Last Modified: 25 May 2020
Home Buying Guide
“Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.” -Franklin D. Roosevelt.
Real estate is considered the best investment option as it is not subject to market sentiments. If you have invested in a property from a reputed developer at a good location, you will undoubtedly yield positive results. Despite being one of the most stable and tangible investment options, real estate comes with many risks attached to its frills. By being mindful of the possible dangers, you can make a risk-free real estate investment. Let’s see what are some common pitfalls:
- No dearth of foul play: Increasing demand for real estate has attracted many new developers, though not all of them are dubious, still, there is no dearth of unscrupulous companies. There are many incidents where a developer launches a new project and instead of using the booking amount for the development of the project they use it to buy more land/property/invest in other project developments, resulting in a cash flow crisis. Don’t fall prey to such developers, verify their credentials and examine their past projects. Don’t get attracted to dirt-cheap deals of small developers, invest with a reputed developer only, as they are more likely to comply with all the rules and regulations. If you are looking to buy a flat in Bangalore, Chennai or Kolkata, there are many reputed builders with some amazing projects
- Beware of fake infra pitch: Real estate appreciation is directly proportional to the project’s location. If you are looking for good returns with a limited budget then invest in a project at upcoming locations where civic infrastructure such as metro stations, expressways, highways and airports are planned as the prices tend to rise manifold when these infrastructure projects are completed. But, be cautious while investing in properties near the ‘proposed’ infrastructure, because if these get delayed or does not come up for whatever reasons, the value of your property may remain stagnant or even fall. Before investing you must verify the claims made by the developer. If you are looking for land for sale in Chennai or Bangalore, look for upcoming locations like- plots in Poonamallee Chennai or Mysore Road/ Magadi Road in Bangalore.
- Avoid title disputes: The lack of clear land titles means you are likely to face the problem of presumed ownership and your land transactions are risky. When investing in real estate, always trace past ownership to avoid any dispute in the future. Make your checklist and ensure that the seller is authorized to sell the land, the title is clear, there are no pending taxes or dues, the plot on sale is approved by the city development corporation and other local authorities, and all the clearances required for further development are in place.
- RERA approved projects are less likely to delay: Delay in getting possession is one of the most common problems faced by real estate buyers. It is always suggested to buy a home at the pre-launch and launch phase, but this also increases the risk of not having a better understanding of when the project will complete when compared to ready-to-move-in projects. You can reduce this risk by choosing a reputed developer with a good record of timely delivery. Also, ensure that your project is RERA approved to avoid such incidences. The introduction of RERA in real estate has made this sector much more reliable. If looking for RERA approved plots in Bangalore you can check Shriram Properties‘ investment-friendly and premium plots.
- Valuation Risk: Before buying a property you must consider whether you are paying the right price for the property or not, it reflects the current market reality or not and
will be a profitable investment or not. Either get the valuation from a qualified professional valuer or you yourself compare prices and features of similar properties in the locality.
- Circumventing Rules: We all have seen that many times property sales are carried out through power of attorney (PoA) where the seller passes on the right to – maintain, rent, lease, mortgage, or even sell the property to the buyer. But in the eyes of the law, such transaction of immovable properties through PoA has no legal sanctity. In October 2011 Supreme Court passed a ruling that immovable properties can be sold or transferred only through registered deeds. Even banks don’t recognize such deals as they believe that a PoA can be easily used to sell a property to multiple buyers. Thus, buying on PoA is risky even when the agreement can be registered.
- Eco-Friendly Trick: Off late the concept of eco-friendly buildings has become very popular among buyers who are conscious about nature. These days many builders are using the tag of ‘eco-friendly’ but their claims are only based on some superficial features such as lawn and gardens. For a property to be recognized as ‘eco-friendly’, there are certain building design, construction, operations and management criteria that must be fulfilled. When buying an environment-friendly home, ensure that it has the required certificate and it is a genuine eco-friendly project.
If you wish to avoid above mentioned pitfalls and make a risk-free real estate investment, it is suggested you buy from a reputed developer. Mostly Tier-A developers like Shriram Properties have their projects RERA approved with clear titles and are at handpicked locations.