Biggest dilemma while purchasing a flat is whether to buy a Resale Flat or Under Construction Flat. These days a new trend has started, wherein most of the buyers prefer purchasing under construction flats…The reason for this shift is, Perception of buying under construction flat for cheap (Which is actually not the case)…Customer think that price of the property will not fall below Pre-Launch price but fact of the matter is Price is decided by Market Forces based on Supply & Demand…It does not make sense at all if the buyer is purchasing under construction flat by availing Home Loan…Reason being, the buyer never takes into account the interest component/Pre EMI he is going to pay…The total cost of under construction flat, purchased on Home Loan works out to be much higher compared to cost of resale flat…I would like to quote e.g. of one of the very Big Apartment Complex in Electronic City, the builder is finding it very difficult to clear the inventory but on papers he is increasing the rates by 75 psf every month becoz he can’t annoy the buyers who bought it directly from the builder. But the reality is, if u search on property sites, u will find sellers who are willing to sell at much lower rate then the rate quoted by builder…The difference is as high as 15 Lac for a 80 Lac Flat (As per Rate Quoted by Builder)…Besides this another big catch is that for under construction flats, rates quoted are base rates i.e. excluding Service Tax, VAT, Parking, Sinking Fund, other deposits etc. You can easily assume these overhead expenses @ 10 Lac for 1500 Sqft 3 BHK flat whereas in resale flat price quoted is all inclusive…I have not included Registration and Stamp Duty for both the case. Also in case of resale flat all the deposits paid can be transferred in ur name…The advantage of this that in resale flat, u have fair idea on final cost of flat whereas in under construction flat, it is quite subjective.
Besides this many of under construction units are also purchased for Investment purpose so holding period is less…As the project near completion i.e. towards registration, these investors try to offload the inventory…Basically it’s the Black Money, which is being invested…. The supply increase when project is nearing completion thus pulling down the price…Therefore perception of buying at cheap rate is just another Marketing gimmick from builders….
I am listing down the Pros & Cons of both under construction flat & Resale Flat..You can decide which one u would like to purchase
- Staggered Payment: The payment in under construction flat is linked to progress of construction therefore buyer need not to pay upfront amount
- Wide Choice available in terms of preferred Floor, House Direction etc
- Profitable if money is paid from own pocket for investment
- Slight Modifications possible during construction as per buyers requirement
- You can get the interiors done as per ur choice and requirement
- The biggest disadvantage is Legal status i.e. Builder start development immediately after receiving commencement certificate from Development Authority but do u know builder also need 19 more permissions from various departments like Pollution Control Board, Water Supply, Electricity etc…I know 1 of complex where complete power is supplied through generators as builder failed to get permission from Electricity department thus huge monthly maintenance bills for residents in long run or U might face problem in getting Khata or Occupancy certificate
- No Clarity on Maintenance Charges till u occupy the flat or association being formed. In under construction flats It is unclear how much maintenance charges needs to be paid…It might come as shock to u at later stages..Since Maintenance charges are lifelong affair so high maintenance charges may dent future valuation of complex until & unless it is being projected as premium complex..Maintenance charges may vary depending on facilities being provided by builder
- No clarity on neighbors/occupants…It might happen that most of flats are rented to Bachelors by owners, who purchased for investment purpose then u can’t stay with family in such complex
- You have purchased a flat based on Construction plan on paper…May be after construction, the flat will not look as u visualized i.e. You may not like the flat or u may find some practical problems which u have not thought of while having a look at flat construction plan or u might find bad construction quality. Anther major problem these days is of water seepage being reported from almost 90% of new flats
- Unexpected delay in projects
- Very High Interest cost if flat is purchased on Home Loan
- Hidden costs cannot be ruled if the builder is not reputed one.
- Most of under construction flats are being built in upcoming areas so might need to compromise on locality & accessibility of Malls, schools etc
- The biggest advantage is, You will get what u will see…No future shocks
- You can verify Legal Titles and can be assured of Legal Status
- Clarity on residents composition of complex and Maintenance Charges
- No waiting period, Immediately you can move into ur new flat until & unless u r planning for some re-furnishing
- Cost including Home Loan interest is low compared to under construction
- Clarity on final amount to be paid
- You can check out the facilities like Malls, Schools available in Locality and in all probability it will be developed one, as people are already staying
- You can check out construction quality with the help of structural engineer
- You can pay right price becoz you can get fair idea on real estate trends of complex and Locality
- Acceptance in Society: Normally the ppl who are staying from day 1 are more close to each other rather ppl who move in after 3-4 years
- Society rules might not suit u & you cannot get it changed whereas in under construction complex u r part of discussions while rules are being framed
- Check out for wear and tear or any other visible damage
- No major changes possible in House Structure or layout
- Not much choice available for selection in terms of floor rise, view etc as not many units are up for SALE
- If house is already furnished & if u don’t like the same then its huge cost to re-furbish the entire house…Minor re-furbishing is OK but complete makeover is costly affair
For many people buying a house is once in a lifetime opportunity so take xtra care while finalizing your dream house…You should feel HAPPY in your house rather regret your decision though out life….
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