Process of Home Purchase
Apr 2010:
A brief on the entire process of buying a home by Strategic Consulting, Jones Lang LaSalle Meghraj:
1. Selection of Property
This stage involves search for properties in the desired location, meeting the sales teams of the builders, doing a background check of the builder, compare the properties in terms of carpet areas, specifications, prices etc, taking professional advice if needed and then finalize the property to be purchased.
2. Purchase of a pre-launch property
Many a time a developer intends to test the interest level in the market about his project by offering a limited stock within a closed circle without much public attention. Such an arrangement is known as the "soft launch" or a "pre launch". Such properties often come at 10 to15 percent cheaper than the market rate. However, a buyer needs to be very sure about the deliverable capabilities of the developer and the future prospect of the project. For the first home buyers it is advisable to take professional opinion before investing into such properties.
3. Brokerage Fee
If the property is selected with the help of a broker then a brokerage fee is paid. The brokerage fee is generally 2 percent of the value of the property or it is negotiated for a pre decided lump sum amount. Part of the brokerage fee is paid at the time of payment of the token money and remaining amount is paid at the time of registration of the property.
4. Budgeting for the purchase
Normally the rates quoted by builder are on the "Saleable" or "Super Built UP" area. The value of the property is derived by multiplying the two factors. The rate of the property is often called as the "Base Rate". There could be many other components such as "Floor Rise", Infrastructure Development Costs, Car Parking Charges, Society and Club membership fee, Electricity and Water charges, Advance maintenance collections etc. A sum of all the above factors makes the total purchase price of an apartment. The budget of a home purchase should also take into account of stamp duty and registration fee which will be a percentage of the total price of the apartment.
5. Token Money
Once the property is finalized a token money is paid to the builder to confirm your booking of a particular apartment of your choice in the said property. The amount of token money can vary from 50,000 to 500,000 depending on the value of the property. The buyer needs to arrange for remaining funds within a stipulated date from the payment of token money.
6. Down Payment
Down payment have different connotations for a under construction and ready for possession building. For an under construction property is usually between 10 to 20 percent of the total price less the token money paid. In case of a ready for possession building the down payment means the entire sum of money less the token money amount
7. Bank Loan
The process for application for a bank loan can be made even before the payment of token money. Most of the reputed builders have tie up with different banks for speedy disbursal of the loan. The banks scrutinises different property papers and the income profile of the home buyers and decides the credit limit. The banks also issues a approval letter to the home buyers but the actual disbursal takes place once the registration of the property is complete. Bank directly pays to the builder as per his payment schedule and as per the status of construction
8. The Registration of the property
Once a buyer makes the down payment and obtains an approval letter from the bank for remaining money the developer executes the sale deed and completes the formalities of the registration. The agreement sets the time line within which a builder need to complete the construction as give possession of the premises to the buyer.
9. Getting possession of the premises
Once the construction is complete and developer receives an "occupancy certificate (O.C)" from the local body the physical possession of the premises is handed over to the buyer and a possession certificate is also issued by the builder. A buyer need to check all the specifications and amenities as promised by the developer before taking the hand over from the builder. Any dues related to the purchase of the property also need to be paid at the time of receiving the possession of the premises.
10. Maintenance by the Builder
Typically the developer is responsible for the maintenance of the building for a period of 18 months from the date of receiving the O.C. This includes general cleaning, security, payment of electric charges for the common areas, property tax, running costs of DG sets and any repair or maintenance works.
11. Formation of the housing Society
At the end of the maintenance period the developer initiates the formation of a housing society under the societies act. The builder also creates bank accounts in the name of the society and transfer any unspent money from the corpus of the maintenance fund. The society elects it representatives and takes the responsibility of the maintenance of the building and collection of maintenance charges. Thereafter, the developer usually conveys the title of the land to the name of the society. This stage culminates the process of a home purchase in any metropolitan city.
Source: IndiaProperty | Back to Realty News