Tips On Buying A Resale Residential Property

Om Ahuja, CEO – Residential Services, JLL India

The primary advantage of going in for a resale flat would lie in buying a home in a strategic location where no new supply is coming in. If one has personal cash resources at one’s disposal and is not reliant on a home loan (a home loan on a very old property cannot be taken for granted), buying a home in a project that is 20 years or more in age can be a good investment bet  if the residential property is in a strategic, high demand location with low or no new supply. This would mean that the project would come up for redevelopment, ensuring a tidy profit to the owner.

Documentation And Procedures

All the documents that are applicable for a primary residential property sale would be required for a clear resale flat transaction, as well. The seller should be able to produce all original documents.

The buyer should establish the existence of a proper Society. The original sales deed and the Society share certificate are most important, since the transaction cannot proceed without them. Also, the buyer should bear in mind that in the case of a resale property, proper transfer and re-registration is necessary.

The documents required for registration of residential flats, apart from the sale deed, include a letter from the society that reflects details such as the number of floors in the building, the construction year, the apartment’s built-up area and the number of lifts in the building.

Also required is an assessment bill to the Society from the municipality in question, a NOC from the Collector if the building exists on Collector’s land, a copy of the property card, and a receipt for the payment of registration fees. In addition, the buyer of a resale flat should ask for a clear ownership history if the residential property has changed hands before.

The local registrar will establish the authenticity of these documents. If one is buying the property via a home loan, the bank will run a routine due diligence.

Are Resale Properties Always Cheaper?

Not necessarily. In the larger cities, new residential property supply is scarce or non-existent in many central locations. In such areas, there would not be a question of discounts on resale properties. Discounts are more prevalent in areas where the market is more competitive. That said, resale properties are sold either by the primary owners or by investors. As such, there is a higher possibility of flexibility in payment terms.

Points To Note

There are certain challenges that a buyer of a resale flat may face. This could include lack of proper chain of documentation, especially in cases where the property has changed hands more than a couple of times in the past. If the property is over 18-20 years old, it is possible that it was never formally registered in the first place. Registering it at the current point in time would put the onus of paying the stamp duty in arrears on the buyer.

There may also be additional expenses for repairs to masonry, plumbing, electrical wiring and fittings. Obtaining a home loan for a property which is anywhere close to 50 years of age can also be a challenge.

Finally, one should bear in mind that the Indian residential property market is in a constant state of evolution. One is unlikely to find the facilities and amenities that are available in the newer projects on the market in an older building.

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28 Comments

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  1. TDI City Mohali 08. Nov, 2012 at 10:17 am #

    Thanks for sharing these lovely tips keep up the good work.

  2. Giri 08. Nov, 2012 at 1:11 pm #

    very useful information .

    Can you please provide the list of documents required while purchasing a Resale Flat and Resale individual house ?

  3. Kanika 22. Nov, 2012 at 7:08 am #

    Hi sir,

    We are planning to buy a flat from first party(resale) in KDP Grand Savanna, Rajnagar Ext, Ghaziabad,U.P We will take loan from SBI bank can you guys please explain me the right procedure to buy a flat from first party with the help of information below.

    *Kdp – Builder
    * First Party – Seller
    * Second Party – Buyer

    1. First party has paid all the amount of KDP (Builder).

    2. First party had a loan from HDFC that he had paid and he has the NOC from bank as well.

    3. First party don’t have registry of this flat so right now flat is under hand of KDP (Builder), right?

    4. We (Buyer) want to take loan from SBI bank but Bank says that Builder will give you a Tripartite agreement Or Allotment paper in your name.

    5. To transfer the papers in our name will KDP charge something from First buyer?

    After getting the allotment paper in buyer’s name can bank senction the loan? Bank will give the check to which party? Builder or Seller?

    please explain us in details so that we can buy a flat in this society, our 2 more relatives wants to have flat in same location but due to the confusion in deal they are still thinking about it.

    Thanks
    Kanika Gupta

    • Om Ahuja 23. Nov, 2012 at 4:32 am #

      Since you are buying through a home loan, the bank will first evaluate your proposal and inspect the property, no matter whether you buy from the builder or the owner. If the loan is approved, you will have to pay the mandatory 20% of the overall cost of the property to the seller, after which the bank will process the disbursal of the loan amount for the remaining 80%. The sale deed will remain with the bank as collateral until the loan is fully paid up.

    • Pankaj 02. Feb, 2013 at 4:14 pm #

      Hi Kanika, Have you got your queries answered. I am also looking for same kind of answeres. Can you please help.

  4. From Zirakpur 03. Dec, 2012 at 10:55 am #

    Buying a property is not a small deal for anyone.So having a strategy in mind is important. Very good tips are shared which should be kept in mind before buying a property or home anywhere.

  5. Gaurav 19. Dec, 2012 at 7:22 am #

    @ Kanika,

    I am also planning for the same, I just want to know what about your experience with KDP regarding the same.

  6. Alok 19. Dec, 2012 at 9:08 am #

    To buy property or home is everyone of dream but some time this dreams are vanish when you deal without any study or detail of that property. Your tips are good to all those are making a plan to buy new property.

  7. Guna 31. Dec, 2012 at 3:48 am #

    Hi Kanika,
    I am also in the same scenario as yours. Could you please inform what is the current status? I also want to know if the developer will be directly registering on your name?
    Guna

  8. David 02. Jan, 2013 at 11:54 am #

    thanks for the post. i am planning for this. and your post is really helpful for me..

  9. delhirents 22. Feb, 2013 at 1:47 pm #

    Thanks for sharing these great tips

  10. J. K. Anand 07. Mar, 2013 at 4:30 pm #

    Your tips on buying a resdential apartment are really very helpful.

    In my opinion, it would be more appropriate, if the buyer considers the following points also while buying a rsidential apartment:

    The number of rooms in the apartment as per the need, a modular kitchen, number of bath rooms, proper flooring, lihting, power back-up, water supply, vehicle parking facility,a large balcony facing east,some greenery,a public park nearby for a morning walk etc,a market for purchasing daily essentials, medical facility and educational institutions in the area etc.

  11. Anil 09. Mar, 2013 at 7:30 am #

    sir,
    i want to purchase a resale flat of cost Rs. 250000 witout bank loan, as the flat owner is ready to sell it to me by depositing only 100000 and remaing amt i have to pay in coming two years. i am saleried personi can pay him the remaing 150000 cash in two instalment.
    is there any legal procegure to purchase a flat and how we make the agreement.
    plz reply

  12. Rajesh 06. May, 2013 at 12:59 pm #

    I have a taken a 1 BHK flat in Jaipur (possesion taken on 1st April 2013) and I have agreement for sale please guide me what all document I should ask from builder inorder to have no problem in future.

    • Om Ahuja 08. May, 2013 at 6:32 am #

      Ask the developer for the approved drawings of the project, a clear land title and a copy of the commencement certificate

  13. M Panat 10. May, 2013 at 9:57 am #

    I am booking builder’s sale apartment in a building that is going for re-development. As the building is on collector’s land in Chembur, what are the possible challenges that I might face.

    1) Is there a transfer fee to be paid the collector’s office?
    2) Can I sell or rent the apartment without the collector’s approval?
    3) Can I sell the apartment to only a specific diaspora – Backward class or Minority, in line with the original agreement the society has entered with the collector.

  14. swapnil desai 18. Jun, 2013 at 6:05 pm #

    my question to you the society charges as well as consultation fee of legal adviser can bear buyer and seller both? kindly advise.

  15. Bosco Baptist 20. Jul, 2013 at 3:06 pm #

    Hi,

    Are original registration receipts of the previous sellers in a resale flat necessary to make the title more clear and do they form part of the the previous chain of agreements.

  16. Mahesh 22. Jul, 2013 at 10:06 am #

    Hi

    I have purchased a flat in gurgaon 2 years ago.
    Now builder will give the possession after few months.
    I purchased the flat in resale(i am not the direct buyer from builder) however the registry will be done first time at time of possession so will it be considered as a resale case or fresh as stamp duty charges of resale is calculated as per circle rate not on the property value mentioned on builder buyer agreement.

    • Arshi 25. Oct, 2013 at 10:16 am #

      Dear Mahesh,

      Have you got your answer to the quiry? Circle rate of any area are nearly 1/3 of market rate. In your case, may be the first buyer don’t want register their property on total sell value in Buyer-Builder agreement.

      May please reply. I am also getting the possession of one flat by Next Dec. 14.

      Arshi

  17. Burton 25. Nov, 2013 at 1:35 am #

    Thanks for sharing this write up. Lovely and sardine packed with information. Bookmarked and shared on social media too!

  18. Hiren 01. Feb, 2014 at 12:14 am #

    Hi Nice Post,

    I wanted to ask some questions like we are planning to buy a collector’s flat which is for only Low income communities.. any problem in that case ? what will be documents I should take care of ??

  19. PRASHANT 12. Apr, 2014 at 4:25 pm #

    Sir
    Iam looking for Resale flat in hadapsar,
    but it costing around 26 LKHS is ok

    • Admin 13. Apr, 2014 at 9:39 am #

      That would be the going cost of a 1 BHK in Hadapsar

  20. Dinesh 28. May, 2014 at 6:32 pm #

    Thank you very much for your valuable Tips.
    I got offer to buy house at good locality in kalyan at attractive price, the building is approx 30 years old and society formation done. I seek your comments on followings-
    1. Please suggest the pros and cons of buying such property.
    2. What will be the limitation if i sell this property after 5 years (35 yrs will be the property age)

    • Admin 09. Jun, 2014 at 12:06 pm #

      The pros would include a possibly good location where there is little new supply coming in, and also that it will soon come up for redevelopment as the building will become too old for safe use. The cons are lack of safety, probably non-functional or badly maintained plumbing and electricity, etc,

  21. sm 29. Jun, 2014 at 7:47 pm #

    Sir,
    I intend to buy a residential flat, 22 years old.What are the things one may physically check to get an idea of the building condition.Please guide.

    • Admin 04. Jul, 2014 at 12:24 pm #

      The building is likely to be in a bad state of repair and maintenance due to the age. It is possible that a bank will not approve a home loan for a flat in such an old building. If you are buying it with your own finances, have the building checked by a qualified appraiser or architect, and the electrical work and plumbing by the concerned professionals. Also make sure that all the legal documents for the property are in place.

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