Choosing between under construction homes and resellers: A detailed guide to make the right decision
- Gaurav Gupta
- Jun 13, 2023
- 10 min read
Updated: Oct 6, 2023
If you're expecting me to give you a blanket statement like "buy property only from a Developer" or "buy property only in a Resale" in this article, then that's not going to happen.
Instead, I'll try to guide you to choose the right fit for you in the Gurgaon real estate market. Every market segment has its own benefits be it a ready-to-move or an under-construction project.
First, let me explain to you what the Primary and Secondary (Resale) markets are.
Primary Market - It involves buying a brand new property directly from the developer or the company in charge of developing, building, or delivering the property. It's like buying a brand-new car from an authorized dealership.
Secondary (Resale) Market - It involves buying a property from someone who purchased it from a developer, or from subsequent owners who bought it from previous owners. It's like buying a used car.
Understanding the example of buying a car makes it clear that there's no specific and unbeatable reason to buy a car only from an authorized dealership. Some people buy used cars, while others prefer brand-new ones. The decision depends on various factors, including budget, availability, and personal preferences.
Now, let's delve into the practical factors and cases related to these market segments. Hopefully, this will help you understand your preference better if you're considering buying a property in Gurgaon
1) What are the available options for properties in Gurgaon's primary and secondary markets?
Primary Market: Abundance of Choices and Personalization Options
Secondary Market: Limited Availability and Dependence on Sellers' Decisions
In the primary market, buying a new home from a developer offers a distinct advantage in terms of the abundance of choices available. With a wide array of options on offer, you have the freedom to choose the specific unit you desire based on your preferences and requirements. This allows you to have a say in the selection process and find a home that perfectly suits your needs. Furthermore, new homes in the primary market come equipped with the latest fixtures and fittings, ensuring hassle-free performance for an extended period.
In contrast, the secondary market, which involves purchasing properties from resellers, operates differently. In this market segment, you are limited to buying what someone else is willing to sell at that particular moment. Availability can vary significantly, as some owners prefer to hold onto their properties rather than listing them for sale.
2) What are the pricing differences between primary and resale properties in Gurgaon?
Primary Market: Higher Price Tags and Potential Impact of Promotions
Resale Market: Lower Pricing and Competitive Market Dynamics
Properties offered by developers in the primary market generally come with a higher price tag. While there are instances where developers may offer promotions to match the pricing in the resale market, such actions can have a negative impact on buyers who purchase at a higher price.
Authentic resale properties in the market, on the other hand, are often priced lower compared to the developer's stock. While there might be instances of overpriced properties in the resale market, they typically lack demand and struggle to find buyers. Instead, it signifies that a reseller can sell it at a price lower than what the developer is currently offering for similar properties. The resale market tends to offer more affordable options compared to primary properties. This affordability ensures a competitive market where private owners can sell their properties when needed.
3) How do property conditions and age differ between primary and resale properties in Gurgaon?
Primary Market: Technological Advancements and User-Friendly Design
Resale Market: Condition, Age, and Potential Technological Limitations
New properties in the primary market often have an advantage in terms of the technological aspects incorporated into the house. These properties tend to feature the latest technologies and amenities that cater to modern living standards. Additionally, new homes are designed with user-friendliness and space optimization in mind, ensuring a comfortable living experience. Furthermore, new properties in the primary market often embrace the go-green attitude prevalent among today's buyers. These homes are designed with an energy-efficient structure, incorporating sustainable features and practices to minimize environmental impact.
In contrast, while the condition of resale properties may still be good, they may not necessarily feature the same level of advanced technologies found in new homes. Due to the age of these properties, certain technological advancements and modern amenities may not be present. However, this aspect can vary depending on the specific property and the level of renovations or upgrades made by the previous owner.
4) Is immediate occupancy your requirement?
Immediate Possession: Saving on Rent Expenses
Tax Benefits on EMIs for Resale Properties
In the primary market, it is not uncommon to find ready-to-move properties that are still available with developers. These units might not have been sold during the construction phase due to factors such as their layout, size, view, and floor or Developers may have intentionally held back a few units as part of their sales and marketing strategy. These properties can provide an opportunity for immediate occupancy and may offer attractive pricing or promotional benefits.
By choosing a resale property with immediate occupancy, you can enjoy the convenience of moving in right away and take advantage of the financial benefits associated with it.
One significant advantage is the ability to save on rent money which can result in substantial savings over time. Additionally, taking immediate possession of a resale property can potentially provide tax benefits on the EMIs paid towards the home loan.
5) What are the government fees and charges involved?
Primary Market: Exemption from Certain Fees and Administrative Registration Fees
Resale Market: Buyer's Responsibility for Government Fees and Charges
When buying a property from a developer in the primary market, there are certain fees that you may be exempt from. These may include the agency fee, transfer fee, and ownership registration fee charged by the state government. However, it's important to note that there may still be an administrative fee for government registration, which is typically borne by the buyer. It's advisable to review the specific terms and conditions provided by the developer regarding these fees.
In the case of resale properties, the buyer is generally responsible for bearing the applicable government fees and charges. This may include the agency fee, transfer fee, and ownership registration fee. It's important to conduct due diligence and understand the exact costs associated with these fees before finalizing the purchase.
6) What are the payment plans and financing options available?
Primary Market: Structured Payment Plans and Flexibility in Financing
Resale Market: Potential Lack of Inherited Payment Plans and Shorter Financing Timeframe
When purchasing a new property from a developer in the primary market, buyers typically follow a structured payment plan. This usually involves an upfront payment of about 10-20% of the property's cost, with the remaining amount being paid in installments as the construction progresses. This payment plan provides buyers with some flexibility and time to manage their finances more effectively.
In contrast, when considering a resale property, you may not inherit the flexible payment plan or special benefits offered by the developer to the first buyer. If the property was initially purchased from a developer with a specific payment plan, as a new buyer, you might be required to make a single payment for the entire amount, not inheriting the original payment plan. Prospective buyers of resale properties will need to arrange for financing within a shorter duration. The distribution of the payment between the owner and the developer depends on the sales and purchase agreement.
7) Evaluating the reputation and track record of developers in Gurgaon?
Primary Market: Assessing Developer Reputation and Track Record
Resale Market: Considering the Influence of the Original Developer's Reputation
In the primary market, developers often have a significant impact on the overall quality and credibility of the properties they offer. It is essential to research and assess the reputation of developers before making a purchase. Established developers with a strong track record generally have a reputation for delivering high-quality construction, adhering to timelines, and providing excellent after-sales service. Reviews, testimonials, and past project performance can provide valuable insights into a developer's reputation and track record.
When it comes to resale properties, the reputation and track record of the original developer may still play a role in determining the overall value and desirability of the property. Buyers may consider factors such as the developer's previous projects, the overall quality of construction, and customer satisfaction. However, it's important to note that the condition and maintenance of a resale property can also be influenced by the individual owner's actions.
8) What are the considerations for home loans when purchasing primary and resale properties in Gurgaon?
Home Loans for Resale Properties: Additional Documentation and Ownership Change
Considerations for Home Loan Tenure and Down Payment in Resale Properties
Obtaining a home loan for a resale property in Gurgaon involves similar procedures as that of a new property. However, there are some key considerations and additional documentation required for resale properties.
When applying for a home loan for a resale property, the list of documents required tends to be lengthier compared to a new property. This is because you need to provide documents indicating a change in ownership. Additionally, if the property is already under a loan, you will need to submit relevant documents related to the existing loan.
While most banks and housing finance corporations provide loans for resale properties, there may be certain restrictions on the loan tenure. When compared to a new property, lenders may insist on a higher down payment for the home loan. It's important to note that some lending institutions may have restrictions on providing loans for properties that are more than 20 years old. Even if they agree to provide a loan, the repayment tenure may be shorter than that offered for newer properties.
9) What are the factors influencing property value in both Gurgaon's primary and resale markets?
Primary Market: Location, Infrastructure, Proximity, and Connectivity
Resale Market: Factors Affecting Demand and Market Trends
In the primary market, factors such as location, infrastructure development, proximity to amenities, and connectivity play a significant role in determining property value. Properties situated in prime locations with well-developed infrastructure tend to command higher prices. Additionally, access to transportation hubs, educational institutions, healthcare facilities, and commercial centers can contribute to the overall value of a property in the primary market.
In the resale market, demand and trends are influenced by factors such as location, property condition, amenities, and market dynamics. The reputation and track record of the original developer, as well as the maintenance and upkeep of the property by the previous owner, can impact its value. Market trends and demand for certain types of properties, such as ready-to-move-in homes or properties in specific neighborhoods, also influence the resale market.
Importance of location in decision-making
10) Are resale properties generally cheaper than new properties in Gurgaon?
Primary Market: Factors Influencing Resale Property Pricing
Resale Market: Potential Savings, Stealing the Deal in Resale Properties
The pricing of resale properties compared to new properties in Gurgaon can vary based on several factors, including the age of the property, location, amenities, and market conditions. While resale properties may sometimes be available at a lower price, it is essential to consider additional factors before determining the overall affordability.
In certain cases, under-construction units in new projects may be priced lower than resale units, particularly during pre-launch or new-launch phases. Investors who enter at an early stage of a new project may benefit from competitive pricing, making it possible to find good deals.
However, when considering the affordability of a resale property, it is crucial to factor in potential renovation and refurbishing costs. Older properties may require maintenance or upgrades, which can add to the overall expenses.
Moreover, opportunities for getting a good deal on a resale property can arise when the owner is in a hurry to sell, such as due to relocation or upgrading to a larger property. Buyers who identify such situations can take advantage of favorable pricing.
It is important to carefully evaluate the specific property, its condition, location, and market dynamics to determine whether a resale property offers a more affordable option compared to new properties in Gurgaon.
11) What are the factors that can influence property appreciation in the Gurgaon market?
Primary Market: Compromises in Unsold Units and First-Time Occupancy
Resale Market: Legal Titles, Neighbours, and Maintenance Charges
In the primary market, several factors can influence property appreciation. Location is a crucial factor, with properties situated in prime areas or those in close proximity to essential amenities, transportation hubs, employment centers, and recreational facilities generally experiencing higher appreciation. The overall infrastructure development and connectivity improvements in the area, such as new roads, metro lines, and upcoming projects, can also contribute to property value appreciation.
Additionally, the reputation and track record of the developer, quality of construction, and availability of modern amenities can impact property value.
In the resale market, there are certain benefits that can influence property appreciation. Firstly, you have the ability to easily verify the legal titles and ensure the legal status of the property, providing a sense of security. Additionally, in the resale market, you can gain a clearer idea of the type of residents and neighbors in the surrounding area, which can impact the desirability and future value of the property. Furthermore, there is better clarity on the maintenance charges associated with the property. However, the appreciation potential may also depend on whether the resale property has been previously occupied or rented. This can have an impact on its future value as the property ages and experiences wear and tear.
12) Understanding the Risks and Uncertainties Associated with New and Resale Properties in Gurgaon
Primary Market: Construction Delays and Waiting Periods
Resale Market: Inspection and Immediate Occupancy
New properties, especially those under construction, carry the risk of construction delays. Various factors such as regulatory approvals, financial constraints, or unforeseen circumstances can cause project timelines to be extended. It's important to consider this risk when purchasing an under-construction property, as it may result in a longer waiting period before you can occupy the property.
On the other hand, resale properties provide the advantage of being an open book. Buyers can thoroughly inspect the property for any construction flaws, such as cracks or leakages. This allows for a more comprehensive assessment of the property's condition before making a purchase decision. Additionally, with resale properties, there is no waiting period as the property is ready for immediate occupancy.
It's crucial for buyers to carefully evaluate and understand these risks and uncertainties associated with new and resale properties in Gurgaon to make informed decisions.
13) Understanding the Impact of Regulations on New and Resale Properties in Gurgaon
Primary Market: RERA and Structural Defects
Resale Market: Lack of Specific Regulations
In the primary market, the Real Estate Regulation and Development Act, commonly known as RERA, is a key regulation that aims to safeguard the interests of homebuyers, providing certain protections and rights to buyers. Developers are legally obligated to rectify any structural defects in the property for a period of five years after handing over possession. This provides buyers with reassurance and a sense of protection regarding the quality and structural integrity of the property they purchase in the primary market.
However, in the resale market, there are generally no specific regulations that govern the transaction. The responsibility for addressing any structural defects or issues falls solely on the buyer and seller, without the additional protections provided by RERA. It becomes essential for buyers in the resale market to conduct thorough inspections and due diligence to ensure the property's condition meets their expectations.
My thoughts:
It's generally more affordable to buy a property in the resale market in the current Gurgaon real estate market. However, that doesn't mean you should disregard the primary market completely. Sometimes, it makes more sense to buy directly from a developer, especially when there are limited alternatives available or when the new property offers significant advantages over existing resale properties.
It's important to keep in mind that property prices are dynamic and unpredictable. The property you don't buy today might increase in price tomorrow. Additionally, certain properties may only be available in the developer's stock or vice versa.
Question: Should I buy a property from a developer or a reseller?
Answer: You must be careful before making an investment. If you are interested in a popular area like Gurgaon and prefer a specific property type, it is advisable to explore the resale market. On the other hand, if you are looking for unique offerings or specific benefits that new properties provide, it may be more suitable to buy directly from a developer. Ultimately, the decision depends on your preferences and requirements.
Comments