Home Buying Guide – Part 2
HOW SHOULD YOU GO ABOUT BUYING A HOUSE – Part 2
Please read the Part 1 of this post in the earlier blog here
5. Going back to the lending institution for a preliminary legal and valuation check
Once you have shortlisted the properties, you need to go back to the lending institution that has sanctioned your loan to check the following:
- Whether the lending institution has cleared any of these projects in which your shortlisted properties are located, for funding.
- What documents would the lending institution need from you and / or the seller / builder of the property?
- And out of these documents, which are the ones they would need prior to the disbursement of the loan and which are the ones that they would need post disbursal of the loan.
- Which are the documents they would need in original and which are the documents for which they would need the photocopy?
- You also understand from the lending institution the entire process for disbursement, the time that it would take for them to actually release the pay order after submission of the documents.
Once you are ready with the above information, it is now time for your to ask your broker to arrange for a meeting with the owner of the most preferred property in your shortlist.
6. Negotiating the price for the shortlisted properties
Before you meet the owner of the property, it would be helpful to discuss with your broker and through him, prime up the owner about the indicative price level that you are looking at. Your broker would be able to advise you on whether your price will be acceptable or not. Please remember that it does not help to be too rigid about one’s pricing as in negotiations there is always a give and take. Be mentally prepared with a cut-off, beyond which you would tell the other party that you cannot close the deal in that sitting.
If you are buying directly from a builder, there may not be much scope for a negotiation. The builders usually have fixed rates. However, if you push your luck, you may be able to get some discount. The brokers in some cases, get the brokerage from the builder and may be willing to pass on some discount to you in return as well. Discuss these options with the broker, before you meet the owner.
Your broker will arrange for a meeting with the owner / builder of the property that you have shortlisted. The first point that usually gets discussed is the price. Ask for the price. When they mention it to you, if you find the price very different from what you have in mind, you could voice it gently to them. Convey to them that you have come with intent to close the deal and therefore the more reasonable they are, the better it would be to close the deal faster. Ask your broker to actively speak on your behalf in the negotiating table.
If the other party is equally serious in selling the property, you should ideally end up closing the deal with an agreed price.
7. Do a thorough document check
After the price is agreed, ask your seller to share with you at that time itself, the entire list of documents that the financier had given you. Demand that you would like to see all the originals. If the seller has availed a loan from another financier, the original documents would be with the other financier and he may not be able to show them to you, In that case, you should ask the seller to arrange for what is called the ‘List of Documents’ (LOD) from the financier where the seller has availed the loan. In the LOD, the financier provides the documents that are available in its custody.
The seller would take a few days to arrange for the LOD. With the LOD, you should have a fair idea of all the documents that the seller would be able to provide to you and also the time as to by when he can arrange for each of these documents. The time when seller can provide you the documents, must match with that of the requirements specified to you by the financier. This is critical. Do not hesitate to point out to the seller, if any of the documents required are missing. This is your chance to do that. Every single item that is required by the financier is critical.
Here again, it could help to do some research by yourself as to the documents that are necessary for the particular type of property that you are buying. There is no harm in consulting a lawyer as well. The lawyer may charge you some fee in the range of Rs.700 to Rs.1500 and would let you know the properties that you must have. The idea is to get a good fix on the documents that you must have in your possession.
8. Make the payment to the builder / seller
Once you are convinced that the seller would be in a position to provide you with all the documents that are required by you, you can make the first instalment of the payment to the seller / builder. An agreement is usually entered into at this point that lays down clearly the dates when the next payments will need to be made. The obligations of you as the buyer and the seller are clearly laid down.
Follow the time lines mentioned in the agreement. Keep in close touch with your broker and your lending institution, all the time during the period when you are making the payments.
If you have taken care to do the above steps, carefully and diligently, you will find that the transaction goes through smoothly.