9 Things To Watch Out for When Purchasing a Resale Property

A resale property has several benefits whether it is a ready-to-move-in flat or a newly constructed house. Here are some merits of owning a resale property:

• The resale property market gives a ray of hope to salaried individuals by offering value deals and attractive prices.
• You can save a significant amount of money by moving into a ready-to-shift flat which would have been spent in paying rent, EMI, or on construction of a new house.
• All the features and amenities are visible and clear, giving you opportunity to choose what suits your needs best.
• You can enjoy tax benefits from the first EMI on immediate possession of the property.

However, buying a resale property often comes with certain challenges that are not known by the buyer initially, such as requirement of a higher cash down (as compared to buying an under-construction unit from a developer); dealing with some compulsory expenses including registration fees, transfer fees, stamp charges, and other charges; uncleared dues by the previous owner and so on.

If you want to check the process of buying resale flat in Mumbai, Bangalore or any other city here are some important things to check before buying a resale flat:

1. Obtain Original Property Documents

Make sure you verify original property documents carefully before signing the sale agreement.

Take help of your advocate to check all the relevant documents required for resale flat purchase:

• Ownership document
• Title clearance
• Approval plan
• Previous electricity/ water and other utility bill payment
• Property tax payment
• Documents of BUC

The Resale Property Documents Checklist will help you avoid any legal issues and financial burden when buying a resale flat. 

2. Approval

Make sure to have following approval, licenses and certificates:

• Commencement certificate for work
• Approved building plans
• Environmental clearance
• Status of the land title
• Development rights on the purchased property
• Release certificate if the property is pledged to get any bank loan
• Encumbrance certificate to verify that the property is free from all legal dues
• Verify land use zone according to the city master plan. The plan can be obtained from your city’s local body office
• Approvals by development corporation and local body of the city for the entire layout

Also, make sure that that the builder from whom you are purchasing property is on the list of banks so that you can get financing easily. If you are planning to obtain a home loan on resale property, this verification is utmost necessary. The bank will also do a complete due diligence before loan clearance.

3. Security

When buying resale flat, it is advisable to check if the property is safe and secure. See if the property is properly gated, has security guards, CCTV, and other security features to ensure a safe stay for you and your family.

4. Location

It is crucial to check where the property is situated. Is location of the property well connected with all basic facilities such as a hospital, school, mall, airport, etc? Is it easily accessible via all the transportation channels? Is the surrounding environment safe and convenient for your kids? You must have answers to all these questions concerning property’s location before shifting into a resale property. Property in the posh area may cost you more but can give you better facilities.

5. Post-Occupation Cost

There could be some post-occupation costs that you might have to bear on purchasing a resale property. These costs include:

• Advocate and brokerage fees to be paid to the facilitating agents.
• You may have to pay for transferring utilities (electricity, gas, etc.) in your name (in certain areas or buildings).
• Club membership fee
• Repairs and renovation costs
• If a resale property is purchased through a property consultant, you may have to pay a brokerage or consultancy charges.

So, add all these costs when calculating the cost of the property as combining them can wipe out the benefit of purchasing the affordable resale property.

6. Current Ownership

Check if the property is owned individually or jointly? In case of joint ownership, make sure the sale of property has approval from all the owners. Also, check whether the seller is the true owner of the concerned property. Obtaining original sales deed and documents is a must indicating property’s chain of ownership since its construction. Sales deeds of all previous owners must be duly registered and stamped. The property should be free of any encumbrance and have a clear marketable title.

7. Property Should be Free from Encumbrances

In many cases, people mortgage their property to obtain a loan against it. Make sure there is no existing loan on the concerned property. The seller shouldn’t have any dues to the building, society or against the house, else you will be the one paying all these dues later. If the property you are purchasing carries any existing loan, the bank will keep ownership documents until the loan is paid in full. Ask the owner for ‘No Due certificate’ issued by the bank if a loan is closed already.

8. Physical Condition of the Property

Check the physical condition of the property before making a purchase decision. The ideal age of the second-hand property should range between 1-10 years. Older flat may come with multiple maintenance issues. Also, Availing a Home Loan on an old flat might become difficult. Identify the actual reason behind the sale, there could be problems and issues associated with the property.

9. Basic Amenities

Consider checking the availability of basic amenities like club, swimming pool, playground, park, golf course, etc. before buying a resale flat. The owner may charge you extra bucks for such amenities. If you can afford to pay a higher price, check for these facilities in a ready-to-shift property.

We hope considering the above-mentioned points will help you make the right decision during second hand house purchase procedure.

If your lack of enough funds is preventing you from owning a home, a Home Loan is the answer. For any financial assistance for purchasing a home, MyMoneyMantra, a leading online financial services marketplace have some affordable housing finance solutions for you.