The Gera NewsletterIssue: # June 2010

Dear Friends and Associates,

I hope you are finding the newletters engaging. I would love to hear from you on In this edition, where Rohit Gera tackles the sensitive issue of trust which buyers inadvertently place in the developer when buying a home.

 

As always, if you have any queries, feel free to contact me - I would be happy to help you with your real estate matters.


Sincerely,

Sujeet Modak
Business Unit Head - Gera Developments Pvt. Ltd.

Hold back some trust when buying a home.
By Rohit Gera, JMD - Gera Developments Pvt. Ltd.
 
Even though the image of the Real Estate Developer ("Builder") has improved over the last few years, the fact remains that in general, developers are viewed with tremendous suspicion.  While for the most part, this is as a result of actions by the builders, it is certainly a fact that one cannot paint all developers with the same brush.  Inspite of the general mistrust towards builders, I find it amazing that customers continue to become victims of malpractices at the hands of unscrupulous builders.

Over the years, I have had the opportunity to interact with many such victims - people who claimed to have "trusted" the builder.  Most of the people I interacted with had purchased homes from unknown individuals who had little or no past track record in the industry.  (which is not so say that all those who have track record are angels or saints).  What I find amazing is that anyone you speak with before buying a home warns you about the potential pitfalls of buying from a builder and yet, people purchase, repent and then fall back on the word trust!

Unfortunately, we live in a world where we check the change we receive after purchasing something from a shop keeper, yet, we rely on the word trust for the most important purchase decision of our lives.  

If you or a friend is planning to buy a home anytime, here are a few things to do to prevent lamenting your purchase decision in the future -
  • Insist on reading the specifications and amenities section in the agreement and tallying the same with the brochure. If something is mentioned in the brochure and not in the agreement, this needs to be clarified. Incase the developer cannot change the "standard" agreement that is signed between him and the other customers, it is possible to get a separate letter confirming that you will receive what is listed in the brochure.  If he is not willing to give you this in writing, lower your expectation - you probably will not receive this from the builder.
  • Please do a track record check of the developer - a visit to past projects and a conversation with one or two past customers at these past projects will clarify things substantially - the most important thing to ascertain in these interactions is whether you can trust the developer. Many individual customers have specific issues with the developers, you need to cut through this and understand the most critical issue - can you trust the developer.
  • If you are taking a home loan, ask the loan officer of the developers track record with that institution
  • If the sales manager makes a commitment to you that seems too good to be true (or is something that is not written in the brochure or agreement), you need to either get it in writing from an authorized representative of the developer.  Remember, the sales persons salary, incentive and increment are based on his selling more.
  • If you are paying less, there is a reason for this- objectively find out why it is.  Someone telling you they bought the land cheap is not a reason. Remember the builder is in business to maximize his profit.
  • When seeing a sample flat, ask whether the ceiling heights, window sizes, flooring, bathroom fittings, wall finishes, terrace locations are as per what will be provided as a standard.  Remember, the landscaping outside the sample flat is not what you will ultimately receive.  
Ultimately, you need to ensure your objectives are aligned with the developer.  A fly by night operator generally will look to save on every area where he has not committed to the customer by providing lesser quality of products in the uncommitted areas.  Generally long term developers are a better bet, however, this doesn't mean you should not do your homework. By and large, atleast long term developers have understood that conning the customer is not good business.

Buying a home is a dream for most- hold back some trust to avoid a nightmare.

Do send me your thoughts or experiences on this.
 
Rohit Gera
rohit@gera.in

As with other investments, real estate too carries a certain amount of risk.  Readers are advised to undertake their own due diligence and take judgement calls based on their own research and not on the article.
HOME BUYING TIP - Buying an under construction property?

For a project under construction, you should ask for the allotment letter and development agreement. The allotment letter contains details regarding the agreed price, payment and construction schedule, house plans, delivery date and builder's liability in case of late completion or problems after possession. It is issued to the buyer upon payment of the 15% of the property value to the developer. The development agreement is inked between the builder and the landowner and contains details regarding the terms and conditions on which the landowner has permitted development of his property.

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Did you know that Gera introduce, for the first time in India, the concept of a 5 Year Warranty on real estate?  Click here to know more >

Sujeet Modak