What
is your need?
Having decided that you
need to buy a home, you need to check your
exact requirement. Do you need one, two,
three or more bedrooms unit? Remember you
have to plan long term, as your needs will
increase with the passage of time.
Should it be land,
bungalow or an apartment? Do you want to
construct on your own or would like a
builder to construct it for you?
What should be the
optimum size of each room? Does it meet your
present and possible future requirements?
This check should simultaneously be made for
sizes of living room, dining room, kitchen,
balconies and servant room. Does your home
receive enough sunlight? Would you prefer
your home to face a particular direction?
What about parking? Is it open or covered?
Are you getting a designated slot of
parking? What about water and power supply?
Is the sufficient to meet all your needs?
How and when will you get telephone lines?
As the apartments are
generally sold on super areas basis (which
includes a proportionate component of common
areas etc.) you need to check the exact
internal area of the premises i.e. the
carpet area.
What are the
specifications offered i.e. the kind of
floorings being offered, the tiles in the
bathroom, kitchen, the quality of woodwork
for doors, windows etc. In case of
under-construction properties, some
developers do not want to commit themselves
on such specifications. Ask and get the same
in writing from them.
When
do you need it?
Do you want your home
immediately or would you like to wait for a
certain period? If not in an immediate need,
it makes sense to opt for under construction
property, as your monetary outflow is
easier. It is generally over the time frame
in which the property is being constructed.
You need to check, what
is the comfort level you have, in case of
delay in handing over the possession by the
developer? Are there any penalties on the
developer?
In case of under
construction properties, you need to
particularly check whether there are any
escalation clauses.
Where
do you need it?
There is no denying to
the fact that you will like your dream home
at a walking distance from your office,
children's school, markets, hospitals, and
other such basic infrastructure. However,
because of escalating prices and lack of
quality space in the city, there is a rising
demand for suburbs.
Whilst deciding on the
suburb, it is important to see, whether home
you are buying is a part of self contained
township. What is the level of security and
who would be your neighbors? Is it well
connected by the roads? Are there other
residential developments in the vicinity?
What is the level of greenery? Are there
enough recreational amenities planned? Is
there a club? What is planned for management
of the complex?
Who
is offering you your home?
The past track record of
the developer, their expertise and future
plan need to be examined carefully as you
are investing your life-time savings. The
level of commitment of the developer to the
project needs to be seen.
Whether the title is
clear and all formalities have been properly
complied with? Whilst it is difficult for an
individual to check all the legal and
architectural issues; it is advised that you
collectively decide to buy a home with your
friends and colleagues (that way you can
know your neighbors before hand, and may get
better pricing from the developer). By the
thumb rule, if the project has been approved
by leading financial institutions, then they
would have examined the legal documents.
However, remember, it does not shift your
responsibility and risk to the financial
institution. It is your money and you need
to spend it wisely.
What
is the best price?
Developers generally
announce about their new and existing
residential developments through newspapers,
magazines and internet. A phone call and a
visit would indicate the exact picture on
pricing and status on the development. In
case it is not possible for you to go to the
site, ask your friend in that city to do so.
There are various real
estate portals, which contain details of
various residential developments. We
EstatePoint, conduct due diligence on
certain properties and certify that the
property has a clear and marketable title by
awarding them as Pre Approved Properties.
The information could also be accessed
through various Property Advisory Services
sections of various financial institutions.
The market research on
the pricing can also be done by exploring
with certain real estate consultants,
particularly who are operating in the
vicinity of the development.
A thorough check needs to
be done on the total cost of the property.
Generally, besides the Basic Sale Price (BSP),
the buyer is required to pay, External
Development Charges (EDC), Maintenance
Charges, Car Parking Charges, Club
Membership Fees, Contingency Deposit and
Registration Charges. These add- on, may
increase the cost of the property
substantially. Generally some of these
charges are not financed by the financial
institutions, so arrangements of such funds
need to be planned in advance.
How
will you generate funds?
Do you intend to buy your
home with your funds, or by selling some of
your existing asset. Do you want to borrow
from your friends, family, or housing
financial institutions?
There are some housing
finance institutions offering attractive
interest rates and service at the doorstep.
The same could be explored.
Comparing Homes
In the real estate
industry, the concept of value is amorphous.
The value of a house (or condo, or co-op, or
an apartment) fluctuates yearly--sometimes
monthly, based on ever-changing market
conditions, the condition of the home, and
the costs associated with owning it.
For that reason, it's
difficult to answer the question, "How much
is it worth?" There is one certainty,
however. The answer to true value does not
lie in how much the seller wants for his or
her home (though that is what the seller and
the listing broker want you to believe). In
fact, the listing price of a home sometimes
has nothing to do with its market value.
Figuring out how much a
home is actually worth is a tricky process.
You'll have to do your homework, pull out
your calculator, and spend some time
learning to recognize certain "value
markers." Once you've figured out what a
property is worth relative to others that
are similar in the area, you can begin to
compare various homes.
Location,
Location, Location
Where a home is located (within a city,
within a neighborhood, on a particular
street, within a single building) is crucial
to determining its value. When you begin to
compare homes, it's important to factor
location into your house valuation formula.
Single-family
House
First, think about where the house is
located in relation to the entire
neighborhood. Are shops and various services
within walking distance? Is the house close
to major forms of transportation and to the
schools your children will be attending? Is
it too close to any of these amenities?
Many families want to be
within a few blocks of the local public
school, but they prefer not to have their
backyards adjacent to the school playground.
Next, think about where
the house is located on its block. Is it on
a corner, or on the interior row? Is it next
to a high-rise building or a three- or
six-flat building? Are there many homes just
like it on the block? Does the block have a
nice residential feel or is it mixed
residential/commercial?
Apartment
If you're considering an apartment, start by
asking yourself about the townhouse's
location in relation to shopping and service
retailers, such as a grocer. If the
apartment is located within a suburb,
compare its location with the premium
location within that suburb.
For example, is it better
to be located on the perimeter, or is an
interior location better? Are end units more
prized, or are middle units preferred? Are
you close to the entrance of the suburb, or
do you have to drive several blocks to get
there? Condominium Or Co-op
The location questions for a townhouse apply
here as well. If your condo or co-op is
located in a high-rise building you also
need to consider where the unit is located
in the building. If one side of the building
has a fabulous view and another faces a
windowless brick wall, you can bet that
units with the full view will be more prized
than units with a peek-around or no view.
Which is more important to you, the lower
cost or the better view? Remember that a
unit with the best view in a building will
generally appreciate faster than a unit with
only a so-so view, even if the so-so has
more amenities.
Market Forces
When comparing one home to another, it's
important to know what kind of market forces
are shaping their value. When real estate
agents and brokers talk about "markets,"
they mean how quickly real estate is being
bought and sold. There are three kinds of
markets:
-
Buyer's
market:
A buyer's market occurs when there are too
many homes for sale and too few qualified
buyers to purchase them. In terms of
supply and demand, a buyer's market means
there is too much supply and too little
demand. Prices tend to come down because
homes are taking a long time to sell. The
market favors the buyer.
-
Seller's
market.
In this type of market, there are too few
homes and too many qualified buyers who
want them. In other words, demand exceeds
supply. Prices tend to go up, and homes
tend to sell quickly. The market favors
the seller. Real estate agents like this
kind of market because properties will
turn over very quickly.
-
Neutral or
balanced market
In a neutral or balanced market, the
numbers of homes for sale and home buyers
to purchase them are about equal. Homes
sell steadily, and for reasonable prices.
As you begin to compare properties in
different neighborhoods, it's important to
know what kind of market forces exist in
each neighborhood, because they will
affect the value of the properties. For
example, if you like a home and it is in a
seller's market, you may offer more for
the home than you would if it had been in
a buyer's market. Conversely, if the home
is in a buyer's market, you may offer
less.
How do you know which
market you're in? One of the ways to find
out is to ask your broker how quickly homes
are being sold in your neighborhood. If
homes sell in less than 45 days, you're
probably in a seller's market. If homes take
longer than 4 to 6 months to sell, you're
probably in a buyer's market. Most
multiple-listing services (MLSs) keep track
of how long it takes for homes to sell. Ask
your broker about the average number of days
a home is listed.
It's difficult to keep
all the homes straight in your head,
particularly if you've toured more than ten
houses. Brokers know that after seeing five
to six homes, buyers tend to start confusing
properties, and you could easily visit 10 to
15 different open houses on a Sunday
afternoon. New subdivision designers know
that prospective buyers might visit as many
as 5 different subdivisions, each with 5 to
8 model homes in a weekend. That's 25 to 40
model homes to keep straight - a virtually
impossible task.
Create a method for the
real estate madness. Here are a few
suggestions for keeping the houses organised
in your mind.
Keep a written
log
You can include the date you saw the house,
time of the showing, and who was there (your
broker, the seller broker, the owner, your
mother, your father-in-law, etc.) Purchase a
spiral-bound notebook and keep a dated log
of each house you've seen.
Photocopy and
enlarge a map of the areas in which you're
most interested
As you go through an area, use a yellow
highlighter to mark the streets you've
looked at. Use a different-colored
highlighter to mark the various homes you've
actually seen in the area. You'll also want
to mark the local schools, shopping,
transportation routes and houses of worship.
Put the
listing sheet given to you to good use
A listing sheet should contain all of the
important information about a house,
including it's list price, size, lot size,
number of bedrooms and bathrooms, and any
extra amenities. Choose a few specific or
spectacular or memorable things (lime-green
kitchen, beautiful greenhouse, attached four
car garage, sauna in basement, pine floors,
plastic wood paneling in basement) about the
house and write them down on the back of the
listing sheet. Draw out the floor plan.
Either staple these listing sheets into the
spiral bound note book you bought, or invest
in a cheap 3-ring binder. Punch holes in
your listing sheets and keep them (by date).
If a house sells, note on it the sales
price. If you don't receive a listing sheet,
create one based on what you saw during the
showing.
Staple a
completed wish list and reality checklist to
the listing sheet
It should help remind you what attracted you
to the house in the first place.
A picture is
worth a thousand words
Invest in, or borrow, a Polaroid instant
camera and a few packs of film. An interior
and exterior photo of each house will surely
jog your memory later that evening, or even
a few weeks later. Be sure to mark the photo
with the address of each house. Better yet,
staple it to your listing sheet. (Be sure to
ask the listing agent for permission to take
an interior photo. You do not need anyone's
permission to take an exterior photo of the
home.
Video is even
better
If you take along your video camera, you
have the opportunity to record your thoughts
and feelings about a house as you recording
the interior and exterior of the home, as
well as the neighborhood. Also, you'll get
more of a sense of what the house feels like
with your video camera. (Again, ask
permission. Sometimes sellers are
understandably nervous about someone having
a video of the interior contents of their
home.) Digital is the future and the future
is now
With a digital camera (they're getting
cheaper and better by the day), you can
actually download your photos onto your
computer and keep your record of homes
viewed electronically. You'll always know
where the file is (especially if you give it
a name you'll remember), and you'll be able
to send photos of the homes you've seen to
your relatives and friends. You can also
pull photos of the homes that you've seen
down from the Internet.
Give everyone a chance to express
their feelings
If you're buying the home
with another person (spouse, significant
other, business partner, child, parent,
friend, etc.), be sure the other people
involved have a chance to write down what
they think about the house.