Sharing this article from ET Realty
Beware of the sales pitch used by builders, especially in the festive season. Here are the nine claims you should cross check before making a deal.
“YOU CAN NEVER GO WRONG WITH PROPERTY”
A builder will tell you real estate prices n ever go down. That is not true. Don’t fall for projections of high rentals either. No one can predict future rent. If you keep away the EMI amount in a safe investment option, you will be able to save a higher down payment amount when you eventually take the plunge.
“THERE HAVE BEEN CORRECTION IN OTHER AREAS, BUT WE HAVE NOT CUT PRICES.”
A builder will contend that the area where his project is has not been hit by any correction. But there will be signs. Account for inflation while calculating the price rise in the past year. Likewise, steeper discounts and more freebies than the previous year on the same property are a correction in real terms.
“THIS IS THE MOST AFFORDABLE PROJECT IN THIS AREA.”
If a new project has 2-BHK flats priced at Rs 42 lakh, when the going price is Rs 50 lakh, it probably has something to do with size. Average apartment size has come down in the country. So, don’t compare the price tag, but the price per square foot. And don’t forget the long list of attendant charges.
“WE WILL DELIVER ON TIME SINCE THERE’S A PENALTY CLAUSE.”
Project delays are a reality. While some builders do offer compensation, the amount offered is nowhere close to the EMI you are paying. Some builders slip in a clause, which insulates them against any claim. Others fix an upper limit for compensation they will pay. And then there are the bounced cheques.
“THESE RATES WILL BE REVISED SOON.”
This is the favourite trick used by every builder to entice buyers. The fact is developers are more desperate to sell than buyers are to buy. The only cheap source of money for developers is sale of projects. This is where discounts come in. Given that the situation is unlikely to get better anytime soon, builders will continue to offer discounts to attract buyers.
“WHAT YOU SEE IS WHAT YOU GET.”
The sample flat may look like your dream home, but the reality is quite different. Clever use of lighting and furniture make the flat appear big. The walls are thin, in some cases just plywood partitions, which add precious inches of carpet area. They are standalone units offering great views from each window. It may not be so when it is a part of a cluster of flats.
“YOU CAN TAKE YOUR MONEY BACK ANY TIME YOU WANT.”
Getting a refund from a cash-strapped company is not easy. Builders follow no norms while cancelling bookings. While some deduct 10% of the booking amount, others quote the same figure on the ‘cost of property‘. Yet others deduct 20%, whereas smaller players may forfeit the entire booking amount.
“THE FREEBIES BRING DOWN THE EFFECTIVE COST.”
All freebies are factored into the price of the apartment. Another lure is the ‘ attractive’ financing schemes that builders offer by tying up with banks and housing finance companies. In most cases, you will get a better deal by approaching the bank directly. Don’t look for freebies; try getting a cash discount.
“DON’T WORRY ABOUT THE LOAN. WE HAVE TIE-UPS WITH BANKS.”
Builders do have tie-ups with banks, but this is no endorsement for the project. Even if the project is approved, hire a legal expert to verify all documents. A tie-up also does not promise the best home loan rate. What it means is that you are more likely to get a loan from those banks than with others.
(This article is a condensed version of one originally published on October 7, 2013, and may contain chronological references based on that date.)