By Ms. Manju Yagnik, Vice-chairperson, Nahar Group | Jun 20, 2017

There are a lot of apprehensions a potential home buyer goes through before investing in a property. In fact, buying and owning a property is a lot more complicated than investing in equities and bonds. But, like any other investment, it’s better to be well-versed in the area before investing.

However, in order to take full advantage of any opportunity, home buyers need to equip themselves with information that will guide them on how to make the best possible investment decision. It is important to evaluate the credibility of a project as well as a real estate developer, to ensure that the money invested remains secure.

Encapsulated below are what could be potential risks and advantages for buying properties which are in the later phases (second, third) of the project.

General advice

One of the key factors while investing in later phases of a project is that you get to see the overall view of the house. You can be sure about the pace of the construction that is going on. Due to unavoidable circumstances, project delays have happened in the past. Hence, projects closer to completion are the ones that make a safe choice.

Home buyers must verify all the amenities, clearances, and the necessary approvals. During the first phase of the project, customers might miss on background checks, but when the construction is midway or complete, it can be considered that all the approvals have been acquired.

Initially, every developer tries to sell 20% to 25% of the inventory at a lower rate to raise funds for the construction cost. But this may not happen in all cases. If due to unjustified prices, inventory doesn’t sell at first, it brings down the prices.

While investing

Be sure that the approvals for the flat, all clearances, land title and other due diligence are in place. Bank loan for the flat should be available. These issues usually surface only after the flat is booked, by paying the amount upfront.

Check thoroughly for any hidden charges.
Advantages

Generally, investors jump into the first phase of the project, because it is the first phase that gets the maximum appreciation. The investors get that benefit of buying at a lower cost when a developer successfully sells 20% to 25% of the project inventory at a special price, during the initial phase.

It’s important to gather information about the project, and cross-check the findings with the developer’s past projects and earlier deliverables. If the developer has sound credentials and track record, one can surely be an early bird and invest or buy property in the first phase.

Sometimes, when phase one is ready and sold out; developers sell the later phases for a higher value. So, early buyers get the advantage of a lower rate.

Factors that affect buyer decisions

Generally, policy changes do not impact the home buyer highly, but it may affect the developer to a great extent. Developing a project is a long process; so, purchases or approvals, take time. Some developers take partial approvals in various steps during construction.

Sudden policy changes then impact the developer, not the buyer.

Change in the tax implementation can impact the buyer directly. If the buyer is purchasing a property and service tax is introduced, then this will affect the buyer reflecting on the cost.

Publication Portal / article Source: Deccan Herald