The Benefits and Pitfalls of Pre-booking Homes

Madhu and Kishore recently decided that it was the time for them to invest in a home of their own. Of course, the advice poured in from all sides on how they must go about it.One of the aspects of home buying they were looking into was that of pre-booking a home and the possible benefits.Pre-booking an apartment that is not complete may be done at 3 stages – pre-launch, at the launch and midway through the project. Here is clear look at the possible benefits and pitfalls of pre-booking at these different stages.

Pre-Booking at the soft and pre-launch

A soft launch is done when the builder does not have most approvals in place and is simply looking for the initial momentum to test response and gather funds for promotion.The primary benefit here is a monetary one where you get a competitive price that may be up to Rs 500 or more per sqft lesser than the launch offer. This ensures you a great deal of savings and will make the appreciation rate of your property more worthwhile going forward.Another major benefit is the fact that you, based on the plans, may choose an apartment of your choice – right from views to direction and to floor.While these may be the benefits, the downside may be that:

• Your builder may not have all approvals in place and this may lead to delays in completion, negating your savings.
• Without necessary documentation in place, especially the sale deed, you may find legal verification a problem.
• Since the building will still be under construction, there are chances that the plans will change and your home may not look the way you envisioned it.

This soft launch stage then moves into pre-launch, where the builder will offer numerous early bird discounts. At this stage, construction may be yet to begin, but most approvals are in place. This is the stage where market hype is created.While the benefits may be the same as above, the risk involved may be slightly lower. This is especially in relation to the conscious delays by the builder in completion of the project, which will block your investment.

Choosing a Home during the Launch Phase

Now this will be time when prices will be at least Rs 200 per sqft lower than the final price for the home. With approvals in place, your risk in terms of documentation is significantly lower. But, a flipside would be that pushy salesmen may try to influence your choice of homes.Your scope for negotiation will be lowered, considering there will be more people vying for the same apartment complex. The possibility of delay, change in floor plans, etc. will remain.

Buying a home under construction

This is a stage where all documentation is in place and you may verify it to your satisfaction. You will also have the sale agreement in place for verification. You will have to be prepared for a rise in price, which is natural at this stage. You will also be faced with a pre-EMI burden.Each of these stages has their own benefits and pitfalls. Based on your position at the time of booking a home, you may choose the stage at which to make your booking. If you are booking at the pre-launch stage, these pointers may help in you making a better decision.

• Research the track record of the builder to look into delays that may have been there in earlier projects.
• Scrutinize all property documents by the builder, especially those related to municipal and land authorities.
• Try and source sale deeds from home owners of the builder’s brands and look into the clauses included.
• Examine your legal options if you are faced with the delay from the builder.

Madhu and Kishore were presented with all of these options and realized that research is the key to making the right decision when booking a home. Examine the pros and cons of every stage before signing on the dotted line.