The Need To Buy Property
The common dilemma that the consumer at our Open House forum poses is what is the right time to buy? The 'right' time to
buy your house is when you feel that you are ready for the responsibility that comes along with buying
a house. It is important to consider the objectives of buying a house. Ask yourself why you want
that house? What really is the motivating factor when it comes to your decision to buy that house?
Do you want to buy it because you want to live in it with your family or do you look for an extra
income that the house will bring in the form of rent? Or, are you simply buying it for long-term
value leverage? The more you know about why you should buy a home, the more focused your search will
be and the better you will be able to select one that meets your requirements.
Shortlisting Your Property
One should buy property in an area which has adequate basic amenities such as power, water, sewerage, etc. It is important
to do your checks and balances while deciding on a project. Infrastructure in the area, connectivity,
builder's goodwill and price of the property are key components a buyer needs to take into consideration.
A buyer should also carefully check points such as the builder's experience, number of projects completed
and delivered, banking institutions involved and present buy options available to suit your requirements.
It is better you conduct a field survey before identifying a suitable property meeting your budget
and location preference.
Choosing The Right Location
When it comes to choosing a location, the consumer looks at connectivity and availability of basic urban and social infrastructure
in that area. Big cities have that advantage. Land values are very high in many big cities. When
investing in a big city, keep a few things in mind. If you are purchasing for self use, buy in a
neighbourhood that has all the conveniences that you require and also has good accessibility to the
rest of the city. Even in premium localities, if you keep searching, you will find properties that
suit your budget. If you cannot afford the premium rates, look for a locality on the fringes of your
area of choice. This will have all the advantages of proximity to the main locality but sport lower
price tags. Also, look for property that is being re-developed in city areas. They will be new and
come with a maintenancefree period.
How To Choose An Agent
It depends on the property you are buying and who offers it to you. In case the seller is a realtor, it is best to buy through
him after doing a background check on his reputation because he would know what legal checks must
be made by you before putting the money on the table. In case a seller is an individual he must hire
the services of a good lawyer to do a due diligence on title, etc before you write that cheque. This
money spent on due diligence may pinch today and seem unnecessary but in the long run you will realize
that this is a wise decision.
Tax Implication
If you are buying a new property, you have to pay Service Tax, VAT and Stamp Duty on the total amount of purchase. If you
buy re-sale property, then you do not have to pay any of these taxes.
Legal Perspective
Documents required while buying property are Identity Proof like Voters' ID Card, Passport, Driving License, Ration Card
and Pan Card. Be careful of the Sale Deed/Agreement and also check that the complete property chain
is mentioned in the Deed.
Home Loan
The main criteria are:
- Your income and your track record of repaying previous loans - this is obtained from the Credit
Bureau.
- Your current expenses including other loans you are servicing. The amount of loan related to
the property value.
- Ownership of the property - this means that the lending bank should be comfortable that the seller
has full and complete ownership of the property.
- Getting a loan depends on the report of the local bank surveyor who will inspect the property
and give his recommendation.
Managing Finance
The real estate market is similar to the stock market, with its peaks and troughs always seeming to make perfect sense in
retrospect. Also, both markets reflect the economy of the country and offer good investment opportunities.
However, the risks must be understood along with the opportunities. Realty index will appreciate
five times, but not the stock market.
Return on Investment (ROI)
Do your complete research on the Web and physical survey of the projects. Invest in projects which are at least 25-30 per
cent complete as this will be comfortable in terms of approvals. Brokers may sometime offer better
rates than the developer's sales team. Bank approved projects are preferred since they give comfort
in terms of the approvals.
Exiting the market
On what basis should I decide to sell my property?
Your decision to sell your property depends on the following factors:
Property market in your city/locality : The residential property market is locationspecific
and the prices will vary for different areas.
How soon do you need the money? Do not sell your property in a hurry if you do not need the money
urgently. Getting the best deal may require patience or even spend some money to add value to
your house. You also need to consider the rental return from the property as it will be a source
of steady income.
