Picture this... An individual has recently purchased an under-construction flat for Rs 60 lakh but the possession is not going to take place for the next two years. On the other hand, you are getting a similar constructed flat in a nearby locality for 10 per cent less. Why?
It is a resale flat that is four years old. Should you pursue it, considering you are already paying a lot of rent for your current accommodation and that could appear as a wise investment? Let us evaluate the pros and cons of buying a resale flat.
"One of the major factors is the goodwill of the developer. Detailed background checks of the developer in terms of the total number of projects accomplished, time taken to complete a venture and the quality of the building, are vital. To have a detailed knowledge about the building with regards to how old the building is and whether it has an occupation certificate, are key," says Kaizad Hateria, general manager, corporate customer relations & asset class specialist,
Rustomjee Group. Before investing in resale flats, it is important to know whether the society handover has taken place from the developer. Also, hidden charges might be involved in case the society handover has not been done, since the developer might charge for the NOC. Preeti Singh, a home-maker, was hunting for an apartment for quite some time.
"I finally bought a resale apartment in Andheri after a lot of research. A resale flat allows buyers the opportunity of experiencing a sense of pride that comes with ownership at a considerably cheaper rate. This triggered my purchase decision too," she adds.
However, there are other experts as well who think otherwise. According to estimates by the Square Yards Global Intelligence Cell (GIC), newly launched properties are 15-30 per cent cheaper than the resale units."Likewise, these units are also older. A higher price that they are available at and their older structural foundations could result in lesser value for money," says Tanuj Shori, CEO of Square Yards.
Experts point out certain advantages and disadvantages of investing in a resale flat. One of the biggest benefits of investing in a resale flat is the low investment sum, as compared to an investment amount required in a new property. "The location of the project is one the most important elements that a homebuyer (whether buying a resale flat or a new property) must not ignore.
Factors like future appreciation potential, proximity to physical and social infrastructure must constitute a major share in the final purchase decision," says Vikram Goel, CEO, HDFC Realty. Sonia Singh, a working professional, invested in a resale flat two years ago but she did not have a pleasant experience. "At the onset, the investment seemed the best thing that had happened; however, the problems started six months later. A huge sum of money was spent on refurbishing the house. Besides, leakages, structural deficiencies and poor quality of construction only made matters worse," she adds.
One of the major disadvantages of resale flats is the utility period. Since flats have already been used as living space; a considerable amount of its utility period has been consumed. "A lack of modern amenities that new properties offer is also one of the major drawbacks. For example, today, electronics have become an integral part of our lives and hence wiring, sockets are designed accordingly. But, similar provision may not be available with `older' flats.
One needs to re-install the wiring while investing in resale flat," points out Sandeep Ahuja, CEO, Richa Realtors. As per the statistics by GIC, two third of the market is dominated by new launches whereas the remaining is constituted by resale units. "Resale flats are not preferred for investment until there is a price advantage. The resale flat could be a sensible investment if it is equipped with the infrastructure and amenities that new projects boast of," concludes Hateria.
Source: content.magicbricks.com
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