Resale Vs. New property – 10 Things to think about

Buying a resale property differs from buying a newly constructed one, both in terms of legality as well as the buying process. The properties listed on resale are often priced higher than the original cost considering factors like new amenities, pricing trends in the vicinity, ease of commuting to the city, malls, schools and hospitals, overall civic amenities in the area, etc.

However, there are several advantages of buying a resale property, such as…

1. Immediate possession of the property
2. Escaping the rent and EMIs simultaneously
3. Getting to see the desired specifications completely
4. No construction delays
5. Time for planning your move-in
6. Tax sops on home loan from the beginning 

In spite of the advantages at a higher price level, it is imperative to know what to expect and what you will get in a resale-apartment deal. 

• Talk to the experts 

There’s definitely a friend or acquaintance who has invested in a resale apartment in the past, and is evidently happy with the purchase. Ask how they went about the purchase. Also try to understand the general legal procedure. Apartment specific details may not be similar to your desire, but certain basics always match. 

• Check for clarity in the ownership context

Although one feels it’s easy to hire a lawyer or an estate agent, it’s better to be well versed in certain areas for your own understanding. Check the title of the property, as its clearance is highly essential to avoid any sort of fraudulent selling. 

• Documents

Check for all documents available with the purchase. Some of them are project commencement certificate, completion, occupancy and sale deed. Also check for the authenticity of the same with a lawyer or an agent of your choice.

• Clearance of loans taken 

Check whether the property is completely free of past loans taken by the builder. Check with bank personnel to conduct this verification because they have the necessary network to do so. 

• Eligibility to apply for a new loan

Considering that you need to fund your purchase through a loan, and this would be a resale property, cross check with your bank about the amount that you are eligible to receive as a loan. Verify that you have the all-important documents to process your loan application. Sometimes it is better to fund the property partly through a loan, even if you can afford the entire payment. Outsource the due diligence to bank authorities and stay rest assured about the safety of the investment. 

• Conduct an evaluation of the property

It is important to get your desired property evaluated for its market value. This is required firstly to ensure that the finances are planned properly. Secondly, check whether the property prices are predicted to fall, which would discourage the banks from granting you a loan amount that you are eligible for. 

• Down-payment amount

Make prerequisite arrangements to pay an initial lump sum amount as a down payment for the purchase. The banks usually give you close to 80% of the total price on the property as a loan. 

• Age of the property

The ratio of loan amount received and the amount of down payment varies based on the relative age of the property. Older properties tend to be valued away from your advantage because banks try to safeguard their interest. Thus, the down payment for an older property would be a larger amount with respect to the loan you can avail.

• Maintenance fees charged by the society

This is a monthly recurring expense after you occupy the purchased apartment. Ensure that your budget can accommodate it with the EMI that you would be scheduled to pay every month to the bank for some years as well. 

• Reason for the sale

This should have appeared much higher in the list, but you can find out the reason for sale only after you build a rapport with the owner. Try finding out the reason behind the sale. Although it is not always necessary that you get authentic information, do ask to understand the intentions.

This is a blog post by Bharath Joshi who is the Marketing Executive for Unishire Signature in Bangalore.