What you need to do to avoid regret when buying a home.

What you need to do to avoid regret when buying a home.

We’ve been selling property in Bangalore for more than 15 years, and it surprises me how some of the brightest people make the most basic mistakes.

For example, not long ago I ran into someone who was the CEO of large software company in Bangalore.  Clearly he was someone who had done well for himself.

While talking to him, he shared with me details of a Property investment he made in a gated community near Electronic City.  I was astonished he paid a price much more than the market rate.

When I inquired further, this is what he said, “I’m too busy and I trust my agent to do all the negotiations.”  Clearly this agent took advantage of him.

If he had known about and obeyed the Essentials Laws l talk about below, he would’ve saved several Lakhs of Rupees.

You Don’t Have to Be an Expert

The thing is you don’t have to be an expert to not make these mistakes. You don’t need a special degree or training. All it requires is a little bit of knowledge, planning, and thought before you make your investment in your dream home. In fact, it requires obeying just four simple laws.

I’m going to share these essential laws with you that I’ve learnt from my experience. Keep these laws in front of you when making a decision and you’ll save yourself the emotional torture of regret when it comes to buying a home.

1. Get a Good Lawyer

The first thing you have to think about when buying property in Bangalore is this:

Are the title deeds of the property clear of legal issues?

Imagine buying the property and finding out that there is a claim on it by someone else. Or worse that it has already been sold multiple times to other people. This is the number one concern investors have when buying property in India.

These claims can take years to resolve, sometimes even generations! Think about it: you buy your dream home with your hard-earned money only to find out you can’t move in. And not only can you not move in, but you still have to make payments on your current home. That kind of financial strain can bankrupt you in no time. Many investors have had this problem, and the last thing you would want is to put your life savings into a property with legal problems.

So, before you invest in a home, get a lawyer to examine the titles of the property. It may cost, but it’s nothing compared to the problems you’ll be saved from.

2. Evaluate future potential of the Property

Every investor wants the property they’ve invested in to increase in value over time.  You don’t want to buy property where the value has been just marginal compared to other areas in the city, or worst the property has dropped in value.  It’s a miserable feeling to own a property for many years and then sell it at a loss.

To ensure your property does well overtime, you need to evaluate the future potential of the area before making the purchase.  Here are 3 ways to evaluate:

Search Google News about activity in the Area

Enter the name of the area in Google News. This is a quick and effective way to instantly find out any interesting activity that’s taking place.  Look out for announcements of new commercial projects. This plays a big factor on how the property will do in the future.

Speak to brokers in the area

There are certain local news that even Google does not know.  For this you need to speak to Brokers in that area. They are an excellent resource for inside information about which areas are doing well and which areas to ignore.

Find out Proximity to Schools, Hospitals & Shopping Areas

The proximity of a property to basic amenities is directly proportional to its value.  So check out how far the property is from these areas & you’ll get an idea how well the property will do. Google Maps is a great place to start.

3. Research Prices in the Neighbourhood

It’s no secret. Investors want to buy the property at the lowest price, while sellers want to sell at the highest price.

As a buyer are you confident you’re getting the best price of the property?

What if after you buy the property you realize that a similar property in the same neighborhood is selling for 20% less than what you bought it for?  I’m sure you don’t want to feel like a let down paying a price more than the market value.

To be able to negotiate with the seller for the best price, you need to have knowledge of property prices in the neighbourhood you’re investing in.

For example if you’re buying a villa in Sarjapur, Bangalore, you should at least know the going rate per sft of similar villas in the area.

Thanks to the internet you don’t have to go door to door to find out the prices in an area.  The two best online resources to research prices are Money Control and Magic Bricks.

If you find the price being quoted to you is higher, which factors are influencing the difference in price?  The reasons could be:

  • The villa comes with better amenities
  • Access to the house is easier from the main road.
  • The quality of construction & maintenance is better.

Understanding these factors will help you make an informed decision about the price with no regrets after the deal is made.

4. Plan for your Finances

A lot of people rush to buy their dream home and only to later realize they don’t have the money to fund other important items.  What use is a dream home if you’re not able to take care of your kids’ education or have savings left for yourself during your retirement years?

Some people end up financing all they have for a home without realizing they won’t have anything left even for their general travels or entertainment. In other words, they are house poor.

Therefore it’s important that you plan your finances well by doing the following:

Understanding costs involved to buy a home

Your total outflow to buy a home will not be just the cost of the home, but several other additional expenses.

Know your Budget

When buying a home you’ll be presented with many options. Having a budget will help you narrow your options within a range that doesn’t hurt your pocket.

To arrive at budget start with a rough estimate based on the property you are interested in.  Then add additional expenses mentioned in the above point.  Finally, add 10 to 15 % extra towards unforeseen expenses.

Plan your home loan

Even if you have savings, it makes sense to go for a home loan keeping in mind that there are going to be other big ticket expenses like children’s education & retirement fund.

A home loan is a product as much as it is a service. So make sure you spend time comparing the various offers in the market.  Here’s a list of questions to keep handy when comparing:

  • What interest rate is offered?
  • Is the interest rate fixed or floating?
  • Does the lender have a good reputation?
  • How long will they take to approve the loan?
  • What is the maximum amount available?

My years in the Real Estate Industry have taught me that doing a little planning in the beginning can go a long way in making the right choice.

The time and effort involved in the planning is worth it to avoid regret later.

And it doesn’t have to be hard. Just follow the 4 Essential Laws explained above.

Attention Home Buyers

The Critical Checklist Every First Home Buyer Must Have!

 

FREE: Use this critical checklist designed for First Home buyers,

which will tell you everything you need to do, for a stress free

and hassle free home buy.