Real Estate Festive Offers
Real estate festive offers: What's on offer and what you should do
Come festive season and real estate companies line up 'exciting offers and deals' to lure potential home buyers. While such offers do cut down the cost of buying a house, you should do your own due diligence before opting for them.
What's on offer: Like every festive season, this time too, the real estate industry has been showering offers and deals like no EMI until possession, free registration and stamp duty, free modular kitchen, free car-parking, no goods and no goods and services tax (GST) among others. "Have clear understanding of base price offered and break-up of apartment price after inclusion of freebies and finally calculate the net value of apartment," says Harinder Singh, Chairman at Realistic Realtors.
Instead of reducing the per square feet (psf) price, usually builders offer discounts and freebies to potential buyers. And to attract home buyers, usually builders showcase the all-inclusive price.
Impact: The overall impact because of discounts and freebies will largely depend on the area of the property. "Buyer must calculate apartment efficiency in terms of net actual carpet area versus saleable area and compare prices to other available options on net carpet area for fair price evaluation," says Singh.
Estimate the total value of discount and then calculate the savings on the original price of the property. Further, one may not necessarily buy the property Further, one may not necessarily buy the property from the builder but may consider a resale unit. If it is a ready-to-move-in property, compare the post-discount price with that of the price of the resale unit being quoted in the secondary market.
Here are few such offers that may be made available by developers
Cash discounts: The discounts are offered on the psf price. For example, the discount may be Rs 175 psf on the rack rate (or brochure rate) of Rs 5,000. So, instead of paying Rs 75 lakh, after availing discount, the final price becomes Rs 72, 37,500, a savings of Rs 2, 62,500, or nearly 3.5 percent of the cost. So, the more you can bargain, higher will be the discount.
Freebies: Not just gold coins, smartphones, some offers may even include fully or semi-furnished apartments including air conditioners and free modular kitchen etc. You will have to estimate their total cost and see how much impact they will make in bringing the overall cost down. Put together, the overall discount may be around 3 percent of the original cost.
GST waiver: Real estate is not yet a part of the GST framework. Therefore, a concessional rate of GST of 12 percent (effective rate of 8 percent after deducting one-third of the amount charged for the house towards the cost of land) is only on the under-construction property. The builder is not allowed to charge GST once the project receives the occupancy certificate (OC). So, be wary of such deals especially if it's a project that has received an OC, since GST will not apply on .
Registration and stamp duty: At the time of registration, the owner has to pay stamp duty as well as registration charges. The calculation of stamp duty varies from state to state while the registration charges and other surcharges range somewhere from 5 percent to 10 percent. A waiver of these can reduce overall cost substantially.
What you should do
Surendra Hiranandani, Chairman & MD, House of Hiranandani cautions, "One must only invest in projects developed by reputed developers having strong execution and financial capabilities. Owing to the rules of RERA, established developers are better positioned to comply with new guidelines. This will give buyers the cushion that they can get capital appreciation on their home as well as timely delivery."
There's nothing wrong in availing discounts and freebies but do not fall for them blindly especially those offers that look too-good to be true. This is because the real estate industry may still not be out of woods and there have been innumerable instances of homebuyers being cheated, builders being sent to jail and even stories of delayed possession being reported almost on daily basis.
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