Like any another purchase, buying a property has its own confusions and risks during decision making. A home buyer has to be sure that he/she chooses the right builder and the right location within the right price. From a personal point of view, every buyer does his/her best to verify the property and have the best pick; however, we still see a lot of cases wherein the buyer is duped and is eventually dissatisfied by the purchase. Following the customer feedback, in this article, Makaan.com lists a few questions that you can ask the real estate developers and then shortlist the property.
Use of land
What is the use of the land on which the project is being developed? Is it for residential or commercial property; floors or plots; how many floors does it permit etc. It has been seen that often developers begin a project and start to sell properties before land acquisition is over. A portion of the land acquisition may be pending and might impact your apartment; therefore, make sure to ask the developer and verify the land acquisition documents. A homebuyer should verify the papers demonstrating the builder’s ownership of the land. You could also hire a lawyer to conduct the title search and to find out whether there is a legal dispute over the land.
What about the approvals?
A home buyer should check all the approval documents prior to finalizing the deal. Check for the developer’s licence in order to check the permission from the area’s town planning authority to develop the project and approvals for building plan, water, environment and pollution, and height clearance. If the approvals have not obtained, it is suggested that a homebuyer should not invest in that project as delay in approvals is of the major causes of project delays.
Payment Plan
In the application form, pay attention to the payment plan. One should not pay a large portion of the cost of the property at initial stages. It is suggested that one should stick to a construction-linked payment plan or one in which a portion of the cost has to be paid after possession. Another area of concern is that the builders often include a cost-escalation clause in the builder-buyer agreement, which states that the developer has the right to increase the cost of the project in case the cost of building materials goes up. Enquiries regarding the builder’s track record as to whether he has implemented the escalation clause in the past can be made or finalise a developer who does not include an escalation clause in the agreement.
Delivery and its terms
Most of the agreements mention a time frame within which the developer will give the possession of the property; however, the trick is that the agreements do not mention the start date of the time frame. Enquire about the start date and if possible get it documented. Also check whether the agreement has a penalty clause under which in case of a delay in possession, the developer will have to pay a penalty to the buyer. If the clause is there, find out how much penalty he will pay and whether he has paid it in the past.
Change in layout plan
Often builders bring about changes in the layout plan and show them as beneficial for the buyer; however, the buyer should not be lured by the increase in area of the property, instead at the time of booking, should find out whether the builder has changed his plans in the past and what were the terms of that. For example, if the area of the property increases, the buyer will have to pay according to the original booking amount or the current rate?
The extra charges
Check out the various heads under which the developer may ask the home buyers to pay, for example, preferential location charges (PLCs), external and internal development charges (EDC and IDC), advance maintenance fee etc. Calculate what will be the purchase value after adding all these charges and buy only if the sum falls within budget. There can also be a case when the buyer falls behind in paying an installment; in that case the buyer should be clear about whether the developer will give extra time to pay up, what will be interest liability etc.
Record of the developer
The record of the developer includes his financial status and his reputation as a developer. The buyer can verify a developer’s financial status by asking for his company’s balance sheet. Do not invest in the project if his company is over-leveraged because it increases the probability of delay in project completion. Moreover, find out how many projects the developer has completed, whether there were legal issues in his past projects, whether the projects were delayed, are the current occupants satisfied with the construction etc.