Resale Home Buying - A few Tips

Although I am not a very real-estate savvy person, but I did get some hang of it in the whole process of buying a flat in Pune, and a very long process it indeed was. It was property resale, and from finalizing the property to the final registration, it took about 3 months. Here are some of the key learnings in the whole process, including property search:

• Property search is a tedious task and requires lot of time and patience. The guiding principle is to not compromise on a few key things you want from your home, and be sure of that. Eventually you'll find what you are looking for. (That's what my wife says, and I trust that, as search was mainly her department :P ... I reviewed once we had a shortlist, then we both reviewed many times and we mutually decided).
• If you care about vastu, hire a good vastu consultant whom you can trust and who is not very expensive. A good knowledgeable pandit, for example. Professional consultants are very expensive...
• Don't shy away from brokers, but beware. Brokers control access to a lot of the inventory out there. And you can't do away with them. Focus on the larger battle and don't worry too much about the brokerage expense. It is better to be clear and upfront on it, though. Make sure the broker agrees to the 1% norm even before he/she takes you to show any flat. And make sure the broker looks confident enough to facilitate the whole transaction, once you finalize your target.
• Ask and agree on all other expenses during the transaction and who bears what. I've had the following
• Society NOC charges - borne 50-50 by buyer and seller
• Other charges on paper-work by Society Office - buyer
• Lawyer fees - buyer
• Electricity Bill name change - buyer
• Property Tax name change - buyer
• Stamp Duty & Registration charges - buyer
• Everything else, and I know I'm missing many - buyer :-)
• If it's the first time you are buying a resale home, or any resale real-estate for that matter, better do engage a broker to handle the entire transaction and related formalities. While the agreements can be in English, a lot of documentation in Maharashtra, especially the Index-2 and stuff like that in the registrar office are in Marathi and if you don't get it, you better have someone handle it for you. Make sure the guy is well-versed with the entire process, and also has connections in banks to help you with your loan application.
• Banks need to review a lot of documents for the property to approve the loan. So it is wise to get a list of the required documents from the bank while you are searching properties. And when you are agreeing to buy the property, do check with the seller on the availability of all the documents you need, as per the list.
• Brokers need to be pushed and questioned. It is true you are paying the guy and he needs to do his job. But the brokers have a habit of overcommitting with confidence like you see nowhere else, and forgetting it altogether. Brokers also tend to get unreachable at times when you need them the most. They are frustrating, they are terrible and they don't care. And you have to pay them. So, although it's some sort of a paradox, don't trust them completely, nor rely on them. Figure out what's needed and be on top of everything.
• Keep xerox copies of every damn paper that you come across or create in the process. You will end up with a huge bunch of paper, but keep that safe.
• Lastly, and most sellers don't know this, and most brokers don't tell this during initial agreement between buyer and seller - 1% of the whole deal value (excluding stamp duty & registration fees), i.e., the cash which the seller gets, has to be paid to the mighty Government of India as TDS. This payment has to be done by the buyer and he/she has to deduct the amount from the total cash he/she pays to the seller. The payment can be done from NSDL website. Read the FAQs here. Quite a few important things to note here:
• This applies for properties with value greater than 50 Lacs INR
• The buyer is responsible for making the payment
• The buyer is responsible for downloading the form 16B and handing it over to the seller
• The buyer has to deduct the 1% TDS value and pay only 99% to the seller
• The seller can use the form 16B to claim tax exemptions
• This is a legal / statutory / whatever requirement, and not doing it can get you into trouble
• It is better to bring it up initially, i.e., before agreeing to buy the property, to make sure the seller accounted for it when quoting the price
• It's a recent rule and may not apply a few years later... so check for similar things that apply in your times... this is for readers of this blog a few years later :-)
• And do keep this in mind - you will definitely end up spending more money than you thought or budgeted for... so keep a few lacs handy, over and above whatever all likely costs add up to, while agreeing for the transaction.

All the best!