After the failed predictions over the past couple of years about a fall in property prices, you are more likely to witness the prophesied Second Coming before the promised correction. So what should cash-conscious buyers do? Wait endlessly in the hope that realty prices falter or take the bait of glossy schemes offered by developers? While most such offers for new houses seem tempting, you won't derive any real benefit.
Fortunately, there is a third option: cheaper flats in the resale market. No, these aren't old, mouldy apartments in decades-old projects. Quite a few of these houses have not even been lived in, but you can still get them at a discount to similar houses within the same project or vicinity. If you're wondering why resale flats are cheaper than the new ones being offered by the developer, it can be due to various reasons. One of them is that these houses have been snapped up by buyers and investors during the pre-launch phase with the intention of selling them after about three years to earn a profit. At this stage, they were only required to make the down payment.
"Many investors book a property at the initial stage just to make a small profit. If they want to make a quick exit, they will price it cheaper than the one offered by the developer, for a faster sale," says Yashwant Dalal, president of the Estate Agents Association of India, an apex body of real estate developers.
Another reason is that a lot of investors who book flats during soft launches are offered heavy discounts by builders. "To get funding before construction commences, builders offer investors at least a 20% discount to the prevailing market rate," adds Dalal.
So, even if such investors sell the flats at a price lower than the one offered by the construction company, they make a hefty profit. While individual buyers readily make the down payment, a few find out that their finances are strained when they have to start paying the home loan EMIs after the construction is complete, especially if they are also paying a rent. In some cases, they find another project that is more to their liking. Obviously, in either situation, the only option is for them to sell the current house as quickly as possible to repay the home loan, even if it means earning a smaller profit than the one they had hoped for.
Original source: economictimes.indiatimes.com
Fortunately, there is a third option: cheaper flats in the resale market. No, these aren't old, mouldy apartments in decades-old projects. Quite a few of these houses have not even been lived in, but you can still get them at a discount to similar houses within the same project or vicinity. If you're wondering why resale flats are cheaper than the new ones being offered by the developer, it can be due to various reasons. One of them is that these houses have been snapped up by buyers and investors during the pre-launch phase with the intention of selling them after about three years to earn a profit. At this stage, they were only required to make the down payment.
"Many investors book a property at the initial stage just to make a small profit. If they want to make a quick exit, they will price it cheaper than the one offered by the developer, for a faster sale," says Yashwant Dalal, president of the Estate Agents Association of India, an apex body of real estate developers.
Another reason is that a lot of investors who book flats during soft launches are offered heavy discounts by builders. "To get funding before construction commences, builders offer investors at least a 20% discount to the prevailing market rate," adds Dalal.
So, even if such investors sell the flats at a price lower than the one offered by the construction company, they make a hefty profit. While individual buyers readily make the down payment, a few find out that their finances are strained when they have to start paying the home loan EMIs after the construction is complete, especially if they are also paying a rent. In some cases, they find another project that is more to their liking. Obviously, in either situation, the only option is for them to sell the current house as quickly as possible to repay the home loan, even if it means earning a smaller profit than the one they had hoped for.
Original source: economictimes.indiatimes.com
