The real estate sector has slowed down massively in the last few years and thus, developers have become more unrelenting when it comes to procuring sales. Builders, these days, are willing to go to any length to sell a property and are offering discounts and freebies to lure customers.
Buying a home might drain your entire life’s savings, and you might even have to avail a Housing Loan in order to purchase the property of your choice. This is why it becomes all the more important to stay alert while buying a house.
Listed below are 5 common real estate scams and how you can deal with them.
“Book now or prices may increase”
This is the first thing most developers will tell you when going for a site visit. Don’t be fooled by the figures they show you. Why? Because judging by the current real estate market, property prices are falling across the country. If you fall for this deception, you’ll end up booking a house in a haste, thereby straining your finances. You might also incur a potential loss if the value of the property drops.
Solution: First, check the rise and fall of housing rates in the area over the last year. If the capital value of homes in that area is comparatively higher than properties in other localities, find out why. If you don’t find a concrete answer, then it’s advisable to not buy a property in that neighborhood. A rapid increase in value with no reason is an indication that speculators are highly active in that area.
“This property is located close to the proposed metro or airport”
Recently, this has been a popular gimmick used by developers, especially in the NCR. Often, when a project is announced close to a particular area, the capital value of properties located in the vicinity tends to shoot up. In such a case, the developer isn’t selling you the house, they’re selling you the area.
Also, infrastructure development in India, normally, gets delayed significantly. If you book a house in an area with the hope of good connectivity to the city, you might end up living in a locality that’s devoid of any infrastructure. If you’ve booked the house hoping for better investments, you’ll have to hold on to the property before there’s a significant rise in its value. What’s worse, the developer will charge a premium for the unit based on future capital appreciations, which rely on the materialization of the proposed infrastructure.
Solution: The best thing to do is to visit the locality before taking any decision. It’s also wise to check the proposed project’s status on the website of the concerned local municipality or state government. Keep checking this site regularly to track the progress of the project and how it’s going to affect residents living in that area. Only when you’re satisfied with the location of the house and the progress of the infrastructure, buy it.
“Book now and get free gifts”
With empty houses piling up, developers will try and lure you with freebies instead of lowering the overall price of the property. These gifts could include a car or a club membership. However, if you look closely, you might notice that offers are only given by new or lesser-known developers in the industry. You’ll rarely find an established real estate player offering freebies to sell a house.
Solution: First off, your decision to buy a house should never be influenced by gifts, as most of them are insignificant when compared to the rate of the property. Even if there is an offer you like, analyze its monetary worth before booking the house. What you might not know is that the cost of these ‘freebies’ is sometimes included in the overall price of the house. When you buy a house, it’s far more important to see if it’s worth your money than the gifts that come with it.
“Your dream home will look exactly like this”
It can be really difficult to read blueprints and developers take advantage of this to create sample houses for home buyers. The process is supposed to help potential buyers understand what their home will look like, but the reality is very different. To entice homebuyers, developers will add a number of fantastic amenities in the mock house, but they will not be included in the actual property. They will also create a number of illusions to attract buyers. For example, many developers will make a small apartment look big with small furniture and bright lighting.
Solution: Once you’ve seen the sample house, go and check out the actual property. Make sure you get an idea of the carpet area and the total built-up area because both are different measurements.
“There’s no EMI until possession”
What started in the lull of 2008 and 2009, is still a prevalent scheme, wherein your developer will share your Home Loan EMIs until completion of the project. Developers use this trick to try and make homebuyers believe that buying a house is easy with some ‘initial assistance’. Don’t be fooled by this, as developers will charge you prices that are 8 to 10% higher than the price of other similar properties in the locality.
Solution: EMI sharing can help you in two ways. First, the developer puts more commitment to completing the project as they don’t want to keep paying EMIs. This, in turn, helps you get possession of the house faster.
Second, EMI sharing will increase your cash flow in the initial stages of buying a house. However, before you agree to this, make sure that you read the terms and conditions carefully. Also, use a Home Loan eligibility calculator to check whether you can avail a loan in time to buy your house.
Owning a house is a great achievement and will give you pride. However, be careful while buying a house so that you don’t end up being cheated by the developer. Be wary of the above sale gimmicks while buying a house and invest your finances in the right property.