Buying Property From First-Time Developers Could Actually Be A Good Idea
Buying a property is an important decision for each and every one of us as it entails a major chunk of our savings and to ensure that our money is safe we generally go for developers that come with a good track record. But, is this correct? Industry experts say that purchasing from a developer that has no prior experience in the industry could be as risk free as buying from an established one. The icing on the cake is that it could actually be better.
Difficult to believe? Well, let's break it down:
First-time developer has only a single project on his mind
Yes! This is a very significant plus point that comes with new builders. As they have only a single project in their kitty, they would generally do everything possible (from getting necessary clearances to legal documentation) to make it a success. Moreover, his future projects depend upon word of mouth from his existing buyers, so poor delivery in his very first project won't lead him anywhere.
Won't compromise on quality
These builders have a brand name to create, so there are lesser chances of using inferior construction material and fixtures.
Would complete the project in time
For him, this is the only project with all his finances put into and if he delays it then it would lead to a cash crunch at his end. A genuine first-time developer would obviously avoid it.
These developers would do anything to entice the audience and here it calls for you to get a good discount on the pricing. Industry experts say that these builders generally cut down on their own profits to make a mark in the industry.
Still find it risky? Here is a checklist that would help you gain confidence about a first-time real estate developer:
- Background check- Do check the profile of the developers especially if the project is under construction or a prelaunch. Otherwise just go for completed or near completion project.
- Bank funding- If the project is funded by a bank then it would cut your risks as the builder would never face a liquidity crunch in this case.
- Document check- Before saying a final yes, do check the title deed and other necessary documents (government approvals, property tax receipts, completion certificate etc.) to ensure that the land occupied by the builder is legal. You can get these documents from the registrar's office or can ask the builder himself.
- Get the purchase agreement tweaked- You can always ask the first time builder to modify the purchase agreement to make it comparatively risk-free for you. For example you can get the escalation clause removed which would abstain him from increasing the price later. In addition to this you can also ask the builder to specify the completion date of the project (if he doesn't complete then he would pay you a decent penalty).
- Go for Possession linked Plans (PLP) - If you are going for a home loan to fund the property then go for a Possession Linked Plans (especially if the construction is in its initial phase). This would keep your investment exposure small even if the project by first time developer gets delayed.
So, happy house hunting for now!!! Let us know if you like our tips.