What is the best stage to buy your dream home?

You would definitely agree that investing in a real estate property is one of the best ways to make money. But, finding a lucrative property is also a daunting task altogether. Several weeks and many times even months pass by before you could zero down on something. And when you eventually reach the builder to buy that dream unit, he simply says that the price has increased.

Have you ever wondered why price escalates in just a span of a couple of weeks.

The answer to it is quite simple; prices fluctuate with stages of construction. A real estate project has a lifecycle with independent stages, risks and opportunities of its own. To make a good deal, you need to understand them well as they influence the future proposition of your purchase.

Prelaunch/Soft Launch: This stage is quite similar to an early bird offer that you usually find with other freshly launched items and hence is priced much lower than the prevailing market rate( 5-25 percent cut). In this stage the developer tries to generate an initial capital for the project and attempts to gauge the market's reaction to it.

There is a catch too. As the project is in its nascent stage there are bleak chances of the builder possessing necessary approvals. He understands that the early buyers are sharing the risks with him so he tries to compensate it by offering discounts. If you are hard on cash than prelaunches might not be a good idea for you as financial institutions generally don't give loans in this stage. Also at this stage builder will only take your unit preference but will not guarantee you a particular unit.

Launch( Construction Not Started): When you see a project getting advertised commercially, it indicates the official launch of the project. Here the price is generally higher than the prelaunch with all approvals in place. Typically developers raise their prices on the basis of varying demand and sales. Let us say if the builder closes around 20-30 percent of the units in the Pre Launch phase then he would increase the prices by Rs 200 – 500 per sq ft. If you are a learned real estate investor than you can make quick bucks by selling the previously bought prelaunch unit at this stage.

As a buyer this is less risky stage as the approvals are with the builder and you can choose your unit and get it allotted on booking.

Under-construction: At this stage developer has started construction of the project and if you visit the site you can see the structure getting ready. Now you will have a better idea of which unit to buy and what view you will get from the tower of your choice. The risks at this stage reduces considerably as you can guage the construction quality and speed to assess when the project will complete. At the same time you will have lesser choice of units as well as pay higher price for the same unit.

Under-construction( Finishing)- This is the stage when the real estate project gets its last touchup. What I mean here is that, the structure is ready and final touches are being given to project i.e.. - painting, polishing of the floors, sanitary fittings, retouching the interiors etc. For an end user this the best time to buy as you can now accurately assess the delivery timeline of the project and the prices still have some potential to appreciate post handover of units.

Final Handover- This is the last stage of construction where the project is all geared up and ready. At this stage you will mostly be buying resale units as builder either has already sold out all units or does not have good units to sell. Though risk at this stage is negligible but price is considerably higher.

Got hold of the the right stage for you to buy? Please share your comments below.