Buyers may be tempted to fall victim to advertisements offering great deals on under-construction projects or real estate agents offering them land that will be converted to non-agricultural use in the future. Chances are that all of them might be gimmicks.
Here are a few tricks that developers and real estate agents usually play on unsuspecting homebuyers. So beware of them and stay safe.
Altering Architectural Plans
Builders often insert a clause into the agreement that they can alter the layout plan of the house. Therefore, the actual apartment may differ significantly from the sample that you were shown.
As a buyer, you should not fall for such marketing gimmicks and instead always rely on architectural plans approved by the municipal corporation.
One of the most common gimmicks is to advertise that you only pay a certain percentage now and nothing until you receive the property. These offers usually have a time limit and a price higher than the construction-linked plans. In a construction-linked plan (CLP), a bank disburses funds periodically to the builder on behalf of the homebuyer until possession takes place.
For the gimmick we describe, the builder-buyer agreement may state that possession will be handed over by April 2024, and the buyer may be required to begin paying equated monthly instalment (EMI) from that point onwards. But note that real estate regulatory authority (RERA) allows the project to be delayed beyond its stated deadline, and a builder can push the completion date after justifying the delay.
So, while the date may be extended by one year, the developer might ask to pay for the property according to date in the builder-buyer agreement. If you do not begin paying by the stated date, you may incur a penalty. You should also check how much refund you will receive if possession is delayed or if you wish to terminate the contract.
Agents Can Fake Land Convertibility
Agents will tell you that they have applied for the land to be converted from agricultural to residential within one or two years. But, it may take 10-20 years, or the land might never be converted.
Investing in such plots can result in investors paying huge amounts for land they can use.
Promising Low Interest Rates
Buyers are also lured by zero interest rates or very minimal rates on home loans. Most builders offer these loans for a limited time to the first few buyers and this clause will be written in the fine print. Interest for the first few months, will also be included in the property price.
Builders may promise to pay EMIs, but the contract is in your name, and defaults will have consequences for you, including a low Cibil score. Make sure any such promises are mentioned in the written agreement.
It is always better to get a bank loan. Banks would have conducted primary investigations on the project.
Further, if all major lenders approve the project, you can be more confident. But buyers should do their homework, too.
Freebies Are Not Really Free
Verify the freebies, such as cars, complimentary club membership and zero stamp duty on offer. They typically contribute to a high purchase price. Lights, doorbell cameras, and other accessories are promised free, but quality and quantity are rarely discussed.
Do Thorough Research on Promises
Real estate agents may tell you that in the near future, a number of development projects are expected to take place in the area, including a peripheral road running through the area, as well as a shopping mall. However, many of these may not be true.
Frauds With Parking Lots
Free parking is another lure. Open parking areas are legally common for everyone and cannot be assigned to individuals by developers. Garages that can be sold separately have specific criteria.
Defining the height, but then reducing the ceiling height of a flat to construct more flats is another fraud many developers usually play. As such, pay close attention to the number of flats specified in the buyer agreement, as more flats mean more open space will be used for parking, and you will get less recreational space.