Do Your Homework before Buying Property Online
December 19th, 2016
The internet phenomenon is resulting into shifting of buyers from offline to online purchasing and this has started happening in the real estate space as well. This helps both buyers and sellers and is largely being driven by the tech-savvy younger generation. In the recent past, the sector saw some real estate companies selling their houses online with some success. The Internet offers a wealth of relevant information that buyers can access conveniently, especially the non-resident Indians. Unlike other businesses, online buying of luxury real estate products, being a big ticket item is still at a very nascent stage but indications are there that it will grow in the future.
Internet has made it a convenient buying experience for customers. Online shopping has its advantages, but when it comes to buying a property online, it is not as easy as it sounds. It isn’t like buying a mobile phone online; there are many factors that should be considered before committing large amount of money. Properties are always advertised well as an investment that is secure, safe and attractive. But buyers have to verify such claims, before property investment.
There has been a spate of unpleasant incidents across the country where buyers have lost their money, which they had committed with little or no research. Therefore, it is critical to do your homework first.
Once a property has been selected, buyer should check all the relevant documents thoroughly. Among all the documents, focus should be on the following –
• The Title deed: Builder must have full right over the property and only a clear title deed confirms a builder’s full ownership. It is a prudent step to take help of a good real estate lawyer for better understanding of documents.
• Legal dues: The land should be free from all legal encumbrances. This can be verified through the Encumbrance certificate.
• Permitted Land Use: The land used for construction should be under ‘land-use’ zone as per the city master plan. It is important to know whether the property falls under residential or commercial zone as per the plan. Heritage-rules and set-back for road widening apply to certain buildings; buyers should know if the property falls under the same.
• Local Approvals: The property land should have been approved by the local development body, without which any construction on the land becomes illegal.
In case of a resale property, the following documents should be in place –
• If the property has been purchased using a bank loan, you will have to get the Release certificate from the bank which will prove that the loan on the property has been paid.
• Property Tax receipts are a good way to check if the previous owner has paid all dues, so no pending bills on the property come to you for payment.
• Sanctioned plan: Sanctioned plans along with commencement certificate for construction must be inspected and verified for under-construction property. You must also ask for the completion certificate post project completion. If the project did not go as per the sanctioned plan, a completion certificate would not be awarded to the developer.
• Income Tax: In case of a resale, you should investigate if there are any on-going proceedings against the seller under the Income Tax Act. If you are buying a property from a non-resident Indian (NRI), it helps to know if TDS has been deducted.
• Sale documentation: The sale documentation should be properly stamped and registered, and in case of a single buyer, the title deed should be obtained from the seller.
Some developers project inflated property sales whereas in real, they sit on unsold inventory. Banks are wary of such builders and do not readily finance such projects. This affects progress of the project. Homebuyers would not find such details online.
A visit to the site / property is a must. It is also critical to have a complete understanding of the layout plan, construction quality and project design. Buyers must see the property to have a first-hand feel and touch of the product quality before taking any decision. They should try to understand the advantages and disadvantages of the location – they should check whether sunlight and good ventilation is there in all the rooms, saleability in that location and try to match their requirements such as built-up area, accommodation and amenities. Since it is a life time investment, buyers should verify all these facts given online after reaching the site it is important to find out all relevant details on the project completed by the developers you are considering. Some builders purchase land under litigation and do not provide sufficient information for buyers to take the right call. It makes sense to go with reputed builders who comply with all legal aspects of construction.
Happy online purchasing!