Buying a property is one of the most complicated and biggest decisions of a lifetime.
From title clearance to black money to home loan there are many complications involved in this financial transaction. As the financial transaction amount is bigger you need to be careful while buying a property. A single mistake can invite a lot of trouble for you and your family.
Let me share one real story with you. My friend has recently done a real estate deal where he got flat at lucrative rates. He made payment in black without looking at the title clearance report. Later he realized that title of the flat was not clear and he got a lot of issues in getting a home loan.
The lesson learned from the above incident is one should carry out proper research and avoid common mistakes while buying a property.
Here is a list of mistakes that you should avoid while buying a property.
11 Mistakes to Avoid while buying property
#1 Not Calculating actual cost of property
The first and most common mistake people do while buying a property is not calculating the actual cost of the property. In addition to the money paid to the seller, you need to make provision for additional money such as –
- Stamp duty payment
- Legal fees payment to advocate
- Society transfer fees
- Advance maintenance deposit
- Insurance cost of property
- Brokerage Cost
You should consider all hidden costs mentioned above while buying a property.
#2 Buying a property before checking property record
You need to check the property record before doing a property deal. Real estate is a non-transparent sector. A lot of black money is involved in real estate. Maximum frauds take place in real estate deals. You have to be careful and check property records before involving yourself in the property transaction.
Checking property records for land and flat is very easy. You can check property records online. Here is a step by step method to check property and land records online with a click of a button.
#3 Not doing due diligence about title of property and valuation
You should carry out due diligence before buying a property. The due diligence process should involve verification of title of property and valuation. Instead of performing this task by yourself, you should appoint an advocate that helps you in doing proper title verification. You should check at least the past 20-30 years’ records.
#4 Not comparing with other properties
You should compare various properties before buying property. The comparison should not be done only on the basis of the cost. You should compare other factors such as location of property, amenities offered, future prospects, availability of home loan etc.
#5 Not taking help from real estate agent
If you are buying property for the first time, you should take the services of an experienced real estate agent. The real estate agent helps you in doing negotiation, handling the legal matter and doing transactions. The experience real estate agents have a good experience and they can help you in relieving stress during a property transaction.
#6 Buying a property beyond your limit
Another biggest mistake while buying property is buying a property beyond your limit. There are many buyers who commit this mistake and get into trouble at later stage. The property transaction leaves them without any disposable income. Most of them are unable to deal with monthly EMI and other maintenance costs of the property. You should calculate maximum limit that you can afford and stick to it.
#7 Not opting for Home Loan
You should go for a home loan while buying a property. A home loan gives you multiple benefits. You can get finance and a lower interest rate. The home loan also provides you income tax benefits on the EMI paid. Looking at the current rate of interest it is advisable to opt for a home loan.
#8 Not planning for black money
In India, most of the real estate transactions take place with a combination of white and black money. The black money component varies from seller to seller. You have to plan how you are going to arrange for black money while doing a transaction.
#9 Avoiding Inspection of property
You should appoint an expert inspection agency before buying the property. The agency should carry out an inspection of the property. This is to avoid trouble at a later stage. This may cost you additional money.
#10 Not considering future appreciation of property
It is recommended to consider the future appreciation of the property. It is not matter of calculation but it is one type of prediction. Whenever you are buying a property for investment, you should consider future returns.
#11 Not considering expense post purchase of property
You need to also consider expenses that you are likely to incur post-purchase of property. Most of the property buyer does not consider it. The expenses post buying property are furniture cost, cost of interior decoration, modification/improvement cost & cost of Vastu Shanti or Gruh Pravesh puja.