Anybody interested to invest in a residential property should evaluate the following points:


  • This is a question, which heckles a lot of buyers. Either this question is not asked properly or buyers take it too personally. Realty of the matter is that one needs to have a clear idea of one's budget and how the same would be funded. Let us presume a client has a budget of Rs. 50L for buying a new property from a developer, what does it imply for the buyer and seller:
  • Leaving aside 10-12% of this amount for payment of taxes and registration cost, the budget of the client is actually Rs. 43-45L. The clients should always consider the landed / complete cost for fixing their budget.
  • The buyer may generally invest 10-15% of the purchase cost as interior cost. So actually the budget for a completed unit would Rs. 55-58L. The buyer has to be financially ready for this eventuality.

Loans / Funding:

It is normally a good idea to run your paper work with your preferred banker to understand one's eligibility for loan. The banks normally fund 70-80% of the value of the residential property. The balance amount has to be arranged for by the buyer upfront before he applies formally for a housing loan for buying a property.


Budget and loan eligibility would determine one's choice of location. Ideally one would want a location close to office and other social infrastructure. Our residential market report would give an idea of the prices prevalent in different market segments / areas to help clients firm up their choice of locations.

Project approvals:

Shortlisted projects would already have been pre-approved by certain banks. It is always better to work with a standard housing finance institution like HDFC or banks like ICICI, SBI, Axis, Kotak etc. They evaluate a project legally and valuation wise before according project approvals for housing loan. Certain banks fix valuations for a particular project. They would only provide loan of 70-80% of their valuation figure. In such cases the buyer's contribution would be far higher than initially envisaged.

Legal due-diligence:

Buyers should check legal paper work of projects being considered in the following ways:

  • Check your bankers legal report
  • Get papers checked from your lawyer
  • Read legal papers, it is not rocket science and a patient reading will give a lot of insights

Purchase price:

Client's should understand the landed cost for the property purchase. The purchase price is a combination of the basic value of the property plus costs like floor rise, premiums for east facing or garden facing, amenities cost, car park cost, club house, infrastructure cost, corpus fund, advance maintenance etc. On top of this would be the applicable taxes and stamp duty for registration.

Payment plan:

It is worthwhile to check the payment plan for multiple reasons:

  • Check if the payment plan is linked to construction
  • Some developers offer pre-EMI schemes where in interest before possession the developer pays. The only challenge here would be that client would be tying up their credit worthiness to the developer's ability to pay on time. One needs to evaluate this risk. Incase one takes a reimbursement from the developer then tax implications of the same need to be understood.
  • Some developers offer schemes like pay certain amount now and balance only on possession. Basically they pick up balance 100% payment from the bank basis the clients eligibility and pay the interest. Schemes like these need to be carefully evaluated because project delays can ruin such schemes.


Check the dates that the developer is willing to commit on paper. What do you feel realistically about these dates? Check with other stakeholders about these dates.


If the project is spread over multiple phases then when does the clubhouse get completed? It should not happen that you buy property in phase 1 and get the clubhouse after phase 10.


What is the developer's plan for delivery? Does he plan to complete project in one go or phases? If it is phases then what is the plan to demarcate your phase or is it going to be living on a construction site till developer completes the project?


Check if the project has a masterplan and if the same being followed on site.

Approval status:

Does the developer have approval for the complete project or for just certain phases? When does the complete approval come?

Draft Agreements:

Check the draft agreement of sale and sale deed. Do check if all the specs and amenities mentioned in the brochure have been mentioned in the agreements as well. All dates agreed by the builder should also be mentioned in this agreement.

Occupancy Certificate (OC):

When will the developer get OC for his project?

Second sale properties:

In case second sale properties are being considered then the following additional points need to be checked:

  • Check if the seller has paid all outstanding's i.e. corpus fund & taxes to the developer, property tax to the municipality and maintenance charges to society / developer. The seller should be able to provide receipts for the same.
  • The seller should also share a no-dues certificate from the developer and society for respective payments.
  • Process title papers for housing loan. This process would ensure that banks would check on existing loans, if any, and come back with feedback. The banks feedback needs to be discussed /negotiated with the seller.
  • Check if the name in electricity bill has been changed or not. If not, then the same needs to be negotiated. Presently for name change, electricity department insists on latest encumbrance certificate alongwith copy of registered sale deed.
  • Check if the name in property tax records has been changed or not. If not, then the same needs to be negotiated.
  • Check with seller / society / other occupants about any notice from authorities pertaining to additional construction or any other matter. These matters need to be closed by the seller before they sell the property.

Payment of Advance:

This should happen once most or preferably all of the above homework has been done to the buyers satisfaction. Look for all possible challenges / issues for the prospective transaction. Be aware of the same and take steps to close these issues / challenges or atleast mitigate them.

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