Sometimes, an offer on a house can seem too good to be true. A two-bedroom apartment or even a one-bedroom apartment in a posh locality is being sold for a very affordable price. Offers like these not only tempt customers to make a rash decision as they feel they may not get this offer again ever in the life, but also property developers take advantage of these hard working individuals by making them fall for such gullible scams.
Let me share an example wit you’ll: In 2011 a Kerala-based property developer (Apple a Day) had offered a two-bedroom apartment in New Cochin for a meager 7.99 lakh. And to make this offer sound more exciting and tempting the property developer was providing a home loan for 80% of the property. Sounds enticing, doesn’t it? This scam felt prey to many a thousand, including a few Non-Residents of India as well. Lenders lost close to a staggering 1000 crore according to a few newspaper reports. The reason why the Kerala property developer was able to pull off the scam was because the developer had completed a few projects under their belt which has created a sense of reliability in those buyers’ minds.
The real-estate market is still in the same condition as it was in 2011 when the scam broke out. It makes it very challenging for buyers to purchase houses as most of the real-estate projects are unregulated by the government and with plenty of cases of fraud charged against few property developers it makes buying the perfect home very difficult.
Here are three warning signs you should look out for before investing your hard earned money in any property project.
Warning sign # 1: Don’t be fooled by the cheap price offered for the property
Not all offers prompting affordable property are good enough or honest enough for you to shell out your hard earned money. Think of the Kerala real-estate developer-Apple a Day before you even consider spending money on offers like these. Take a cautious approach before considering a big move investment like this. The buyers who purchased the flat from property developer Apple a Day are still quarreling to get their hard-earned money back from them. We know opportunity never knocks twice but doing due diligence is better than complaining a builder as fraud.
Warning sign # 2: If your property developer urges you to complete the formality as quickly as possible
Is your property developer very hasty in closing the deal? These are tell-tale signs that your property developer is looking to scam you. Property developers may even drop their prices from their actual market selling price just to ensure the customer pays the down-payment on the house as soon as possible.
Shankar Nambiar is an NRI from Dubai, one of the victims of the Apple a Day scam who had given 10 lakh as an initial amount for an apartment that cost 20 lakh is still fighting till today to get his hard-earned money back from the developer.
Making customers feel insecure and tempting them to buy these flats by brain-washing them by saying that this offer will never come in your life again is a very common scam which is being played by most real-estate developers to attract clients.
Warning sign #3: No transparency on legal documentation
If a property developer is giving a thousand and one reasons when you ask him to show the necessary documentation it is a major warning sign that the property developer cannot be trusted. Many developers will skip this step of asking buyers to sign a bunch of documents just to receive the down-payment amount as quickly as possible. If you are a buyer, ensure you sign the necessary set of documents like your title deeds, agreement of sale and a few other documents before going on ahead with any monetary payment. Property developers may hoodwink you by mentioning that the paperwork will get processed in due time, but it is highly unlikely they ever will.
Also, it is advisable for buyers to look into the property developer’s history, check to see if they have any pending cases against them or if they have acquired the necessary documentation for any of their development projects undertaken. Check to see if the developer has got letters of approvals from local authorities, also check to see if the company is a registered company before making a rash decision.
It may be difficult for you as a buyer to constantly keep a check on the project as well as the builder due to prior engagements or distance between your home and the property you bought. So it helps to do a rigorous check up on not just the property but also the developer before making any informed decisions.
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