The festival season is considered an auspicious time to buy a house. Sales are generally higher in the October-December quarter compared to other quarters as developers come out with a plethora of discounts and offers. This year, too, there is no dearth of discounts and freebies being offered by developers to attract buyers, who have been sitting on the fence waiting for prices to correct further. All this is coming at a time when market dynamics are in favour of buyers. Interest rates are at a multiyear low and developers have huge inventory that they are trying hard to clear. This has substantially reduced developers' bargaining power, giving buyers an upper hand. Many of you would be planning to buy a house during the season. However, it is imperative that you do not get swayed by the headlines and analyse the deals and offers thoroughly before choosing what is best for you. Let us understand how you can choose the best deal.
What's on Offer
Developers have come out with a plethora of schemes to lure homebuyers. However, you may not see many developers offering their long time favourite interest-subvention schemes under which you can book a home by paying 10-30 per cent of the cost and pay the rest on possession. In this, home buyers have to apply for a loan for the rest of the amount and, once sanctioned, the burden of interest payments till possession is taken on by the builder. The National Housing Bank has banned housing finance companies from financing such loans. "While liquidity crunch and ban on subvention schemes might keep developers from launching mega festive offers that are a big attraction for buyers during the festive season, the reduction in interest rates and easy availability of ready-to-move affordable homes are likely to be the big drivers of demand during the festive season this year," says Dhruv Agarwala, Group CEO, Housing.com/Makaan.com/PropTiger.com.
The builders are also offering freebies ranging from free modular kitchen, LCD, free second car parking, iPhone, car, gold coin, free club membership, power backup, cash discount, foreign trip and more. Many are offering to pay registration and stamp duty charges. This is apart from the waiver of goods and services tax or GST.
Do Basic Research
In order to get a good deal, do some research on your own so that you are in a better position to bargain with the seller. Once you have finalised the location after evaluating it on parameters such as infrastructure around the area, proximity to schools, hospitals, airport and your job location, etc, start collecting information about projects in the area. There are several online property portals that can come in handy for comparison of projects in the area.
"It is advisable for a customer to do extensive research about the developer's track record and the feasibility of the offer as per legal frameworks such as RERA. Some feedback from existing clients is always helpful. These precautionary steps can go a long way in protecting customers from any unpleasant experiences at a later stage," says Anshuman Magazine, Chairman and CEO, India, South East Asia, Middle East and Africa, CBRE.
When you are not sure about completion date or whether the builder can be trusted, go for a ready-to-move house. "Buyers now prefer ready-to-move assets or assets nearing completion (in under six months) wherein the apartment can be booked by paying a small amount (up to 30 per cent cost) and the residual payment is linked to possession. This limits buyers' risk in case of non-delivery or construction delays," says Ashutosh Kashyap, Associate Director, Valuation & Advisory Services at Colliers International India.
After you have zeroed in on a few projects, visit those to see at what stage the project is. "Sometimes, developers say the project is ready and has part-occupancy certificate but if one visits the site, one would find that a lot of internal work is yet to be completed, which may take another six to 12 months. So, a buyer must visit the site before finalising the deal," says Pankaj Kapoor, MD, Liases Foras.
To evaluate the deal, compare prices with similar projects in the vicinity. This will help you understand whether the developer is offering a real discount or has jacked up the price and offering a discount on that. "As part of marketing campaigns, developers offer foreign trips, cars or gold coins. At times, there are even bigger offers on the basis of 'lucky draws'. More often than not, such offers have been observed to be nothing more than marketing gimmicks with limited substance. Besides, the monetary value of such offers is a very small percentage of the deal value," says Ashutosh Kashyap of Colliers.
Also, be wary of frivolous offers. Some developers are offering GST waiver. However, if a project is ready to move, no GST is levied on it. GST is levied only on under-construction projects. Therefore, homebuyers should avoid such offers.
So, bargain for cash/price discounts as you may not need some of the freebies on offer. "Developers attempt to lure buyers with promotional offers. However, the buyers should insist on offers with substance and utility such as upfront cash discounts, flexibility in payment schemes, club membership charge waiver, free additional car parking, modular kitchen, apartment furnishings, etc.," he adds.
Buying a house is generally a once-in-a-lifetime decision. So, thoroughly evaluate the deal before opting for it. If it looks too good to be true, it is better to avoid it. "Evaluation should be backed by good research about the developer and the micro market. Background check, past projects and quality, opinion from legal consultant, financial position of the developer and reviews from existing customers need to be considered with utmost importance. Assessment of all these factors can mitigate any possible risk," says Magazine.
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