Pre-launch Projects: Are Buyers Still Ready To Take The Risk?

At the best of times, buying a home has always been a costly process. For a service class, homebuying with all the cash is a difficult process as having so much liquidity is not possible until or unless one is selling off the previous unit. For others, the only option is to go for a home loan. A home loan sets the stage for anything between 10-20 years of debt and paying the EMIs on a home loan can take up a significant part of the monthly income. Down payment too can consume a normal middle-class family's entire savings. Thus, it becomes necessary for buyers to look for every possible angle to lessen the monetary burden of purchasing a house.

There is no doubt that buyers can save up to 30 per cent of the property price by investing at the pre-launch stage of a project. This is the most popular method used by buyers to invest their money in buying property. But at the same time, this mode of property investment is seen as full of risk, as the buyer is investing his hard-earned money in a product that has yet to be launched. And those who are averse to any kind of risk, prefer to invest only in ready-to-move-in flats/apartments. 

Also read: Should You Invest In Pre-launch Properties?

Risk factor

However, since the last few years, we have experienced a lot of illegally constructed buildings being recognised and destroyed by local authorities, even the apparently 'risk-free' route is turning terrible for homebuyers. But the entire scenario suggests that the risk-factor lies less in the stages of construction. It is who is constructing matters most because the money is ultimately going into their hands. 

Happy buyer

Before the entire construction is completed, a buyer can only speculate the end result. But if you speak to people who have invested in their homes at the pre-launch stage in the past, they are happy inhabitants of completed homes today. Ripunjoy Sarma, 35, bought a 3BHK apartment at Cherry County project, developed by ABA Corp, in the Techzone 4, Greater Noida, is a happy man today. He booked the flat in 2011 and was delivered by early 2016. Although he exposed himself to the risk, at the same time he had shown his confidence in the developer. In a nutshell, buyers feel safe and secure to invest in an under-construction project by a reputed developer, because they know that they will get the house that they paid for - in time, and with no unpleasant surprises.

Factors to consider

The first and foremost thing to consider for a pre-launch project is to see the developer's reputation and how it stands in the market. If buyers need to research, then there are many names which can infuse confidence without buyers having to delve further. These developers maintain a clean track record and can be trusted, based on their project records.  

Since the very beginning, buyers need to establish whether the developer has been able to deliver his project on the scheduled time or not and whether there have been instances of changes in the project designs and specifications in the interim. Maintaining the project record will benefit the buyer in the long run. Homebuyers should be able to expect to get what they had originally signed up for. And because of this reason, buyers should always stick to reputed, established real estate developers.

If the buyer has already picked up an established developer, still he needs ask the right questions and be aware of certain facts. Knowing the actual completion and handover timelines is necessary for buyers. An acceptable window would be two to three years or at a maximum of four years from the time of property investment. 

Also read: Provisions To Protect Home Buyers From Misleading Ads

Trusting a new developer who is yet to establish his credentials in the real estate market can turn out to be risky. Buyers should under no circumstances rely solely on the bank to do the necessary due diligence. They must establish the legal bonafides of the project at every level.