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Thursday , 21 September 2017
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Buying a home? Beware of these tricks used by builders

With residential real estate prices hitting rock bottom across many cities, it is generally being considered a good time to invest in property. However, don’t believe in every word that a salesman or an agent might tell you. To ensure that you make the right decision, let’s take a look at some of the most common tricks that builders might use to sell their stuff.

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The “perpetual appreciation” theory

The most common reasoning a builder or realtor might put forth to you is that property prices will always keep appreciating. What they want you to believe is that your property investment will always be a profitable deal. While this may be true to some extent, it may not be applicable for every project. Past records show that property prices also fluctuate, just like gold or stocks, albeit not as volatile as other assets. Recent data shows that property prices have remained stagnant in several areas for 1-2 years and there are also cases where prices have come down. So, do not blindly believe in the perpetual appreciation theory.

“This area will soon be a residential hub”

A builder launching a project in fringe areas may offer attractively low rates and claim that the area will soon become a sought after destination for residents. The price may be hard to resist, but remember that living in fringe areas comes with its own set of problems such as underdeveloped infrastructure, long commutes to office, lack of shopping malls, social exclusion, etc. Moreover, you never know how long it will exactly take for the area to become fully developed. So, weigh the pros and cons before you make the decision to buy a property in the fringe areas of a city.

The “most affordable project” claim

A builder might tell you that their project is the most affordable in the area. For example, they may offer you a 2BHK flat at 30 lakh, when the prevailing rate for a 2BHK in the area may be 38-40 lakh. You might be tempted with such an irresistible offer, but the common trick that may have been used here is the reduced size of the housing unit. So, don’t fall for the “most affordable” claim unless you have checked the specifications of the flat and have found it to be matching other such units in the area.

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“Book now or rates will go up”

The salesman might tell you that you need to book the property right away, as the prices will go up soon. Never fall for such claims, especially in the current scenario where supply far exceeds demand. Take your time in evaluating multiple projects and do not worry about prices going up.

“You will be compensated in case of project delay”

The builder may refer to the new penalty clause and promise that the property will be delivered to you on time, as they are now bound by the new real estate regulations. However, do not believe in such claims, as the builder may have included some specific clause in the agreement that would protect them against any claims made by you. “Factors outside their control” is one such clause that builders often use in the agreement to protect themselves against claims made by buyers. Moreover, the amount of compensation will never be close to the EMI you might pay on your home loan. So, read the fine print before finalizing anything.

The sample flat trick

The builder is likely to walk you through a sample flat, but don’t make your decisions based on what you see in the sample flat. Such sample flats are designed by expert interior designers who know how to create optical illusions to make the home look superior or more spacious. You should instead check the project layout map and the architectural drawing of the flat to know the exact carpet area of the flat.

Freebies

Freebies are the current flavor in the residential real estate market. However, don’t fall for them, as in most cases the cost of these freebies may already have been included in the price.

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Tie-ups with banks

Builders often have tie-ups with banks, but this should not be considered as an endorsement by the bank. Banks are just there to facilitate loans, and may not be bothered about aspects such as quality of construction, amenities, delivery timeline, etc.

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