Buying a home is one of the biggest investments individuals can make, and therefore it’s best to avoid any hitches that can slow the process down. This is why it is prudent to research properly before purchasing real estate, as one of the ways of safeguarding your money. Housing projects follow strict timeliness that if considered and followed strictly can help in avoiding losses and upsetting customers.
Currently, based on PropEquity’s latest report, about 44 cities still have nearly 2,000 housing projects of more than 500,000 units under construction that have been launched but left in suspension. These causes include the real estate developer’s inability to manage their monies prudently, and or lack adequate and appropriate skills in executing projects. This has put many home-buying clients on the edge especially because they are unable to recuperate the initial cash they put down or they never receive possession of the dream homes that they paid for.
The fact remains that property prices are still on the increase while the signs of a slowdown on the demand side are already visible; it became apparent that there is the likelihood of more project delays in store. Accordingly, when buying homes, the experts agree that homebuyers should always proceed with a lot of care and research when identifying a reliable real estate developer.
This makes due diligence a very important aspect to be considered in the real estate business.
Historically people believed that real estate can be a very profitable investment. But Certified Financial Planner Lt Col (Retd) Rochak Bakshi, Founder and CEO of True North Financial Services, has words of advice. He says, “Everyone believes real estate is profitable because this form of investment is illiquid and most investors don’t sell their properties for several years, but if one calculates the long-term average real returns on real estate are quite low. ”
Bakshi opines that it may not be possible to buy properties for income generation only. But when a homebuyer opts to go ahead and make the purchase it is important that one conducts his/her research well to protect their investment.
Lenders often bear significant risks and it is often beyond the abilities of homebuyers to assess the credibility of the developers, including their operating and financial capabilities. Excluding RERA, there is not much that can be done to guarantee the developer’s integrity. According to Rao, the buyers are normally sandwiched between the developers who do not abide by the law as well as the numerous paperwork that is required of them, hence they remain at risk.
Though recently the government has introduced a rule known as RERA (Real Estate Regulatory Authority) there is still a long way to go. Lack of compliance involving developers who have not complied with RERA and enforcement issues remain the main issue.
The barrier of non-compliance however persists, a lawyer who represented homebuyers in the insolvency proceedings of Jaypee Infratech Ltd (JIL) said in an interview, anonymously. Civil courts, and RER regulators importantly have ruled in favor of homebuyers in consumer cases but developers completely ignore these rules. The fact that RERA authorities do not have enforcement powers within the system is a problem,” the lawyer underscored.
Niche Services for Homebuyers
Nevertheless, homebuyers do have some basic ways to perform due diligence. Sometimes the best approach is to engage well-known consultants who will guide you in assessing market trends and specific developers.
Shiwang Suraj, Founder and Director of property consulting firm InfraMantra said, “It is always beneficial for homebuyers to approach consultants since these consultants are well acquainted with the strengths of the developer, their financials, and their performance history. ”
Hence, PropEquity has injected a special service known as ‘PropAlert’ to assist homebuyers in tracking the actual progress of their under-construction properties. This one is offered on a subscription basis, and it offers updates and live information to the customers to maintain the transparency of the services provided and to safeguard the clients’ investments.
About this service, Samir Jasuja, Founder and CEO of PropEquity said, “PropAlert will bring a new revolution in home buying/buying of properties that will give timely information along with real-time alert to customers This service will not only be useful to Indian customers or home buyers but also to NRIs who can track their properties sitting in any corner of the world by a click only.
Conclusion
To prevent postponements and protect their investments, house buyers need to conduct careful groundwork in property selection. They should ascertain the developer’s past performance, ensure its financial viability, and check if it is in line with the law. Furthermore, hiring professional property advisors of good repute or subscribing to services such as PropAlert can give them essential information and updates while they are still in the process of purchasing. These steps would also help to minimize the risk of the projects being delayed hence providing a better buying experience for house buyers.
