[ecis2016.org] Buying a home and later realising that it may not be the appropriate one for you, can have serious financial implications. We examine the options that a buyer has, in such cases
Buying a property is a once-in-a-lifetime decision for most people, as the investment is generally huge and may come with a long-term liability. One wrong decision, can create imbalances in the buyer’s personal balance sheet and can lead to financial distress. Moreover, with the market getting mature, speculative gains have reduced. Thus, it is important to consider the long-term implications and do proper research and financial analysis, before buying any property.
You are reading: Bought the wrong house? Here’s what you can do
Most common reasons for misjudgement in buying a home
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The most common mistakes that buyers make, while buying a home are:
- Not doing their own due diligence.
- Exceeding one’s financial capability.
- Relying completely on brokers and/or advertisements, for information.
- Relying solely on rental income, to pay the EMI.
- Not evaluating exit options, to deal with situations of financial distress.
- Not budgeting delays in the project, while computing the total cost.
- Failure to fully understand the terms and conditions of the loan.
- Not planning for the long-term.
- Not maintaining enough liquidity.
“Each person has his own specific requirements, in terms of buying a house. Proper research about the location, project, developer, neighbourhood, social amenities, etc., is a must before buying a house,” maintains Surabhi Arora, senior associate director – research, at Colliers India.
“After you zero-in on a location, compare projects on the basis of quality, the developers’ record for timely delivery, amenities and price. After this, one should analyse the various payment plans that are available for the same property,” adds Surabhi.
Overcoming a misjudgement
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Although it’s not easy to reverse the damage caused by a misjudged home purchase, buyers can still curtail it, in certain situations.
- When a home buyer selects the wrong lender: In this case, the home buyer has the option to transfer the loan to any other lender. Although such a move may incur penalty charges, the buyer will be able to get rid of an unfit lender.
- When the developer fails to do the work as per expectation: The only option available to the buyer, is to create a group of consumers who are facing similar problems and take legal action or and also protest and gather support through various fronts. Protection of buyers’ interests is likely to improve, once the real estate regulatory authority comes into force fully.
- When there is no appreciation in property rates: Real estate investments should be long-term. Do not panic, if there is no appreciation in property rates in the short-term. Check the market trends before investing. The real estate industry is cyclical in nature and thus, it is important to enter and exit at the right time.
- When recurring expenses are more than expected: Check with the developer about the maintenance charges, beforehand. There is not much that a buyer can do, to reduce the maintenance cost of an apartment. If the expenses become unbearable, then, the buyer can consider disposing of the property.
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“Buyers should park their money, only in projects that have all the necessary approvals. ‘Prevention is better than cure’, when buying your dream home. The buyer should undertake due diligence and check the credentials of the developers, before investing in any project,” advises Aman Agarwal, director of KV Developers and governing council member of NAREDCO.
Source: https://ecis2016.org/.
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Source: https://ecis2016.org
Category: Lifestyle
