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How to choose the right house in right locality from right builder

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How to choose the right house in right locality from right builder

Last updated: October 21 2012
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  • How to choose the right house in right locality from right builder

    NEW DELHI: With the start of Navaratra from October 16, the festive season, and with it the season of house-buying, will begin in earnest.

    This is the time of the year when the majority of house purchases take place in our country. Think deeply about the factors that you should take into consideration before making the buy decision, and do some preliminary research in order to avoid harassment at a later stage.

    Location: Both the spouses should take into consideration the distance from their workplaces and from their children's schools. If the travel time for any member of the family is beyond 45 minutes, it is likely to affect quality of life adversely.

    Generally, at the time of house purchase, there is a tendency to make an optimistic assessment of travel time. Do take into account things like walking distance from your house to the bus stop or the Metro station, time required in changing modes of transportation, and so on.

    If you use private conveyance, remember that traffic will only increase with the passage of years, and so will your travel time.

    Connectivity

    There may be plans for a Metro line or an expressway in the forthcoming destinations and information about such plans is available in the public domain several years before a project actually comes up.

    By consulting the area's master plan and purchasing a house close to the planned project, you can reduce your daily walking distance and enhance the prospect of appreciation of your property's value in future.

    Take the instance of Noida Extension. It is well known that the Metro line that to Noida, Sector 32, will in future be extended to the main roundabout in Noida Extension (where a Metro station will also come up). Do try to buy an apartment that is within walking distance of a Metro station.

    Social infrastructure

    Once you start living in an area, its social infrastructure will have a profound impact on the quality of life you enjoy. Find out how far away the nearest market place, where you will buy your daily necessities, and bigger markets, where big-ticket items can be purchased, are situated.

    Also find out about the availability of hospitals and movie theatres in the neighbourhood.

    In new areas, if the social infrastructure is not already in place, then for the first few years you may have to depend on neighbourhood areas. For instance, residents who move into the Dwarka Expressway area may, in the initial years, have to depend on the social infrastructure of Palam Vihar, Gurgaon and Dwarka.

    Those who buy apartments in Noida Extension may have to depend on Noida for their recreational and big-ticket shopping. Will the distance be too great and thereby cause inconvenience?

    Essential infrastructure

    The availability of water and electricity should also be taken into account. Increasingly, many parts of South Delhi and Gurgaon are becoming water deficient.

    Such shortages cause harassment in daily life. Even if a system for supply of water via private tankers is available, it will add to your monthly bill. Even if the cost of water per se does not rise much in future, the cost of fuel is likely to gallop. Hence, be prepared for rising water bills.

    The same holds true for power scarcity. In several parts of the National Capital Region (NCR), electricity cuts become routine and last for as long as eight to 12 hours in summer months.

    Builders will tell you glibly that their projects offer power backup. But the power backup comes at an extra cost: a unit supplied from a generator always costs more than a unit supplied by the power-utility company.

    Pricing

    Pricing and affordability will have a bearing on both the locality that you can buy in and the builder you can buy from (projects of reputed builders with a sound track record typically cost more than those of smaller builders).

    Again, the tendency to overestimate how much equated monthly instalment (EMI) you can afford each month should be curbed. Veer Sardesai, a Pune-based financial planner, says: "For six months prior to buying a house, start putting aside money each month to see how much EMI you can realistically afford."

    With more people now finding jobs in the private sector, the cradle-to-grave certainty of government jobs has now become a thing of the past. Factor in the possibility of a job loss or a period of unemployment during the 10-15 years for which the EMI on your home loan will have to be paid.

    To reduce risk, consider developing a back-up corpus. Double income and a second source of income (moonlighting or a side business) are other ways through which you can reduce the financial risk that arises from the purchase of a house.

    Another important aspect of pricing is to understand in explicit terms exactly what is being offered for the price charged.

    Manish Aggarwal, executive director of Cushman & Wakefield, says: "Typically , the pricing of an apartment is structured as follows: there is a basic price (BSP or basic sale price), and then you have a slew of additional charges - for car parking, club, preferential location charges (PLC), and so on.

    Find out exactly what the PLC is for: is it for the storey or floor on which the apartment is situated, is it for a park-facing apartment, and so on? Such due diligence will ensure that the builder does not spring hidden charges on you at a later stage."

    Choosing the right builder

    Your next important goal should be to zero in on the right builder. Avoid pre-launches even if the cost in such projects is low. Pradeep Mishra, a Gurgaon-based real estate analyst, says: "If you buy in a project under construction, your risks are likely to be lower because by then the builder would have got most of the approvals."

    Another way of reducing risk is to buy in a project that is on a bank's pre-approved list. Banks do their own due diligence on a project before lending either to the builder or to homebuyers in that project.

    When you go to make the purchase, check out the title deed. Make sure that the builder owns the land on which he is developing his project. All the necessary approvals, such as environment clearance and approval of building plan, should also be in place.

    Read the buy-sell agreement before signing on the dotted line. Make sure that there is a penalty clause for project delays. You would also do well to visit the developer's past projects and speak to buyers there to find out if the builder delivered the project on time. If there was a delay, did he honour the penalty clause?

    Buying from well-known builders who have a number of projects to their credit in the past also reduces risk. Developing a real estate project is an immensely complicated task. Obtaining the necessary clearances, arranging the finances, executing the project and ensuring its timely completion - all these require experience and acumen that established builders are likely to have.

    Since high debt is the bane of the real estate sector, avoid heavily indebted developers . The correlation between high debt and delayed projects tends to be quite strong. In case of listed players, information regarding their level of debt is in the public domain and can be easily obtained.

    The list of things to do that we have suggested may appear long and tedious, but the saying "Act in haste and repent at leisure" is especially apt for house purchase in India. Do the due diligence so that your dream of owning a house does not turn into a nightmare.






    How to choose the right house in right locality from right builder - The Economic Times
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