Tips for home buying in secondary market
At Makaan.com, our endeavor is to empower people with information & tools that will help them in property search process. Given below are some tips that you should keep in mind while buying a property in secondary market
What are the advantages of buying a house from the secondary market? Are there any disadvantages of buying a house from the secondary market, especially considering the fact that most options available in the primary market in the present day would be completed only after say in the next 12-15 months?
Secondary market purchases are akin to purchasing a stock.
- In a falling market, secondary market purchase are at a discount over primary like in case of Greater Noida (NCR) , White Field (Bangalore)
- You are better informed regarding the health of the project and infrastructure provided by the developer. In Primary market purchases these things remain grey till possession.
- In a market where funding to real estate developer is tight – “one in had is always better than two in the bush”. A secondary market purchase is real and quantifiable. Primary purchases are subject to delays and defaults.
Secondary market offers options far in excess of primary market (where supply is limited).
What are the things one needs to consider before starting the search for a house in the secondary market, especially with regards to arriving at a budget that one can spare to buy a house?
Arriving at a budget
- There are tools available to calculate your affordability / budget. These tools are built around your EMI servicing capability & tenure of loan. Logon to www.makaanIQ.com or any other good website for the same.
As a thumb rule if your CTC is “x” p.a; you should be able to purchase a house with is 4x-5x (depending on other liabilities that you may have to service). It is also a function of your age; the younger the age higher is the multiplier. So for a person in his early 20s and earning 7 lac p.a; a comfortable budget could be around 35 lac.
Which are the channels through which an individual can take help from to buy a property from the secondary market? Is taking the help of realty portals an effective way to start the home search?
- Property websites like www.Makaan.com are easy starting point especially as there is no charge to the home buyer. Do an online research.
- There are Online Groups on Google, Yahoo and other popular websites. One should join a group that is the closest to your requirement. Joining these groups brings you up to speed with the latest happening pertaining to that property/project. It also provides a collective bargaining / negotiating power that you miss as an individual.
- Home buyer should also rely on property intelligence and reports that describe the trend in the property market. Check sites like www.MakaanIQ.com for details.
- You should also identify 3-4 brokers / agents who are active in your identified area. Although they will charge a free but that is a small component of overall asset value and is worth the amount.
Most importantly discuss with people who are already staying that condominium, apartment, builder floor etc and get an overall idea of the pros and cons. They will be your best guide.
What are the things that one should look at while visiting the short listed properties?
- If there are multiple decision makers, all should take out time to visit the short listed properties. This may not be always possible but is very critical.
- Be obsevant – avod giving exremely positive or negative feedback to the owner or broker. This weakens your negotiation power.
- Do not engage with more than 3-4 brokers. Each of them will try to attract your attention in different directions. This leads to information overload and confusion, so avoid it.
- Prefer brokers with direct access to the landlord. Many a times, there is a long chain of brokers leading to the landlord. Avoid such dealings.
- Do your homework and have a fix on your property specification (no of bedrooms, area, locality preference and budget). Try and understate your budget by 10-15%, as brokers will always show availability that is slightly beyond your budget.
Do not change your specifications under pressure. This may put your budget off. So avoid short term gain for long term pain.
Does it make sense for a person to take the help of a property valuator while purchasing a property in secondary market? And why?
- Property buying decision is among the biggest decision that an Indian takes in his life. If you are unable to get a fair value thru references, websites and friends; it is always beneficial to engage services of a property valuator. This is essential to eliminate any risk that may be there in any high value transaction of this nature.
If you are taking a home loan then this valuation will also be carried by the home loan provider.
What are the factors one should be careful of while negotiating price with the seller?
- Do not negotiate directly, involve an intermediary. This practice has always worked for long term, high value purchases.
- Do not show eagerness to conclude the deal.
- Do not boast about your budget (even if you are comfortable)
- Try and find (thru secondary sources) how keen / desperate the seller is?
- Always try and table your strong points.