January 30 , 2013
For most middle and upper-middle class families, a house is the most expensive asset owned by them. The asset also has emotional value and therefore families should do careful research before buying one. However we will restrict the list of do's and don'ts to property buying for investment.
Don't: Hurry to buy the property you liked
Do: A common mistake investors make is letting their emotions come in the way of a financial decision. Don't get carried away with the interior design or scenery of a property you've seen. These things might add financial value to the property but if you know there are other unfavourable factors at play just forget about it and move on.
Don't: Think due diligence means scanning newspaper ads about upcoming projects
Do: Builders are notorious for delaying projects, using inferior quality materials and not completing paperwork, etc. If it is an under-construction or new house you are buying get down to the builder's site office and check whether Drawings have been approved by the architect and local authorities. Check the Intimation of Disapproval (IOD) which is an instruction set pertaining to construction from an authority to the builder.
In case of under-construction properties ensure the builder has obtained No-Objection Certificate (NOC) from the lender and Commencement Certificate which is a proof that the builder has obtained all licenses and permissions from municipal authorities. Also verify the builder holds a clear land title for the plot. In case of a pre-approved loan, these things are taken care of by your bank or NBFC.
In case of resale property, check whether previous owners have cleared all dues on electricity and telephone bills. Verify if the title is clear.
Don't: Underestimate your cost of investment
Do: One-time cost of registration, stamp duty, loan processing fees and administrative fees can run up to a few lakhs depending on the cost of property and its location. The builder's ad showing price per square feet usually talks about super built-up area. However not all of this area is exclusively yours. In many cases people end up paying for amenities useless for them. Try to save on this by negotiating with the builder to reduce the super built-up area on your flat. You might also have to shell out on maintenance cost.