In India it is common to book an apartment with builders during the construction phase as it gives enough time to arrange finances. However, many buyers are not willing to go through hassles like delays in completion, builders delaying projects, legal issues etc. Hence, people often prefer to buy an existing property from existing owners. However, when you are buying a resale property, there are several checks and balances that you need to run. Here is quick look at how you need to prepare yourself when buying a resale property.
What to look at when buying an existing property?
If you are thinking of buying a resale property, you should keep the following factors in mind and conduct your due diligence accordingly.
- The age of the property is something you need to give emphasis on. Normally, properties that are over 50 years old have serious structural issues. In such cases, the costs of renovation may also be quite steep. It is best to ensure that the property in question is not more than 15-20 years old at the most. The newer, the better it is for you in the long run, since it is a long term investment.
- Check for existing mortgages, if any. The current owner may have pledged the existing property to get a loan from a bank or a business loan. You need a clean title so don’t even talk to the seller if there are existing liens on the property. Cross check with the registrar, since all legal mortgages have to be registered with the registrar.
- Check costs pertaining to transfer fees and utility ownership charges. When you buy a property, you pay transfer fee and stamp registration charges. These can be fairly steep. In addition, you also need to pay to transfer the electricity, water, and gas connections to your name. Factor all these into your cost calculations.
- The general practice is that buying a resale property is normally done through a broker or an estate agent. It must ideally be done through a RERA registered agent only. It is the property consultant or estate agent who shows you the various resale property available according to your choice. These estate agents charge a certain fixed percentage of the cost of the apartment as their brokerage and it could be anywhere between 0.5% and 1.0%, and even higher if the agent is offering additional advisory services.
- Factor in other costs like what you need to pay for repairs and renovation. This includes property maintenance, costs in terms of painting, civil works etc. All these can add up to quite a bit, even before you enter your new apartment. In addition, there are other relevant charges like society membership charges, maintenance charges, club fees, common area charges, parking charges etc. All these costs add up.
- One more thing you need to check when buying a resale property, is the gap between the market value of the property and the value assessed by the official valuer of the bank. The bank will give you loan based on the assessment of their property valuer. If the price paid for the resale property is much higher, you must shell out more.
These are broadly what you need to look when you are buying a resale property. However, it also depends on where and whom you are buying this property from.
Unique document checks for unique selling points
Based on who you are buying the resale property from, you need to run some additional checks. These are over and above the regular checks.
- In case you are buying from a cooperative society, check out for the payment that you need to make to the society, ensuring that there are no society outstanding or dues from the existing owner, and ensure NOC from cooperative society.
- In case you are buying the property from an Apartment Owners Association, ensure there are no discords in the association and the functioning is smooth over the years. Ensure that the association provisions are adhered to and relevant charges and fees are paid.
- If you are buying the property from a development authority settlement, check for the age of construction, illegal constructions if any and whether there are resale restrictions.
- Lastly, if you are buying a private property from an individual, then you must check for total cost, age, clear title, link documents and no-encumbrance certificate.
Remember, there are an elaborate set of rules and regulations when buying a resale property. It is best to consult an expert or take the help of your bank to do the due diligence for the resale property. It can make your job a lot simpler!