When you think of buying an under construction property from an investor, it is not the same as it is when you are buying from a builder. And it is not the same as if you are buying property in the secondary market, from a home owner.
The investor when he wants to sell his under construction property to a buyer to make profit on his investment, he assigns the right of the property completely to the buyer, this arrangement requires the builder also to be a party as the first party has neither paid the full amount, nor in possession of the property. This arrangement between seller, buyer and builder is called “Assignment deal”.
Most of the consumers are unaware of the finer points of these transactions and discover them in the buying process. So it is important for the buyer to have knowledge of these points before making the deal.
It gets even more complicated if the seller has a loan running, generally this question is completely forgotten at the time of deal making and if the buyer also has plans to avail a loan it gets even more complicated.
Here are some questions that the buyer should ask before finalizing the deal.
- What was the price of the property when the seller bought it?
It is very important for the buyer to know what the price of the property was when the seller bought it and get documents like the sale agreement executed between seller and the builder. This document is mandatory for loan application.
- What is the outstanding left on the property and how much is paid?
Get a statement of records and copies of payment receipts from the builder; these will be required for the lending too.
- Are there any pending dues which might attract penalties?
Check whether the seller has being making delayed payments, there is high possibility the all those interest accrued by the builder will be charged on the new buyer on possession.
- Is the seller having any home loans?
It is very important as a buyer to know whether the seller has any loan on the property which he is selling, if yes how is he planning to clear the loan? Take advice from your financial adviser he will be able to guide you in a proper manner.
- Are there any other loans attached to this property?
The property that you are buying if it is attached to any other loans can never be known unless the seller discloses it. In India, there is a method for loan search for an individual, but a search for collateral created in a property can never be found out.
- Who will pay the transfer fee to the builder?
Generally it is the seller who pays the transfer charges to builder however that is not a rule. Sometimes, the buyer and seller make an arrangement and pay it together.
The most important thing to keep in mind when you are buying an under construction property is that all the steps of the transactions are closed smoothly and effectively. For that to happen be educated and well informed before striking the deal and keep your calm at all times.