The A to Z of the Home Buying Process

Buying a home can be a rather long and drawn out process, no matter where in the world. It is an especially daunting task if you are a first-time buyer. There are a number of hurdles that may lie in your path. These include title defects, inexperienced brokers, property conditions, financing, etc. That is why it is very important that you deal with the entire procedure systematically to reduce any accompanying hassles.

Finding a realtor

A good realtor can assist you in evaluating and locating good properties on the market. They can guide you through the entire process, providing useful resources and market information. However, in India, real estate firms are aplenty, and most of them aren’t even institutionalized. It is essential that you, as a buyer, move with caution while choosing your realtor. You need a broker who is objective, informative, experienced, and transparent in his dealings.

Budgeting your purchase

People do not realize that buying a home includes a number of charges besides the basic purchase price. The charges that one needs to account for, while budgeting, include:

• Registration fees
• Stamp duty
• Legal fees
• Renovation/improvement charges
• Furnishing costs
• House tax/property tax payments (in the future)
• Maintenance fees
• Brokerage fees
• Society transfer charges

If you choose to buy a newly constructed property, it might be possible that you do not know the gross price of the property. Builders tend to state the base price and leave it at that. However, the gross price is typically a sum of a number of charges, like:

• Base price
• External development charges (EDC)
• Infrastructure development charges (IDC)
• Preferential location charges (PLC)
• Car parking charges
• Electricity and water connection charges
• Maintenance charges
• Club membership (if applicable)
• Insurance policies
• Service tax and any other applicable taxes

Finding the right property

There are a number of factors that a homebuyer may consider before buying a property. The most common of these are:

• Apartment vs. Independent House: Besides the common advantages/disadvantages related to privacy and independence, some factors that may influence this decision are the maintenance costs, responsibilities, amenities, etc.
• Old vs. New construction: In new constructions, the difference between the built-up area and the carpet area can be rather substantial, ending up with the buyer paying a rather large amount for a small apartment. In older constructions, this is not that much of an issue. However, newer buildings may have better maintenance and amenities to offer.
• Location: Location can make a huge difference in the price of a property.

Some points to remember

Before you lock in on a property, there are a few things that you would do well to keep in mind.

• Property title is free from defects
• The property does not have any encumbrances
• Property is not under litigation
• Is not inherited the property with a probated will
• Checking the utilities
• Considering the Property Tax
• Availability of all required No Objection Certificates (NOCs)
• Assessment of value

The Legal Aspect

When you have found the right property to buy, the next step is dealing with a number of legal intricacies to complete the deal. It is advisable to instruct an experienced and local lawyer for this part. Buying property entails a lot of paperwork, so once the selling price has been decided upon, the rest of the buying process should be handled by your lawyer.

Properties by Developers

When buying an unconstructed property, the reliability and reputation of the developer is the most important factor that one should consider. There are a few documents that a buyer should check before investing in a developer’s project, this search is performed by the buyer’s lawyer and is referred to as ‘due diligence’. These are:

• The Title
• Encumbrances
• Property Tax Receipts
• Litigation
• Probated Will
• Approved building plan
• Documents pertaining to the ownership of the land
• Whether the land is registered as agricultural land
• Building bye-laws of the area
• Specifications in the “agreement to sell” and the plans of construction
• If proper NOCs (No Objection Certificate) has been obtained
• Once the buyer’s agreement is in place, you will need to pay about 10% of the sales price in the form of a deposit. The rest of the amount can be paid via a number of plans, including:
• Down Payment Plan
• Time Linked Payment Plan
• Flexi Plan

Backing Out

The buyer has the option to back out of a property deal if his lawyer discovers any of the following conditions:

• Title defect
• Unpaid property tax (if it isn’t remedied)
• Material structural defects
• Zoning or land use related issues, like:
• Construction of unsanctioned floors
• Unsanctioned construction
• Unsanctioned construction plan
• Undisclosed encumbrances on the property
• No probated will

Once all litigation and deals have been completed by both the seller and the buyer, the buyer must consider safeguarding their new property. This can include home insurance, security measures (including changing the locks), etc.

With a systematic approach, buying a new home does not have to be as hard as it seems.

**To understand exactly about the policy coverage, exclusions etc read the Policy Wordings carefully.**