Buy cheaper flats in a resale

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

Luxury Homes & Real Estate

"Luxury real estate usually does well during recession or sluggish environment as we are seeing even now. In a highly uncertain environment , the super-rich clientele prefers to put their money into these hard assets than any intangible service or instruments ," says Sanjay Dutt, executive managing director a South Asia, Cushman & Wakefield.

Sales of luxury homes across big cities such as Mumbai, Bangalore, Gurgaon, Chennai and Pune have been moving up along with 6-23 % year-on-year price rise in this segment, reaffirming the upward movement. Mumbai, for instance, sold 789 units against 652 new launches; Gurgaon sold 792 compared with new launches of 726 units, while Chennai saw sales overtaking new launches by 17%.

Although Bangalore and Pune have seen sales numbers lower than new launches, prices here too have risen by around 10% from a year ago. "Real estate continues to be the most preferred asset class with rich Indians due to higher returns. However, clients are only investing with reputed builders, who can deliver on time," says Rajesh Iyer, head a investments and family office, Kotak Wealth Management.

 This was the picture at a time when other real estate segments have remained sluggish for most part of the year forcing developers to offer discounts and other incentives to attract buyers. "Luxury home is the reflection of social status and lifestyle for the rich, which they can flaunt to friends and family. While some park money in buying luxury homes for mere investment, others are upgrading to get like-minded neighbor’s," says BM Poonacha, head aland and special projects at LJ Hooker Project Marketing India.

Mumbai, the country's most expensive property market, registered sales numbers which were more than supply figures, thereby reducing the existing inventory in this segment. Although launches here in 2012 had almost halved over 2011 due to absence of civic approvals , sales numbers moving above supply along with 23% rise in prices, indicate the response. Omkar Realtors & Developers, that launched four projects, the most by any developer in this segment in the past year, is preparing to launch super-premium apartments at Worli in central Mumbai which will come with a price tag upwards of Rs 10 crore. High-end apartments priced above Rs 3-30 crore coming up across Bangalore, Chennai and Gurgaon have become hot spots for investment for the A-list.
Original source:http://articles.economictimes.indiatimes.com

Tips to buy a resale property

DOCUMENTATION AND PROCEDURES:

All the documents that are applicable for a primary residential property sale would be required for a clear resale flat transaction, as well. The seller should be able to produce all original documents.

The buyer should establish the existence of a proper Society. The original sales deed and the Society share certificate are most important, since the transaction cannot proceed without them. Also, the buyer should bear in mind that in the case of a resale property , proper transfer and re-registration is necessary. The documents required for registration of residential flats, apart from the sale deed, include a letter from the society that reflects details such as the number of floors in the building, the construction year, the apartment's built-up area and the number of lifts in the building.

Also required is an assessment bill to the Society from the municipality in question, a NOC from the Collector if the building exists on Collector's land, a copy of the property card, and a receipt for the payment of registration fees. In addition, the buyer of a resale flat should ask for a clear ownership history if the residential property has changed hands before.
The local registrar will establish the authenticity of these documents. If one is buying the property via a home loan, the bank will run a routine due diligence .

ARE RESALE PROPERTIES ALWAYS CHEAPER?

Not necessarily. In the larger cities, new residential property supply is scarce or non-existent in many central locations. In such areas, there would not be a question of discounts on resale properties. Discounts are more prevalent in areas where the market is more competitive. That said, resale properties are sold either by the primary owners or by investors. As such, there is a higher possibility of flexibility in payment terms.

POINTS TO NOTE:

There are certain challenges that a buyer of a resale flat may face. This could include lack of proper chain of documentation, especially in cases where the property has changed hands more than a couple of times in the past. If the property is over 18-20 years old, it is possible that it was never formally registered in the first place. Registering it at the current point in time would put the onus of paying the stamp duty in arrears on the buyer.

There may also be additional expenses for repairs to masonry, plumbing , electrical wiring and fittings. Obtaining a home loan for a property which is anywhere close to 50 years of age can also be a challenge.

Finally, one should bear in mind that the Indian residential property market is in a constant state of evolution. One is unlikely to find the facilities and amenities that are available in the newer projects on the market in an older building.
Original source: articles.economictimes.indiatimes.com