7 Reasons Why a Cheaper and Unbranded Builder Could Be a Terrible Mistake

7 Reasons Why a Cheaper and Unbranded Builder Could Be a Terrible Mistake

Regret-Free 2Looking for a new home means taking into consideration numerous factors but primary among them is trust. How much do you trust your builder? Because you will be entrusting your life’s savings into the apartment that you are buying.

It’s not something that you can take lightly.

In the case of reputed, or branded builders, there are several established precedents to show the buyer what to expect. Branded builders might turn out to be much more costly, but they are worth it.

One of my friends, Mr. Kanakaraj found this the hard way when he bought an apartment from an unbranded builder. Dazzled by the marketing spiel and especially the low price offered for the apartment in Uttarahalli, he went ahead and bought the apartment. It is an action he greatly regrets, even till today.

The following is his account of how everything that could go wrong; went wrong. Wise people learn from the mistakes of others and our aim is to ensure that others do not undergo the same experience.

The never ending story of construction

Everyone expects delays in construction, so when this builder specified that the project would begin in 6 months, Mr.Kanakaraj assumed it would take a few more months. Instead, the construction began after 2 years.

This meant numerous problems because it drastically changed all the plans he had made with regards to his future residence. In particular, he faced a financial crunch because he was paying EMI as well as rent.

They took the stairs because there was no lift

Amenities like lifts are necessities and not luxuries. But that is precisely how the residents of this building felt when the lift arrived into their building four years after they occupied the flat.

For four years, those who lived on the third and fourth floor had to trudge up and down every single time. However, the problems of the residents didn’t subside even when the lift arrived. The lift is not of good quality and breaks down every week and doesn’t open on the ground floor.

Ta-da! It’s a new home. It just doesn’t look like it!

Barely a year after residents started living here, they noticed that the paint was peeling away. It no longer looked like the brand new apartment it was supposed to be.

Apparently, only a single coat of paint was given. Shoddy paintwork has made the entire building look old and tasteless.

Park your car, here, there, anywhere

Everyone takes car parking for granted. But residents discovered that this builder had not demarcated any space in the building for a car park.

It’s indeed shocking negligence on the part of the builder who failed to fulfill even this basic amenity for the residents.

Residents have to constantly raise a stink about this

The presence of a Sewage Treatment Plant in the building is apparently an eyewash as there is no outlet created for the sewage! On repeated badgering, the builder claims that there was no written agreement about BWSSB being involved.

Without an outlet for the sewage, residents have to bear the stink and suffer numerous other problems if the sewage is not taken away. The situation seems rather prehistoric!

They didn’t even get A Khata

One of the most important aspects while buying a home is ensuring that you get an A Khata but in this case, the Khata given was conditional. This meant that the residents would be able to get only the B Khata and this is a serious situation.

The builder also didn’t pay betterment charges to BBMP. All this means that buyers are stuck with the apartment which they cannot sell because of khata issues.

What happens now on a regular basis

The result of all these problems is that the residents have formed an association and are constantly trying to approach the builder to rectify his mistakes. The builder never answers the phone calls and conveniently stays out of reach.

What’s galling is that he has started construction for another building and the residents fear that he has diverted their money to fund that building, while they continue to languish.

The building has become rather infamous in the locality for all these problems and naturally, people are unable to sell their apartments or even rent it for that matter.

Mr. Kanakaraj wholeheartedly regrets his purchase with this non-branded builder. Opting for a branded builder might seem expensive but in the long run, it will save you all this anguish. What’s more, if you want to sell your apartment, there are definitely better chances of getting a better ROI.

Key Takeaways

  • Don’t get taken in by marketing tactics. Low, attractive rates often become high liabilities later on and promises are just empty words.
  • Before making the plunge, do your homework about the builder. Find out the condition of his other construction sites, speak to home owners who have bought apartments from him and ask lots of questions. No question is too silly or irrelevant when your life’s savings are at stake.
  • Unrecognized, unbranded builders often divert funds from one construction site to another, resulting in inferior quality buildings, inundated with numerous problems.

 

 

7 Targeted Questions You Must Ask Before Buying Your Dream Apartment in Bangalore [Infographic]

7 Targeted Questions You Must Ask Before Buying Your Dream Apartment in Bangalore [Infographic]

infographic-7-targeted-questions-ask

Don’t Take A Hit With These 5 Hidden Costs While Buying Property

Don’t Take A Hit With These 5 Hidden Costs While Buying Property


no-hidden-costs1-298x300Buying a new home is a big decision. It’s also a momentous occasion in your life. But hidden costs can take the zing out of your happiness. Here’s why you need to know more about them, before signing the dotted line.

  • They can spring unpleasant surprises on you when you least expect it.
  •   Create a financial imbalance for which you’re not prepared.
  •   Hidden costs also make it difficult to have a fair comparison or a proper estimate of the total cost of your apartment.                                      

This changes everything.

If you’re not careful, these hidden costs will ruin your happiness of buying a property. How can you avoid this? By learning more about these 5 hidden costs.

1. Registration and post registration charges

registration-charges-in-hyderabad2-300x160Registration, the final seal in your deal, never comes cheap. Registration costs depend on the total worth of the property you are purchasing and in Bangalore, it is 1 percent of the total or registered property value.

Apart from this, there is also stamp duty which amounts to 5.65 percent of the total or registered property value, as of now in Karnataka.These costs have to be taken into account when you are evaluating the total cost of your dream home and planning to foray into buying property.

Further, there are also costs related registration process (after all you are dealing with a Govt. Department) euphemistically called Legal fees. Often times, this also includes  property tax and obtaining khata.

2. Taxes and Parking Charges

tax-on-rent-nriMost often, the price list of the apartment you’re buying may not have all the costs included. So, the good deal you think you’re getting might actually come with these hidden costs.

For instance, you need to be clear about any taxes that  might be levied on you, which the Builder or the sales representative may not have highlighted in the price list .

You also need to ascertain parking charges if they are detailed in the price list. You need to factor these costs  as they are part of total property cost. Avoid later-day  hassles by making sure that the property seller shows all these outgoes in the  price list of the home that you’re planning to buy.

3. Escalation and Penalty Charges

COLA-ID-10059121-300x199Cost escalation clauses have become a regular feature of most agreements but many buyers are not aware  about this. Often, builders hit  the buyers at the last moment, usually just before registration with “escalation charges”, allegedly due increase in prices of raw materials like cement, steel, sand. etc. as well cost of labour.

Since this is already inked in the Sale Agreement signed by the buyers, there is no choice but to comply.

However, a wise buyer will be aware of this clause and should check whether this clause will be invoked.i.e. whether the builder has levied escalation charges in his previous projects.

Otherwise,  this can become a huge headache for you later on when you discover that the price of the under-construction apartment that you bought has gone up significantly, making the home loan that you may have taken, insufficient.

1bfaa60f-a624-4f83-b912-5fa70b9fcb99Penalty charges are also another cause for concern. If you’re unable to make a payment, you need to know if there will be any interest charged and if so, how much. Or if you decide to cancel the booking, you need to know –

  • If there will be any deductibles while obtaining a refund
  • Whether the builder will wait till the flat is resold before refunding
  • Whether the builder will refund at all.

4. No Objection Certificate Charges

hand-over-the-keysWhen you’re trying to buy property, there can be expenses where you least expect them.

Before handing over the keys to your house, the builder issues a No Objection Certificate, which is a document that states that the builder has no objection in the buyer occupying the house and that all payments are clear. Many reputed builders sometime charge the buyer to issue this NOC.

5. Maintenance charges

handyman-image1Though most of the builders collect maintenance deposit/fees for the first year during which they maintain the project, it tends to be minimal.

A year later, when the Residents Association takes over the maintenance, they may be compelled hike the  maintenance charges,  which results is considerable cash flow and heartburn.

This is even more true, few years down the road, when the Association wants to repaint the building  or make some significant repairs.

A wise buyer would be alive to this fact of life and be ready for it.

 

Takeaways:

  • Be aware that  what a  builder advertises is not the total cost of the possessing the property.
  • As a smart buyer you ought to be aware of other not so visible costs, and be ready for them.
  • Then not only you will enjoy your piece of property but also your  peace of mind as well.
Rent Vs EMI – The Big Debate !

Rent Vs EMI – The Big Debate !

buy_or_rentFor the average Indian, a major sign of truly having arrived to success is buying a home of his own.

A common refrain heard is that “it is better to pay an EMI and own a home, rather than pay a rent and make someone else rich”.

While this argument does have merits of its own, there are certain times when paying a rent makes more sense.

If you are currently caught in the dilemma of whether to pay a rent or EMI, here is some advice that will help with the decision.

A home is definitely about being close to everything that you need to lead a comfortable life. The question of whether to buy it or rent it often depends purely on the financial considerations involved and how you handle it.

It would be prudent to get a financial advisor to help you make the right decision. If not, here is what you need to keep in mind.

Loan-EMI-Calculator1. When EMI Makes Sense Financially:

 The first factor to evaluate in the rent vs EMI debate is your financial position. You may have found the perfect house – one that is close to work and school and which has all the amenities you need for a good life close to you.

Find out the approximate price with all additional costs.

If this sum is more than 75% of what your proposed EMI is going to be, it would be a good idea to consider buying.


e39e4a0327acbf2f0ffd7dd02f26fcca2. How Much Upfront Payment Can You Afford:

In general, you may be eligible for a home loan that covers up to 80% of the cost. Which means, you have to pay around 20% to 25% of this amount upfront as your contribution.

For example, with your down payment, you will take on a loan amount of Rs 48 lakh for a Rs 60 lakh home. This would put your EMI at approximately Rs 50,000 a month, based on current rates of interest.

If this EMI is more than 40% of your monthly income, then you are better off with a rental home. Ideally, if you can pay over 50% of the value of the home as your contribution, then that it would be a good idea for you to invest, else continuing to rent is better.

 

3. PO16_BS_Lead_1_jpg_1950975fWill You Be Ready for Pre-Payment:

In an ideal scenario, you should be prepared for a total pre-payment of your loan amount within a few years of beginning it.

Keep in mind that making regular EMI payments will get you a good discount when you work on pre-payment. Work out your finances and make a projection of where you will stand a decade or so after taking the loan.

Pre-paying even a small amount of around Rs 10,000, in a reducing EMI scheme, will help you make some good savings while buying a home. This will help you make a decision on whether to rent or buy.

 

You have to remember that investing in a home is all about investing a large part of its complete pricing. Putting in only a small amount of this may lead to the banks benefitting more from the interest you pay, rather than you making the most of your investment. Similarly, if you end up investing more than you can afford, you are going to be stuck in a financial rut for a long time to come.

Take-aways:

  • Buying a home makes sense if you are able to invest at least 50% of the total value of the project.
  • Buying a home vs renting one, makes sense only if it is in line with the rent you are paying and not double that amount.
  • If your financial planning allows you to be able to pre-pay major parts of the loan over a period of time, then buying a home makes more sense than renting one.
Top 5 Costly Mistakes Villa Buyers Make – and how you can avoid them.

Top 5 Costly Mistakes Villa Buyers Make – and how you can avoid them.

vec_view27Owning a villa is every home buyer’s cherished dream.

And that’s why most times it becomes an emotional decision, rather than a decision backed by sound planning.

While a real estate investment is one of the largest financial transactions one makes, we have found that many home buyers are poorly prepared to ensure that they make a good purchase decision.

Don’t worry it’s not all your fault.

The prospect of owning a big, fabulous villa can render the best of us emotional and naïve, leading to cloudy and hasty decisions.

To help you avoid making any faulty decisions, we have put together a report of the top 5 mistakes people make when buying a villa.

Read on, to learn how to avoid these mistakes.

1. You don’t fix your spending limit and end up overstretching your budget:

When you are dealing with large financial figures, we there are a lot of things that we forget to factor in. Analyzing your budget and planning your finances is very important.  More features and amenities might excite you, but it would make sense if you stick to your budget. Ensure you have budgeted for all the hidden costs as well.

Tips for good financial management:

  • Get a pre-approval for a loan before beginning your property search. This way you have a limit to observe and can avoid taking on too much debt.
  • Determine your down payment and all the closing costs and save enough to meet them.
  • Clear all your existing loans and debts with a satisfactory credit score.
  • List out the liabilities of the next six months, like kids tuition fees or Insurance Premiums and keep reserve to fulfill them
  • In life you don’t know when things go awry, so always keep 3 months of your EMI payment as reserve.
  • Maintain a separate budget for home furnishings and interiors.
  • A regular source of income is mandatory when you are buying a home. In case you are unsure of job stability, postpone your home buy.

2. You don’t double check the legalities:

 Unlike most apartment projects, villa projects are set over large land formats. And when it comes to large townships covering many acres of land, you have to be double check the legal paper work like the parent deeds and the history of the land. The land should not be subject to any property /ownership dispute and have clear titles with all the necessary approvals.

Handy Checklist of documents you need to double check on:

Sale deed, Khata certificate, Tax paid receipt, Joint development agreement, Loans from bank, Encumbrance certificate, Sanctioned building plan, Electricity/ water bill receipt, Maintenance no dues, NOC, Sale and construction agreement, Registered previous agreements.

Most importantly check on:

  • Approvals by at least one leading bank of the country
  • Approval by the government authorities
  • Delivery of past projects
  • Feedback of existing buyers of the quality of the product.

3. You don’t check on the construction quality:

Again unlike apartment complexes that are built as one complete unit, a villa construction is different. You need to be constantly checking with the builder on the progress of your villa and the quality of construction materials used at every stage.

Tips for checking quality:

Fix dates for construction inspection and talk to the architect and project management team of your builder regarding the materials used. Also look out for any electrical and plumbing issues that could arise in the future.

4. You ignore the reputation of the builder:

Most people tend to chose unknown builders as they sometimes offer cheaper products. However this is a grave mistake when it comes to home buying. There have been instances when the builder has constructed poor quality home and or swindled people of their money without even completing the home.

Qualities to look out for in a builder:

Do your background research on the builder to ensure you are not buying from a builder of dubious reputation. In order to earn trust in a heavy duty industry like the real estate, a builder needs to have established himself through formidable years of service in the industry, had a host of successful and completed projects to his name, should have timely delivered quality projects, received positive testimonials from his clients as well as the media.

5. You get too optimistic about the development/ location

Since villa townships are located on large sects of land, they generally tend to be located very far from the city. Most people invest their villa buy thinking the development would take place in a matter of months, and by the time they move in it would be a bustling locality. This unfortunately is not the case.

How to save yourself from disappointment:

To begin with, look for areas with potential for development. Track the potential for connectivity like development of metro or flyover. Also look for news of upcoming schools and hospitals in the vicinity. Most importantly be patient. Bangalore is a growing rapidly, so in a couple of years you would definitely witness the development in your area.

If you have made some to these home buying mistakes, or know of someone who has, please comment down below and share your experience with us.

4 Steps to Getting Reliable Information Online During Your Home Search

4 Steps to Getting Reliable Information Online During Your Home Search

home searchIt’s the natural order of things – when you decide to look for a property to invest in, your first round of research is done online. You look for reviews of the property, the builder as well as the area that you are looking to invest in. Often, the information you are looking for is found on real estate portals or websites that are dedicated to documenting properties and all the information related to it. While you read through all of the information available, one of the first thoughts to cross your mind is the accuracy of the information. “Are the details authentic?” “What is its nothing like the images online?” and many more queries scamper through your mind, don’t they?

There is no doubt that real estate developers are promoting their brands and properties online. In fact, larger budgets are being allocated each year to online brand management and promotion. Of late, the rise in the number of online flash sales is another indicator of how well the industry is doing on the web. But, somewhere along the line, the thought that lurks through your mind is, “Is possible that the true image of a brand is manipulated online to enhance sales?”

How to Sift through Information On The Web?

There is a lot of information available online on real estate. You will find this in multiple formats such as:

  • Property/builder reviews
  • Comparison charts amongst properties/builders
  • Analyses and trend discussions
  • Location analysis
  • Builder profiles and much more

If you are looking for reviews and conducting research on the overall feasibility of investment in a particular project in a city, here are some tips to cut through the fluff:

  1. Know where to look: There are a few well established portals and discussion forums that govern the space. Look for sites that moderate comments and have a sort of regulatory system in place to ensure some level of accuracy in reviews and information provided.
  2. Look for details and not statements: The fact that review portals allow the general public to log in and write about anything, makes the portal susceptible to misleading information. Always try to opt for a detailed post rather than a rant. Look for reviews that qualify a complaint rather than simply rant about it. This will give you an idea of what possible issues may come up and what you may ask the builder yourself.
  3. Look for Commonality: There may be a customer who is dissatisfied with a builder for a particular reason but that does not mean that you shy away from the project. Read through multiple reviews and look for factors that repeat – if at least 5 of 10 reviews say that a project has been delayed, then chances are it will happen to you as well. Don’t write off a project over a single complaint.
  4. Look into Poster Profiles: It is a common practice to create fake profiles and write in reviews or information on a site. This works both ways where you have positive as well as negative reviews coming in. This makes it difficult to ascertain who is telling the truth. Ideally get into the public profile of every poster, especially those with negative reviews and ascertain whether profile is genuine. Some telltale signs are:
    1. No profile picture or that of an animal or celebrity
    2. No prior posts
    3. An overly positive or negative review with no justification
    4. The lack of response to any queries that come in

With these 4 simple tricks, you will be able to weed out the unnecessary information and get on decision-making mode. Not all information available online is of bad quality. The trick is being able to differentiate between the two and make some smart decisions based on your research. Make sure you do ample research before you boil down on a project.

Takeaways

  • The Internet is the most popular source of information, but weeding through unreliable information is necessary.
  • There are 4 simple ways to set aside the fluff – know where to look, know what to ignore, look for commonality and look for details.
  • Online research is convenient, if you know how to make the best of it.