Benefits of buying resale property
Mr. Raj is planning to buy a flat but he is confused whether to invest on a resale property or to buy a new property from a builder directly? As Mr. Raj is not ready to wait for more than two years to get the possession of the property, buying a resale property would be a viable option.
It is a quite common factor that many would be struggling to decide whether buying resale property is good or bad.
If you do not want to wait for three-five years that developers usually need to complete projects, or if you want to buy property at a price lesser than market rate, or if you wish to live in an area where right infrastructure is already in place and area is pretty much developed, then it is advisable to buy a property in the secondary property market.
Buying a resale property is beneficial in many ways. Resale properties are not necessarily old – it can be a new ready-to-move-in property, 1-2 years-old property, decades old property, an under-construction one or a plot too. However, each kind of resale property has its own merits and demerits.
Lower rates:
At a time when property prices seem to be evading the reach of an average buyer, hope comes in the form of resale market. As compared to the prevailing market rates, resale market offers properties at a discounted rate and one gets the chance to buy a home at a much lower rate. i.e a 1000 sq ft new apartment in Whitefield (Bangalore) is costlier than a same size apartment for resale.
You may be thinking why the resale flats cost lesser than new ones offered directly from developers, it can be due to various reasons. The main reason would be that the resale properties are mostly bought by investors during the pre-launch or launch phase with an intention of selling them for a profit. At this stage, they may have only made the down payment and generally, at discounted rates. In locations such as Delhi-NCR, Mumbai and Bangalore, such properties are being sold at 5-20 percent lesser than the latest prices that developers are offering.
Anyhow, it has to be noted that not all resale properties are offered at lower rates while some of them are quoted even at higher rates than new ones, depending on the demand for properties in that area.
The price difference is minimal between a resale property and a new property in same project which are close to completion. While in the initial stages of a project, the difference would be high, but the risk involved is also high at this stage.
Non-availability of better projects:
When buyers are left with no better projects available in the area of their focus, it is a good option to buy a resale property.
In older areas of cities and in central locations, land is usually scarce due to which new residential properties are difficult to find. In such cases, resale properties are mostly in demand.
In certain pockets of Delhi-NCR, investors book at launch so that they can sell out as the project gets going, so end users have no other way than to approach the investors.
Time factor:
The important use of buying a resale property is that the construction/partial construction is already done and your time is saved. In case of completed projects, benefit of buying in the resale market is that the construction is almost complete and some of the houses are ready to move in. So, unlike in the case of a project that is still under construction, you don’t have to worry about when you will get the possession and what if the project gets delayed.
For example, in Pune, the prices have been stagnant since last 2-3 quarters. In that case, the investors have to pull out with the desired returns in time to keep the money rotating. Developers will quote higher prices in this case than an investor.
Saves rent:
If you buy a ready-to-move-in flat or house, it will help you save on rental costs, unlike purchasing a property under construction, where you pay both rent as well as EMIs.
Transfer Charges:
Developers charge transfer fee to meet administrative expenses as transfer of booking involves a lot of administrative and documentation work besides few legal issues, which developer has to address. Though the transfer fees is an extra burden on buyers’ shoulders, at times, it is justified to control active investor participation.
In some places, you don’t have to pay transfer fees. The Maharashtra government has abolished levying transfer charges in the state which saves some amount of resale property buyers.
Confirmed Approvals:
Many buyers realize only after buying that the developer has not obtained all the necessary approvals. This makes them panic and leads them to certain legal issues wasting time and money. But in case of buying resale properties, this kind of risk associated is minimal.
Infrastructure development of locality:
Mostly in case of resale properties, you will have a clear idea as at what level is the development of infrastructure in that locality and to what extent it would further be developed. But in case of new launches or pre-launches, even though developers assure many things, it is not easy to understand when and how much development is likely to happen. If the newly developed project in upcoming area, there is a fair chance that the project will not have connectivity to the trunk infrastructure of the city.
You will know the neighborhood:
When you are buying a ready house, you know exactly who your neighbors are. You will get a clear vision of what kind of neighborhood you are going to be placed in and what kind of merits or demerits you may have to face in future. Also, you will know what are the facilities available around you and how to access them.
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