Are you fed up with your nomadic lifestyle? Desperately longing for a place to truly call home? Yes, I know how it feels to stay in rented accommodations for years and enduring the landlord’s critiques. But why should you go through all this hassle and still pay exorbitant rent?
Enough is enough!
It’s time to take charge and find your perfect home.
Yes, you heard me right. No matter how young or old you are, you can always buy a house for your own peace of mind. But, before you jump to arrange a home loan, maybe, you should learn a few things about it. Though there’re a lot of steps involved in buying your first home, I won’t say it is difficult in any way. Anyone can do it on their own without a broker or real estate agent, even. Trust me.
This article focusses completely on purchasing your first home in India. You may not believe, but India’s real estate market shows promising growth. Over the next five years, it’s expected to grow at an average rate of 9.2%, offering ample opportunity for the investors. Trust me when I say it- Investing in real estate is secure and provides steady returns, ensuring shelter and security for the future.
That’s confidence enough.
What factors should one consider while buying real estate in India?
Buying real estate in India isn’t a piece of cake. It’s a time-consuming process clearly. It’s not like- you decide to buy a home today and have it tomorrow. You must know, patience is the key when purchasing real estate, especially without a broker.
There are several factors one should take into account. These are-
- Location,
- Budget,
- Online housing websites,
- Basic property rules regarding devaluation,
- Legal Due Diligence,
- Reputation of the developer/builder,
- Property type/amenities/facilities,
- Rental potential,
- Resale value,
- Future development plans,
- Home loan
- Negotiation.
To successfully purchase and own real estate in India, you can’t overlook any of these aforementioned factors.
You must thoroughly understand them to avoid being misled by others. After all, the real estate investment and transactions involve working with various parties including lawyers, builders, agents, and banking professionals.
However, with optimism and consistency, you can buy a house entirely on your own (without broker/ agent).
So, let’s begin.
What are the steps for purchasing real estate in India?
Step 1- Location
Your house isn’t a portable property unless you’re content living in a camper van. When it comes to real estate, choosing a city to live in is non-optional.
Yes, you have to do it first.
You can opt for a location near family for frequently visiting them or pick a spot close to your office to minimize commute time.
Also, choose a location with nearby amenities such as hospitals, markets, and transportation hubs. It’s crucial to assess the neighborhood to ensure you can live happily among the residents.
So, you can understand that the location of a place determines the price of real estate and its future growth rate.
And opting for posh localities ensure proximity to amenities and a favorable neighborhood. However, in other cases, there may be a need for compromise.
Step 2- Budget
Now, the budget? The sound of this term sends shivers down the spine of those who dread home loans. After all, who wants the burden of a loan on their shoulders?
No one.
But, you know, if you carefully set your budget for the home, you may not mind spending a lot of money for your first home or entering into a home loan.
So, here’s what you should do… Ask yourself, when do you want this home?
Suppose you have 3 years. Set aside a certain amount of money to an RD for home purchase. Even if you can save around 30,000/- every month after all monthly expenses, you’ll have 11.85 lakh rupees for the down payment. The down payment can be around 20% of the property value. By this example, you can aim for a home worth 60 lakhs.
When buying real estate, only consider houses/flats that fit your budget. Opting for luxury properties may mean a longer wait or a heavier burden of loans.
Anyway, let’s not do that.
Step 3- Shortlisting properties
Well, it’s clearly one of the vital steps when it comes to selecting the perfect home for you.
In this modern world, you can always use online websites to help you find properties within your specific budget and in your preferred areas. You can check out platforms like 99acres, MagicBricks.com, Housing.com, NoBroker, and so on.
Not only that, but if you prefer offline methods, you can also look for posters and billboards advertising new residential projects in your chosen areas.
Or simply search for the top residential builder groups near your area online.
Also, you can ask around among your friends if they have any contacts with reputed builders. You can then directly reach out to them for further discussion.
Step 4- Onsite visits
This is the moment of truth, where you get a chance to evaluate a property from top to bottom. It’s crucial to check a few things while looking at the property you’ve shortlisted online.
For Resale Properties-
i) Enquire about the age of the property. The building construction should ideally be less than 10 years old as it begins to depreciate in value after this period. To verify, check the sanctioned plan date and the Completion Certificate (CC) date.
ii) Assess the condition of the property for cracks or dampness in the walls. Avoid properties in need of extensive repairs at all costs.
iii) Request all the necessary papers from the broker or owner. If they can’t provide you all the papers and try to persuade you otherwise, reconsider the property.
iv) Understand why the previous owner is selling the property.
v) Speak with neighbors about the owner and builder for further insights.
vi) Confirm water availability and electricity connections of the building.
For New Properties-
i) Enquire with neighboring shops and residents about the reputation of the builder.
ii) Research previous properties developed by the builder. If feasible, visit their completed properties and talk to the previous buyers.
iii) If the property is unfinished, ask the builder or contractor about the expected completion date.
iv) Assess the air circulation within the property.
v) Obtain the sanctioned plan from the builder and ensure the building is being constructed accordingly.
Only proceed with the property if you are satisfied with all the above. They are crucial because based on these answers, you can negotiate a great property deal if you are willing to compromise.
If the owner, broker, or builder lies about the property for any single question, feel free to walk away from it.
Step 5- Collect Property Papers
To land a great house, you’ll essentially need to become a detective capable of uncovering all the hidden details about a property and discerning the intentions of brokers, owners, and builders.
Now, what are the papers you should collect?
These individuals should provide you with:
i) Title Deed, Mother Deed, Chain Deed – all types of deeds pertaining to the land/flat.
ii) Sanctioned copy of the building plan approved by the municipal corporation.
iii) Mutation Copy for resale properties.
iv) Completion Certificate for both newly finished and resale properties.
v) Possession certificate for resale properties.
vi) Latest Tax receipt for resale properties.
vii) Sales agreement for resale properties.
viii) Power of attorney papers in the name of the builder/contractor.
Collect the photocopies of these property papers first by providing the owner/builder with a nominal token amount if necessary. At this stage, you don’t know what the search result will be for this property.
Step 6- Title Search
When you express interest in a property, it is very likely that the owner/builder/broker will persuade you to close the deal as soon as possible. Don’t lose your cool in such scenario.
Insist on a 2 to 3-week period at least so you can hire a reputable lawyer to conduct a title search on the property after submitting all the necessary papers.
If needed, ask the lawyer to also check for construction approval. This involves inspecting the building’s materials to ensure stability.
Wait until you receive the search results and a green signal from your lawyer.
Step 7- Agreement of Sale
Once you receive the search report from the lawyer, you can breathe a sigh of relief knowing there are no issues with the property.
Next, approach the previous owner/builder to initiate the agreement of sale.
This legal document, made on stamp paper, declares that the property is in saleable condition (vacant and unoccupied) and mentions the negotiated amount for the real estate property. In the seller’s interest, there will be a specified date by which the buyer must pay the entire amount. The agreement of sale period should be a minimum of 90 days, preferably 6 months. You need to pay an amount in advance when you sign the papers.
The agreement needs to mention that you will get your advanced amount back if the deal falls through for some reason.
This document is required by banks to consider giving you a home loan.
Step 8- Home Loan
Now, it is time to welcome another character to the picture- The Bank.
Once you have the agreement of sale signed by the seller, proceed to the bank immediately and fill out their home loan application form. Remember, the clock is ticking.
It’s important to note that banks are more interested in your income potential than conducting strict scrutiny on the property of the owner/builder, which can seem unfair at first. But, you have to take the home loan anyway.
Why?
Because banks do check the technical and legal aspects of the property through the property papers. If everything’s not alright with the property, the bank will reject the home loan. That’s why, they may also send a bank representative to measure the carpet area and inspect the building condition.
If you buy entirely in cash, you won’t get this particular property investigation support.
Bank: “Got your back, but partially!!”
In the real estate dealing you can trust no one, but the bank.
Once all these steps are completed, the bank will inform you that “Your Loan has been Approved.” However, this isn’t the final step. When they say, “Your Loan has been sanctioned,” then they inform you that they are preparing the cheque.
This indicates that you can proceed with the registration of the property. Now.
Step 9- Registration
This is the day you’ve been waiting for, for many months.
The day of registration.
Appear at the registration office with your lawyer, where the entire process will take place. Beforehand, ensure the property valuation is done by your attorney and obtain the “No Due Certificate.” Also, pay the stamp duty online prior to arriving at the registration office. Review the draft deed multiple times; this will be the final deed for your purchased house/flat.
Now?
Sign, sign, sign…on papers your lawyer hand over to you.
After registration, you’ll receive an IGR copy, which someone from the bank will collect or you’ll need to submit to the bank before collecting the remaining amount, apart from your down payment.
Congratulations!!!!!!!! You’ve purchased a home!
Now, collect the keys and the possession certificate signed by the seller.
And it’s done. Phew!!
It’s indeed a process of around 6 months: 4-5 months of house hunting, numerous visits to lawyers, endless calls, and the bank loan process of nearly 1 month.
But when you step foot into your legally owned home, suddenly all those 6 months seem worthwhile.
Investing in real estate is a significant decision as it involves your lifetime of savings. It’s crucial to give the process the time it requires and thoroughly complete each of these 10 steps to avoid any regrets in the future.
I understand it can be demanding, mentally draining and exhausting at times, but keep going. Don’t stop until you have the house in your name.
I wish all the very best to every house hunter out there.
Stay put, have all the patience you can muster, and you will find a great home
This is it for today.
Signing Off.
