We look at some warning signs that indicate everything may not be right with the property or the seller or the intent behind the transaction
Home purchases are the single biggest purchases in most people’s lives and any error in this regard, could have severe and long-term monetary repercussions for the buyer. This is why inexperienced buyers should take utmost care while investing in real estate, to steer clear of any property frauds. We discuss some tell-tale signs that could indicate that everything may not be right with the property, or the seller, or the intent behind the transaction.
Sign no 1: The seller is in a hurry
A person who intends to dupe a home buyer, would want to close the deal in a hurry. Hence, such behaviour should serve as a warning and the buyer should stay away from such deals. Nevertheless, it may also be true that the seller might be forced to sell his property in a hurry, because of a personal emergency. However, for a buyer, the scope for errors is huge, if the deal is concluded in a hurry.
Sign no 2: The property is very cheap
The Mumbai Police’s crime branch recently busted a racket that promised Maharashtra Housing and Area Development Authority (MHADA) flats, at rates lower than the market price. The racket was busted following a complaint from a buyer who was cheated of Rs 12 lakhs, with a promise of a MHADA flat in the suburbs.
Even a desperate seller will not let go of his immovable asset at a throwaway price. Real estate is not a commodity that loses its chances of getting its true worth with the passage of time. Hence, deals at unbelievably low rates, must be examined cautiously.
Sign no 3: The seller is unwilling to show the property documents
The property’s documents serve to prove the owner’s rights over a real estate asset. Without examining these documents on your own and through a legal expert, you should not believe any claim regarding ownership of the property. A seller who is not genuine, would be evasive and unwilling to produce these documents.
Sign no 4: The property is located in unregulated areas
Buyers may, sometimes, be willing to consider the risk of buying a property in an unregulated area, because of low rates. This is a bad idea, as you will continue to live under the fear of losing the property title throughout your stay.
Sign no 5: Bank rejects the loan request
An advantage of applying for a home loan, is that the bank carries out the due diligence about the technical and legal aspects of the property. Any issue found will result in the home loan request being refused. This could serve as a clear indication that you should not proceed with the deal.
Sign no 6: The seller is abroad
Another common way to dupe home buyers is to use the power of attorney (PoA) to sell property. In this scenario, the so-called representative of the non-resident Indian (NRI) seller would inform you that his client cannot be present during the property transaction, because s/he is unable to travel. There have been numerous fraud cases in the past where properties have been sold to naïve buyers, using fake PoA documents.
Sign no 7: Excuses on-site visit
A seller who wants to dupe you, may not allow you to visit the property at your convenience and only allow the same at their own comfort. To ensure you are dealing with genuine sellers, make several visits to the property and get in touch with the neighbours.
Sign no 8: Demand for huge token money
A person who is out to swindle the buyer is likely to consider the possibility that the buyer may see through his scheme and it may fall apart mid-way. Such sellers will focus on getting as much token money from the buyer, as possible.
Sign no 9: Assured returns
In the residential segment, builders often launch interest subvention plans and 80:20 payment plan offers. In 2018, the government approved the Unregulated Deposit Schemes and Chit Funds (Amendment) Bill, 2018, with an aim to put an end to such schemes. Note here that the rates of properties that offer assured returns, are invariably much higher than other similar properties. Also, the money you earn through such schemes is counted as your income from other sources.
How much token money should you pay for a property?
The amount of token money may vary, from being merely a token to a substantial percentage of the value of the property.
What are the subvention schemes?
Under subvention schemes, a buyer can have a house, by paying as low as 5% of the property’s value and not bear the burden of EMIs till s/he gets possession of the house.