good article in TOI.

Property in the resale market may sometimes be more reliable than new or future projects.Find out the other advantages of buying an existing house


When Rita Dey and her husband started window shopping for a house in Mumbai,they were in two minds.Should they buy in the far-flung,but affordable,Thane suburb,where lots of new projects were coming up Or should they opt for an apartment in an expensive project in the city Ultimately,the couple junked both the options and settled for a flat in an existing residential society at Vashi.It wasnt too far and the 45 lakh price fitted into their budget.

However,not everyone can take the resale route for buying property.Sometimes it is the demand for the cash component that prevents the deal from being finalised.The elaborate legal formalities and paperwork involved in buying a resale property can be intimidating.
Yet,if you are willing to spend time on research,you may find the house you have always dreamed of at a price lower than that of new projects in the same area.Banks are now more willing to lend for resale properties than they were a few years ago.Let us look at some benefits of buying a second-hand property.

Lower prices,better facilities:


Want to stay close to your workplace or your childs school Chances are that a new project in an established location close to the business district will sport a premium tag.But if you look around the same locality,you have a better chance of finding a resale property which may fit in your budget.The difference in the prices can be 25-50 %,depending on the city,location and age of the structure.

The best part is that you get to live in a well-connected locality.The Deys,for instance,chose a house at Vashi because the husbands workplace and the childs college were close by.

What you see is what you get:


The difference between the super area and carpet area has always been a contentious issue.The super area includes common facilities,such as corridors and staircases,enjoyed by all the units in the building.The carpet area is the actual living area inside the house.The gap between the two has increased in recent times.But in a resale property,there is no builder or marketing gimmicks.You get to see the property on the basis of the actual carpet area.So,even though the per square foot cost of a resale property may appear high,it will also offer more usable area.

Lower maintenance cost:


Usually,older properties have lower maintenance charges compared to the new ones.This could be due to the slew of additional facilities in new projects.But remember that older properties need general structural maintenance more often.Recurring costs like painting the building,water-proofing and structural repairs have to be borne by residents,which adds to the financial burden of the individual.

EVALUATING OLD PROPERTY


While there is the promise of a good location and a better deal in the case of a resale property,one has to put in a lot of time and effort on research and due diligence.Unlike a new project,you do not buy from a company,but an individual.There are many imponderables and the legal implications of making a mistake are more severe and complicated.

Manish Agarwal considers himself lucky and he has his bank to thank for it.The 29-year-old Mumbaibased marketing manager almost bought a disputed property in a highrise building.The flat was on the top floor of a 13-storey tower.It had a beautiful view and was within my budget too, he says.Luckily for Agarwal,the bank from which he was seeking a loan,exercised due diligence and found that the building did not have the necessary permission from the municipal authorities.But not everyone is as lucky as Agarwal.Experts say that there are some basic checks that one shouldconduct before buying an old property.

The structure:


Before you are swayed by the location and interiors of a property,take a look at the structure.It is a good idea to take a civil engineer,who can tell you whether the walls are double layered or single layered;whether the cracks on the walls threaten the structure or can be corrected;whether the moisture has affected the structure badly or not.If the property is more than 10 years old,you may also consult a structural engineer,who will tell you if the property has been constructed according to the plan and if you are getting the carpet area promised.

Plumbing and wiring:


You may not notice seepage in the walls if the owner has put a fresh coat of paint on it.Here again,you need to consult an expert who can detect the problem.A good plumber should be able to tell you if there are any fissures in the piping system.Before you sign the deal,ask the seller to give you the wiring plan of the house and ask your electrician to take a look.Since the wiring is concealed in most cases,the age and quality of wiring may not be apparent at first glance.

Hidden charges:


Before you buy,find out how much you may have to pay for common spaces,such as parking,staircase and lifts.Check whether the owner has cleared his dues or if some arrears are outstanding against his name.If you really like the house and dont care about such issues,this information will give you the handle to bargain on the overall price or ask the owner to get things fixed before you buy the house.

Borrowing limits:


The valuation by your bank is usually lower than the price you pay for the property.This will push down the loan amount because banks lend 80% of the value of the property.This is why it is advisable to get the property valued before you approach the bank for a loan.Even if your income is enough to justify a bigger loan,the bank will give one based on its margin requirements.The down payment can also vary depending on the age of the property.If the property is quite old,the down payment requirement may be higher.Moreover,most banks have a cap on the maximum age of the building at the end of the loan tenure.This is normally 50 years.The reduction of the tenure also reduces the loan eligibility.

DOCUMENTS TO CHECK



Purchase agreement:

This document tells you who the current owner is.Make sure this is on a stamp paper and duly registered.Copies of stamped receipts for payments made to the previous sellers would also be needed if the present owner is not the original buyer.

Share certificate from the housing society:

This helps establish the owners membership in the society.Often,after the death of the original owner,one of his heirs may occupy the property though he may not be the legal owner.Getting a loan would be difficult in the absence of a share certificate.If it is lost,ask for a duplicate share certificate,along with an indemnity bond,from the owner.

No objection certificate from the society:

This certifies that the society has no objection to the transfer of the share certificate in favour of the purchaser.It should also certify that the seller has no defaults,penalties,or outstanding payments due to the society.

Architectural drawings and clearances :

If you are buying an independent house,make sure you take the architectural drawings,municipal clearances and completion certificate from the owner.These will be needed if you intend to alter or extend the house in the future.

Says Mohammed Aslam,COO,residential services,Jones Lang LaSalle India: The original sale deed and the society share certificate are the most important,since the transaction cannot proceed without them. You would also need a letter from the society mentioning the number of floors in the building,the year of construction,the apartments built-up area,and the number of lifts in the building.You would need an assessment bill from the municipality to the society,an NOC from the Collector if the building is on his land,a copy of the property card,and a receipt for the payment of registration fees.

PITFALLS TO WATCH OUT FOR




Undervaluing the property:


The biggest hurdle in buying a pre-owned property is the cash component.Even if you have the cash,undervaluing a property to save on registration charges and capital gains tax is fraught with risk.Ravi Goenka,advocate at Goenka Law Associates,points out that a registered document can be scrutinised by the authorities even 10 years after the date of registration.

Not getting the property registered :


Unless the property is registered in your name,it doesnt belong to you in government records.Many properties,especially in northern India,are bought and sold on the basis of power of attorney.To put an end to the transactions that take place through unaccounted money,the Supreme Court,in October,made the registered sale deed the only valid document for property transactions.

Buying very old property:


If you are looking for an apartment,go for societies that are less than 10 years old.This means you will spend less on renovation and they will come with a fair discount to the market price for new apartments in the same area.One reason why some of the best deals are available on properties that are 8-10 years old is that many sellers are looking to upgrade to a new apartment at this stage and may have probably identified one.They will not lose a potential buyer for a few thousand rupees, says Harish Tiwari,a Noida-based real estate agent who deals mostly in resale properties.If you do not have the time to do the necessary legwork,hire experts to do it for you

BEFORE FINALISING A DEAL ON USED PROPERTY

Your checklist of things to do before you sign on the dotted line.

1 What is the cash component

The seller may want some portion of the price in cash.In that case,you wont get a home loan for the full price.So,make sure you arrange it.

2
Is it registered

There are properties that get sold on power of attorney.Check if the property is included in the government registry.If not,it should be cheaper.


3 How old is the property

Properties older than,say,10 years would need a detailed look at construction quality if you dont want to end up with huge repair bills a few years after buying it.

4 s the property free of debt

Find out about the home loan status of the property.Is it still mortgaged to the bank Are all the bills,like electricity and ,duly paid

5 property free from dispute

Are there any lawsuits related to the property This is particularly important if you are thinking of purchasing land.

6 Are documents in order

The owners share certificate,sale agreement with the previous owner,latest society bill,electricity bill and NOC from the society must be checked.

7 What are the transaction costs

Though some fees are fixed,the society may levy charges for facilities like car parks and transfer cost.Make sure they are included in the price.

8 Why does the seller want to exit

Check if issues like a noisy neighbourhood,seepage problem,or water scarcity forced the owner to sell it.

-TOI
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  • Thanks fritolay_ps bhai... good and useful.
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  • yes always better to buy a ready to move in house provided u have deep pockets!!
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  • Originally Posted by trialsurvey
    yes always better to buy a ready to move in house provided u have deep pockets!!


    For END USER POV better to take Near RTM or RTM Property..... I Really have seen lots of my salary class friends who are stuck with their finances after paying RENT & EMI both and have to pay for 3-5 years in booked pre-launches Under Construction Properties.

    Booking any under construction property in initial pre-launching stages for SELF Living ie END USER POV is as same as playing Gamble at the cost of DREAM HOME... See the history of most of the builders, anything can be possible!!! YES Anything...... Purchasing Under Construction Properties in Pre-Launching stages is actually good mainly for an Investment POV.

    4-5 years old good flats are available in RESALE in market at 20% lower rate then NEW Flats..... Buyer can also observe actual quality / neighbors / near by facilities / schools / malls..... near them.... ie NO RISK...

    I am not saying Under cosntruction is not GOOD.... I say for Investment POV Under Construction is fine but for SELF Living or for END USER POV It think Resale or Near RTM (possession in less than 1 year) are much better with ZERO Risk and Better Peace of MIND for whole family.
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  • Originally Posted by saurabh2011
    For END USER POV better to take Near RTM or RTM Property..... I Really have seen lots of my salary class friends who are stuck with their finances after paying RENT & EMI both and have to pay for 3-5 years in booked pre-launches Under Construction Properties.

    Booking any under construction property in initial pre-launching stages for SELF Living ie END USER POV is as same as playing Gamble at the cost of DREAM HOME... See the history of most of the builders, anything can be possible!!! YES Anything...... Purchasing Under Construction Properties in Pre-Launching stages is actually good mainly for an Investment POV.

    4-5 years old good flats are available in RESALE in market at 20% lower rate then NEW Flats..... Buyer can also observe actual quality / neighbors / near by facilities / schools / malls..... near them.... ie NO RISK...

    I am not saying Under cosntruction is not GOOD.... I say for Investment POV Under Construction is fine but for SELF Living or for END USER POV It think Resale or Near RTM (possession in less than 1 year) are much better with ZERO Risk and Better Peace of MIND for whole family.

    ---->"4-5 years old good flats are available in RESALE in market at 20% lower rate then NEW Flats..... Buyer can also observe actual quality / neighbors / near by facilities / schools / malls..... near them.... ie NO RISK..."

    which area are u talking abt boss ? any examples where ready to move in flats are available at 20% lower rate than under construction ones ?
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  • Originally Posted by trialsurvey
    ---->"4-5 years old good flats are available in RESALE in market at 20% lower rate then NEW Flats..... Buyer can also observe actual quality / neighbors / near by facilities / schools / malls..... near them.... ie NO RISK..."

    which area are u talking abt boss ? any examples where ready to move in flats are available at 20% lower rate than under construction ones ?

    I don't think any Good RTM Property is available at 20% lower rates as compare to under construction projects in the particular area.
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  • Good RTM properties will be available at premium to under construction properties because one will save from EMI/rent from day one and interest during construction, which is sizable, will not to be paid.

    A 4000 down payment paid flat will be costing 6072 after 4 years with 11% loan interest. In such a case a 5500 RTM will be cheaper than 4000 under construction.
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  • Originally Posted by amarakbar
    Good RTM properties will be available at premium to under construction properties because one will save from EMI/rent from day one and interest during construction, which is sizable, will not to be paid.

    A 4000 down payment paid flat will be costing 6072 after 4 years with 11% loan interest. In such a case a 5500 RTM will be cheaper than 4000 under construction.

    i guess there are many variables in that calculation .. amount of loan .. prevailing interest rates etc etc
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  • Originally Posted by saurabh2011
    For END USER POV better to take Near RTM or RTM Property..... I Really have seen lots of my salary class friends who are stuck with their finances after paying RENT & EMI both and have to pay for 3-5 years in booked pre-launches Under Construction Properties.



    101% agree with you on this. I feel the best approach is near RTM...max a year or few moths more to possession. Bottomline if you buy underconstruction plz plz ensure that your tower construction has reached quite a few floors. And also visit that tower and have a feel.
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  • Originally Posted by trialsurvey

    which area are u talking abt boss ? any examples where ready to move in flats are available at 20% lower rate than under construction ones ?


    You got mis-understood..... 20% lower rates of same type of RTM NEW FLATS of same area....

    We can not compare RTM Flats with Under Construction Flat rates which possession after 3-5 years.....

    Like in IP/Vaishali/Gurgaon if any NEW RTM 1200 SF 2BHK GOOD Society Flats is available in 55 Lac - 85 Lac then in same locality 4-5 years OLD Resale 2BHK Society Flats can be found in 45 Lac - 70 Lac..... (2nd Value is for GGN) Do Market Search with Lots of Local Brokers.... Good RTM Resale Deal of 4-5 years OLD Society Flats is always exist in sufficient number.

    Compare is RTM to RTM....
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  • Originally Posted by trialsurvey
    i guess there are many variables in that calculation .. amount of loan .. prevailing interest rates etc etc


    Yes it will vary slightly. In case you put your own money then you are loosing FD returns which has to be built into the cost.

    On the other hand if investor puts his own money and gets a FD return of 10% by selling in cash and thus saving on IT then he will be happy, but for people buying on loan under construction will prove costly in the long run with prices above 4000 dp
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  • There are several members here in Noida Forum who purchased in 3000-4000 PSF Rate for PURE Investment POV..... Some of such person say that it is always good to purchase Under construction property (either for END USER POV or for Investment POV)...... BUT..... Just analyze

    After 2-3 years once Such Investors will actually started to SELL OFF their invested property THEN will they not like if END USER prefer to purchase RTM Invested Flats at 4800-5800 PSF in place of new pre-launchings after 2-3 years at 25% cheap rates.....

    Believe me it is actually good if REAL END USER prefer RTM Flats in place of Under Construction pre-launching at CHEAP RATES (Dikhta he Sasta Hai, Par Hota Nahi Hai.... Include everything like TAX , Loan , Mental Tension)
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