[GTO]

My blood boils when I read about such experiences. Unfortunately, there are thousands of home owners who have been cheated by builders (some intentional rogues, others just got caught out by bad business decisions). Thankfully, the government has come out with some really stringent laws in the recent past, and has also started putting fraudulent developers in jail! Still, as the saying goes = Caveat emptor!

This thread is to share your experiences, tips, advice & precautions.

Originally Posted by iTNerd

I am one of the thousands of disillusioned homebuyers in Jaypee Wishtown in Noida, having invested hard earned earnings 8 years ago and still waiting, and in the process seen the subsidiary company (Jaypee Infratech) declared bankrupt, insolvent and almost went liquidation before our honorary Supreme Court intervened. Though the founders are visionary, the company and its subsidiaries are overly mis-managed with 'sarkari' type work ethics.

The corporate work culture is simply not there. Greed and rapid expansion took a toll on their financial standing and eventually sank because of the volume of debts. These extravagant projects e.g., BIC, Yamuna expressway, Jaypee Hospital were built by siphoning funds from home-buyers and investors meant for apartments. So, I for once, am delighted to see the dismantling of this 'evil' empire. At least, I find solace that some sort of justice is done.

[pkulkarni.2106]

Originally Posted by GTO

Thankfully, the government has come out with some really stringent laws in the recent past, and has also started putting fraudulent developers in jail! Still, as the saying goes = Caveat emptor

I feel the government fell short when they came up with RERA.

I booked an apartment in Pune in Feb 2016 with a prominent builder. The possession date was March 2019.
RERA allowed the builder to extend the date to Dec 2019, which we buyers didn't object as things go out of control sometimes.
But when the builder was about to miss the 31 Dec 2019 deadline, RERA allowed him to extend the date to June 2020!

By this logic, a buyer will never be allowed to raise a complaint and get compensation from the builder, right?

[Nav-i-gator]

Whoever feels he/she has not been cheated by a builder, please share your story. I don't think anyone would be in that category of God child.

I booked a flat in Greater NOIDA west in Oct 2012 (erstwhile NOIDA extension; a name that was changed due to extremely bad publicity related to farmer protests, scams and what not), with promise of delivery in Mar 2016. I finally took delivery in Dec 2019 (actual physical delivery, not on papers. That is a separate story filled with anger, frustration and endless calls/follow-ups).

And that's just about delivery of flat. Condition of flat at the time of delivery (seepage on walls, different shades of tiles, ill fitted electrical switches/sanitary wares) was way below acceptance levels, but I had to take possession as builder has already started charging maintenance charges, club usage charges (for a club which is yet to be completed) and fixed electricity charges. Common areas like lift foyer etc are already looking like decades old construction. Condition of the overall complex is even worse. People are living there (I guess due to lack of options - Rent plus EMI are hard for survival) while 70% of the project inside the premises is still under construction. This is a hazard from security, safety and pollution point of view. And this is from one of the better known builders in this part of India. Worst part is - owners think they are lucky to even get possession while many other builders are going bankrupt.

[2000rpm]

I keep it simple. I target buying "ready to use" properties, though you have to pay a premium for the same. This leaves little scope for surprise, actually none if the documents are properly vetted.

The thing with real estate buying is realizing that as buyers with cash, you have more bargaining power. Use it to negotiate the best rate, lowest brokerage.

Builders receive capital at 14-18%, so their strategy is to get money from you as you get it at 8.5% and you pay interest, not the builder. A simple excel calculation will make you realize the loss of capital you will have if you book houses 3-4 years before completion. If you factor in mutual funds level ROI on your capital, it will become a no brainer.

If you are stuck with a builder in construction space, we have little power over anything! You just cant fight those goons (all builders will be either goons or goon-associated or politician associated), not worth the fight unless you have the backing of someone powerful locally.
Even in that case, A well connected guy in Mumbai cant move a powerful builder in Bangalore or Hyd, forget NCR.

To summarize,

1. Buy ready to move properties.
2. Buy with higher DP, negotiate rates and brokerage well.
3. Negotiate property price atleast 7% below market rates. Remember you will be losing this 7% during registration and stamp duty.
4. Pay market rate only if the property is like the rare gem (like an immaculately maintained Civic or S10)
5. If under-construction, buy in a locality where you have connections, preferably your base location.
6. Absolutely avoid under-construction properties in areas where you have zero contacts.
7. For under-construction, wait till the property is atleast 70% complete. Builder is unlikely to run away after pumping in so much cash, much higher likely hood at lower stages.
8. Buying real-estate in a saturated market like Mumbai for investment is a bad idea, expect minimal appreciation of capital (FD will provide better returns)

Disclaimer: I only have experience of buying 2 properties and am in the process of buying a 3 one, so hardly an expert.

[speedmiester]

Originally Posted by 2000rpm

I keep it simple. I target buying "ready to use" properties, though you have to pay a premium for the same. This leaves little scope for surprise, actually none if the documents are properly vetted.

Absolutely agree with you.
As I write this, we are registering an apartment in our home town tomorrow. This is a ready to move in property from a builder with good reputation in the city.
Premium paid over under construction to ready to move property in this project is <2% as I was able to bargain hard as the apartment we bought was one of the last one to be sold in the project. I bought it for my parents as it is becoming hard for them manage by themselves in an independent house.

I will put in money for a full product, not half baked one or for one with dreams/strings attached and only if I am staying there.

The current apartment where we live was bought by my FIL when it was under construction, the possession was delayed by over 18 months and all he received in compensation was Rs. 1L. This was before RERA, so even this paltry amount is significant. This apartment is in a prime locality with good security and access to all requirements within a km or two. The nearest Metro station will be less than 500Meters away which is under construction as of now. But still the capital appreciation on this apartment over the past 7 years is negligible. Many of our neighbours have sold their apartment for cost pricing considering inflation and home loan interests.

I do not see real estate as an investment. Maybe Land, but not an apartment.

[ninjatalli]

Sometimes the decision is not only based on the builder alone; the surrounding environment setup also makes a huge impact on the decision. For example, (possibly) folks like @iTNerd who invested in Jaypee homes or similar setups would have done so basis promises of the area seeing massive infrastructure upgrade and overall development keeping in mind the Yamuna expressway and other plans.


Back in 2011, I purchased a house in a relatively unknown area called Dhanori (Pune) for a few set of reasons
- a close friend was purchasing a house and I preferred living next to him (a decision that helped a lot over the next decade)
- a huge Sahara society was coming up right next to the society I was investing in; there were promises of ring road, a 100 feet cemented connect road right upto the airport and much more investments in that area from public services (water connections, etc)
- and the builder was one of the prominent ones in Pune so that helped; plus the apartments were more than 50% completed

Less than a year later, the Sahara organization started going down and the society next door wrapped up immediately! Within weeks of them closing shop, all the promised investments started drying up. Thankfully my builder delivered the apartments, albeit a year late but still satisfying majority of the promises that were given. But we lost on the ring road, or the 100 feet road (this was partially done in patches) as well as the society had to rely (still do) largely on tank water supplies and borewell. The builder made a few amendments on his own; one of the promised playground areas disappeared and an additional flat setup came up instead.

Do I regret the decision? Retrospectively yes - although at that time, had the Sahara complex survived, the area would have been a different picture entirely. And my answer would have been different for sure!

We have sold the house now; and going ahead, my thoughts are clear - live on rent and if I go down the purchase decision, it will be a ready apartment only and what you see around the area at that time, not in the future, and certainly not based on promises!

[aadya]

Originally Posted by 2000rpm

I keep it simple. I target buying "ready to use" properties, though you have to pay a premium for the same. This leaves little scope for surprise, actually none if the documents are properly vetted.

Originally Posted by speedmiester

I will put in money for a full product, not half baked one or for one with dreams/strings attached and only if I am staying there.

Well said. When we buy underconstruction, We pay for chicken by seeing the eggs as simple as that. Most home buyers do so for living there or as a long term investment(though always not sound one with current tax structure). They forget that they are not speculators to buy cheap and sell high. And more often they forget the interest rate and risk value and registration charges when they buy cheap.

[ishan12]

I have some limited experience of buying and selling property along with my dad in Pune.
We bought 3 flats and sold 1 during the period of 2010 - 2016. One of them was a resale, another was a under construction and the one we live in now was a ready possession. Later we sold the flat that was the resale one.
I can certainly say, that if you do not have good contacts and are not a local who can do due diligence and vet a builder, DO NOT put your money on a under construction project. Specially if you plan to have a loan and currently living on rent. (since timely delivery would be important for such a buyer). An exception could be a 90% ready property, with all civil work done and only internal/ plumbing/ electrical work remaining.

We were very lucky with the under construction property we bought, since it was a 2 building project and a few months after the purchase we switched from building A to B, which was supposed to be completed earlier, and was delivered with some months delay. But buyers in building A waited from 2012 to 2019 for their property, which was scheduled to be delivered in Dec 2014.
Once on our visit to the site, I witnessed the wife and mother of a buyer literally crying, since they had a newborn and were having to pay both rent and EMI at the same time. The builder's representative could just say that, am only an employee and can only convey what the builder says. Memory of that evening is etched in my mind. I made up my mind to never buy a under construction property and the next flat we bought was ready possession.

Given the current market trend, you are not gaining much when putting your money in a under construction flat, currently it is totally a buyers market. You can really low ball the builder and they are usually ready to sell a ready possession flat for as low as minus 20% of the quoted price. I have experienced this when negotiating with builders for our flats. The trick here is to quote your price and wait. Initially they would outright reject your offer and then after a few days you would get a call back to re-negotiate, that's when you start gaining the upper hand in the negotiation.

RERA and related legislations have improved the situation a bit but certainly not enough.
Imagine getting your 10 lakh car delivered with a delay of 6 months, no buyer would accept that.
But we have normalized the situation with properties so much that a 6 month delay for a 1 cr flat is accepted as normal/ routine.

[Malyaj]

My wife and I purchased an apartment from Nitesh Estates in Bangalore in 2013, with the promised possession date being 2014. All the slabs were completed that time and this was a major reason for opting for that particular project. Before finalizing this we had visited about 2 dozen projects. In the last 7 years I have seen each of those projects completed before my eyes, in fact I see some of them while driving to work every day and regret my decision.

I do not want to get into the rant mode as I have done this many times in the last 7 years, individually, with my wife and with other buyers from the same project. I will just share my learnings:

1. Do not buy from a builder who has too many projects going on at the same time. No matter how big that builder.

2. Most builders will quickly complete all the slabs as it gives the impression that the project is just a few months away from completion. The maximum time is taken in finishing the apartments thereafter.

3. Stay away from so called 'integrated projects' which combine housing, retail and commercial complexes. They look great in brochures but are a nightmare for residents. The construction never ends and you will feel like you are living in a war zone.

4. RERA is a toothless animal. We have got judgment from RERA in our favour for cancellation and refund of the sale agreement but we know this is going to be a long drawn battle. Many buyers from the same and other projects have got RERA judgement in their favour but the builder has not budged an inch.

5. There are multiple options to litigate. RERA is one of them. The other ways are:

a) NCDRC (National Consumer Disputes Redressal Commission) - Pros: Considered more powerful than RERA. Cons: Extremely long litigation period, claim amount should be over Rs 1 Cr. If less than Rs 1 Cr, you are supposed to file with State Commission of NCDRC.

b) State Commission: Pros: None. Cons - Endless wait period. As toothless as RERA. I have been told by a lawyer that the Karnataka State Commission does not even have the required quorum of judges for passing judgement and cases are lying in limbo for ages.

c) Tribunal: Consists of a retired Supreme Court judge presiding over the case. Believed to be fast. Cons - 10% of claim amount is to be paid as deposit while filing the case. The defendant is supposed to pay this amount along with the compensation if case is settled in your favour. Rarely used due to high amount of deposit to be paid.

6. We chose RERA because we were advised that we should have a decision in favour on paper at least and then explore advanced options. So what are the advanced options?

7. The builder will not pay, whether they have funds or not. They have ability to fight protracted legal battles and will use every bullet in their arsenal. You have to stay put in the fight, even if it is only to mentally satisfy yourself that you did not allow a crook corporate to steam roll you. Post judgement we are preparing for the following:

a) Appeal to RERA to enforce judgement (this is the rule, we have to exhaust this remedy)

b) If the above fails, file police case against builder (we have already done this earlier as a group). This results in a token raid on the company offices and not much else. If you are really influential, you can also use the police complaint to prevent the builder from fleeing the country.

c) Try to get the builder's assets attached. This is the most painful part of the proceedings. Moreover asset sale first goes towards compensating secured creditors and then people like us get the crumbs if any.

d) If even this fails, the only punishment the courts can enforce is imprison the builder. This will not get you back your money, it will only be a moral victory.

8. For those not looking at legal options, they can come together and form an association to take over the project. They need to come to an assessment of how much money is required to complete it. You will require builder's nod for this. The old contractor is unlikely to come on board because his unpaid dues by the builder is the reason why construction has stopped in the first place. Recommended only if very little work is left, otherwise you will be saddled with unprofessional contractors who will take you to the cleaners.

9. Completing the construction is not enough. There are other headaches like EB connection, water and sewerage connections, Occupancy certificates etc which are uphill battles even for builders, let alone associations.

10. Almost all projects these days are undertaken via the JDA route (Joint Development Agreement). The developer does not own any land but sort of partners with a landlord (generally a large family) to build on their land in lieu of money or share of apartments. Make sure that the JDA is clean and there are no provisions using which the landlord can encumber your rights.

11. In the case of our project the landlord has claimed null and void the registration of apartments which are completed, using a clause in the JDA which says that unless the builder completes landlord's share he cannot register other apartments. Now this can be disputed but it's just another thing to fight over.

12. Do not be bulldozed into accepting one sided terms in the sale agreement. Simply walk away from the deal if it is not to your liking. A house purchase is not an emergency.

That's a lot of free advice I have dispensed. I paid for this

[BBR_SHR]

I purchased a Unitech apartment (Gurgaon) in mid 2000s. They had a decent reputation back then. Everything was going well up until 90% of the payments (construction linked) were done. After that everything stalled. As of today I have only recovered one-third of my money via Supreme Court. The timeline for recovering the remaining money + interest is anybody's guess. Luckily, I did not take any loans for this and because of that I have been able to keep some sanity.

[speedmiester]

I feel really sad to hear stories of deceit by unscrupulous builders.
Our societal pressure on us is immense. Every year, I keep getting pestered by my no good relatives to invest in real estate and almost every time I have to tell them I am not interested in wasting my money on real estate. I rather invest in equities or keep it in FDs than lose my patience and mind over a bad real estate deal.
Just not worth it.

If you really have to buy, buy a ready to move in property and bargain hard. It is a buyer's market now and try to minimize exposure to home loans and interest burden.

[aargee]

Do I have permission to share the name of the builder? If yes, then I can share the horrors of 688 families from one of TN's reputed builder - Akshaya who claim to be top real estate developers and builders in Chennai & the story is about their project January

If you visit their website for January on completed, they've clearly advertised as completed, but we all know the horror stories!!

[PrideRed]

When buying home, I look out only for ready to move in. This is something I religiously suggest to friends and families. It might work out costlier but better than losing money or not getting possession.

[saisree]

It's not always feasible to look out for ready to occupy flats when the area is just developing. In general, avoid those big apartments with 100's of units being constructed. They are designed to get late and they come with their own set of problems. We aren't still there to reach that construction/management efficiency.

1. Don't fall for the false socio economic status. It's not necessary that the apartment has to be built by a reputed builder and it has to be a big gated community. As the reputation of the builder increases the chances of failure also increases due to various economic/geographical/political/social reasons. One of the best example is Lavasa by HCC (Hindustan Construction Company)

2.The amenities that you miss in big gated communities are available with multiple choices outside at cheaper costs than the average maintenance charges in these apartments. A private Helipad is the only thing, that, I feel is a real amenity inside a big apartment complex, rest all are gimmicks.

3. Choose the right place which has a bare minimum amenities like, schools, colleges, hospital and public transport first. As the area develops all other amenities develops on its own. OMR in Chennai is a best example. You also have a new business opportunity.

4. Look out for those small apartments with 10-20 flats/houses max and you are at-least 90-95% assured, that, you will get the possession on date or even earlier at times. These small builders try their best to reach that reputed builder status and hence, allow a bit of bargaining, are open to some modifications and also give some fixtures free of cost.

[asingh1977]

Purchased an RTM (Ready to Move) back in 2016. Had to pay a hefty premium—but worth the peace of mind. GGN (Gurgaon) is a horror story of purposely failed deliveries. Unitech being the champion.