When you are ready to buy the
home of your dreams, you naturally want to make sure that
everything is perfect. There's a hundred different things that
need to be checked, and every one of them is important. ICICI
understands your concerns. We suggest you spend some time and ask
yourself certain critical questions, before taking this important
decision of your life.
- What is your need?
- When do you
need it?
- Where do you need it?
- Who is offering you your home?
- What is the
best price?
- How will you generate funds?
- Comparing Homes
We've compiled, for you, a
comprehensive guide on things to keep in mind while buying a
home. Whether you're able to make time for one two or three
showings for a house, following the tips detailed here should
ensure that you make the correct, informed choice.
If this list is not enough, we also have a pool of real estate
experts who will answer your queries. Just Ask the Experts! and
they will get back to you at the earliest.
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.
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.
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.
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 at ICICI Limited, 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.
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.
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:
1. 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.
2. 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.
3. 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