This Is What Your Builder Is Not Telling You

As a marketing agent, builders try to paint a beautiful picture of their project. However, the picture in reality may be different. As a home buyer, you must weigh the prices of the property that you are buying.

Here are some of the facts you need to check before you make a decision:

• Space is everywhere: Mismatch of promised area is the primary reason for real estate disputes in consumer courts. Most oftenly, the builders mislead the home buyers about the floor space index (FSI) or the buildable area. Even the home buyers given in to this misleading information without any background check. The build-up area includes walls and a few builders also include the common areas like lift, staircases, area occupied by clubhouses and others divided per flat. Rather, a home buyer should ask for the carpet area, which is the functional area of an apartment without the walls. Do not let the builder confuse you and make sure you get measurement done yourself, before inking the agreement.

• Worth of the property: A number of builders give estimated worth of the apartment at a future date. That includes property's value appreciation of 25 per cent or more. It is true that all real estate investments appreciate, but, they take time and also grow at a much slower rate than what is estimated. Study the past experience and value appreciation data of the area and the city before you believe in the numbers the builder puts across. If possible, hire the services of a qualified appraiser to get the actual value of the property and possible appreciation in short as well as long-term. 

• Possession date: Another inaccurate information provided is the promised delivery date of the property, which keeps on changing. The home buyer should remember that the actual date of possession is at least a year or two away from the promised date. So, add this timeline while calculating your loan EMIs and other financial commitments.

• Legal complications: Legal issues are common when it comes to real estate. In most cases, builders go ahead with the construction with limited permissions, and such practices go unnoticed. However, such malpractices can be a huge risk for home buyers who invest in projects. For instance, there has been a case in Worli, where a building was taken down by the Mumbai municipality as the builder did not have the permission to erect extra floors. All the home owners lost their investments, even after a number of protests. Never assume that if the project is under construction, it will have all the required permissions to build it. Always cross-check.

• Future development in the area: Make a right estimate of the livability index of an area before buying an apartment there. Some areas could take about a decade to get all the amenities in place. That would mean living in substandard civic infrastructure, until otherwise.

• Credibility of the developer: Every developer claims to be an established name in the industry, based on the number of projects done. That does mean that there will not be any financial troubles associated with it. Many reputed builders have large debts and hence, face the risk of foreclosure. That might include your building. Make sure that the builder is in the right condition to finish the property that is under construction.

(Katya Naidu has been working as a business journalist for the last nine years, and has covered beats across banking, pharma, healthcare, telecom, technology, power, infrastructure, shipping and commodities)