Realty check

In case you are giving into the positive vibes of 2012 and have decided to invest in a home, these are a few things you need to be on top of

At end of a destructive interest rate cycle that wrecked havoc on property market, the New Year has brought in a ray of hope. If you have given up on the age-old leasing-versus-owning conundrum and finally made a New Year resolution to buy your dream home, 2012 is full of promises. There is a dip, albeit minor, in property rates across the country, while home loan rates are all set to fall from their peaks. On the other, property developers have begun the year on a high note, getting busy with an array of new projects.

So the year marked by prohibitive property prices, sharp rise in home loan rates and overall inflationary pressures has just passed by. Property prices across major cities such as Mumbai, Bangalore, Chennai and NCR have dropped, according to industry experts, by up to 10 per cent. A cursory perusal of property markets across the country brings to the fore enormous hope for house hunters. What is more, the Reserve Bank of India (RBI) has signalled a pause in interest rate hikes. This actually could be the best time to start thinking of buying a home.

To make things easier for you,

FC Build brings to you the dos and don’ts

of house hunting and deal striking, with

the help of experts.

Pocket size

Obviously, the most important factor is your budget. Your budget will determine your location, size and the builder. According to Surinder Chopra, managing director of SCSL Buildwell, the first thing would be to figure out one’s loan eligibility from a housing loan company or a bank. “The best way would be to look at your resources and decide how much you can put in as down payment. That will help you do a back calculation and decide what budget you should have while looking for a home,” says Chopra.

Experts have also been recommending purchasing a house even as average home loan interest rates moved up from 9 per cent to 11.5 per cent in the last 18 months. Their logic is that even if one starts paying high interest rates, because such loans are of long tenures of 15-20 years, there would be cycles when the rates would come down.

Typically, one can only avail a maximum loan of 80 per cent of the property value. You need to pay 20 per cent of the total amount upfront to the developer. Though EMIs are restricted to 40 per cent of one’s salary, they could fluctuate if you have opted for floating rate loans. And, therefore, you have to be pragmatic in deciding what kind of lifestyle you and your family would be comfortable with and can afford to buy and maintain. Making a decision to buy a villa, apartment, individual house, an executive floor or, for that matter, deciding between living in the inner city and a

suburb, all are a lifestyle

decision.

Market research

Chopra segregates potential buyers in two categories — the first category are those who need the residences for their own use and second, those who consider realty sector as an investment option. But both categories should do their groundwork. There is always internet to begin with. With just a few clicks of the mouse, homebuyers can search through hundreds of online listings, view virtual tours and sort through dozens of photographs and aerial shots of neighbourhoods and homes. Om Ahuja, CEO (residential services) of Jones Lang LaSalle India says, “Find out what the prices for a given location were a year ago, what they are now and where they are headed in a year from now. Establish what properties of the same size and configuration with similar facilities and amenities are selling for in the immediate neighbourhood.”

Many decide on the advice of someone they know. But it is always better to do one’s own research while buying a home. Looking at property supplements and trade magazines would be good idea to have an overall view of the market conditions. These will also help you in comparing prices of various properties you are intending to buy. Just remember, by the time you reach your real estate agent's office, you are halfway to home ownership.

Getting the location right

No one will blame you if do not want to invest in the middle of nowhere. But, as Chopra points out, with demand for housing in the urban areas has been growing more or less on geometrical progression, staying inside the city may not be an affordable option. True, one always wants a place near work, near the kids’ school, shopping centre and other conveniences. Perhaps, finding out what’s going to come up in the area in future and to what extent things have been planned out could be a good compromise. “The location is a matter of personal choice and convenience, and also a function of one’s budget. Both have to match for the right location to emerge,” Ahuja concludes.

Amenities

You get the property brochure and you get to see the sample flat. There’s a difference between the two. According to Chopra, sample flats are based on project developer’s imaginations as to what you can do with the flat, if you buy. The sample flat represents the artistic presentations of living and other spaces depending on the ability of the interior designer. But the buyer should look for the airiness, availability of sunlight, the quality of visible material used in floors, windows, doors, the fittings in bathroom and kitchen. The placement of water facility, garbage disposal, storage provided, quality of electrical; size and speed of elevators in case of high-rise and movement area outside your flat —all have to be considered carefully.

Any alteration would mean money and time. You should talk to a professional to understand what the finishes in the specification list mean and look like. According to Ahuja, it is important to establish how much the builder is charging for common areas over and above the carpet area, where and how parking is allotted and also how much space is left open. For those who believe in vastu or feng shui, the orientation of different flats within the project can also be identified from layout plans.

Background check

Once you have zeroed in on a project, it is important to look at the track record of the builder. Finding out about the builder’s last few projects would be the best way to judge. Background check of builders is the most difficult thing to do, says Chopra. More than market rumours, information from media, bank approvals and the possibility of monitoring should be trusted. The customer can visit the office of the builder and also can talk to him directly. They can check the financial strength and the background of the people involved in the project from market sources, suppliers and infrastructure at the site.

Consulting a reputed and unbiased property advisory firm and checking internet, paying particular attention to blogs that make reference to the builder and his projects, would also be helpful, adds Ahuja.

2012 goodies

RK Arora, chairman and managing director of Supertech says, “We are optimistic about 2012 as we foresee a lot of demand, be it in the residential or commercial segment.” Also expecting good prospects for the real estate industry in 2012 is Snehdeep Aggarwal, founder-chairman of Bhartiya Group. “If there is a right product, there will be demand for it. Interest rates will not be a deterrent for homebuyers,” says Aggarwal. Ashwani Prakash, executive director of Paramount Group adds that 2012 seems to have started on a right note, providing relief to the industry. The market, according to him, is settling down and customers are out again to fulfil their residential requirements.

While 2011 will be remembered as the year that saw interest rate hikes to 13 per cent on home loans in 12 months, 2012 seems to have ushered in a lot of optimism in the market.

Source: http://www.mydigitalfc.com/real-estate/realty-check-374