Home Buying Tips: How to buy the right property at the right price
Home Buying Tips: Investing in a property is considered wise only when you purchase it at a fair price or below market value.
While there’s no fixed rule for determining the property price, you can estimate its fair value by keeping a few factors in mind. (Image: Freepik)
By Pradeep Mishra
An investment in property is considered wise only when you purchase it at a fair price or below market value. This is because buying at a lower price increases your chances of earning a higher profit in the future. It’s worth noting that property pricing doesn’t follow a fixed formula. Currently, the realty sector is experiencing high demand, and over the past few years, new projects have offered limited options, allowing builders and developers to periodically raise prices.
In such a scenario, especially when it comes to new projects, determining the price of a property built two, five, or ten years ago becomes challenging. While there’s no fixed rule for determining the price, you can estimate its fair value by keeping a few factors in mind. Let’s explore how to do this:
Choose the Right Time
Property prices are currently on the rise. So, should we consider this a good time to invest? Many people might advise waiting. However, if you’re not buying the property for personal use but for rental income or long-term capital gains, it would be wise to focus on semi-developed areas. You can definitely find properties at lower prices in such locations. Second and third-tier cities, as well as satellite cities of larger urban areas, fall into this category.
To clarify, a satellite city refers to a town that undergoes urbanization due to the rapid population growth of a nearby city, helping to ease the population pressure on that main city. Cities such as Noida, Greater Noida, Sonepat, Gurgaon, and Faridabad were once considered satellite cities of Delhi, and currently, towns like Dharuhera, Bhiwadi, and Alwar can be connected as satellite cities of Gurgaon.
Direct Contact with the Seller
There’s no doubt that brokers working in a specific area have the most information about available properties there, but sometimes, friends or acquaintances can also provide information on properties for sale. If you can establish direct contact with the seller, you can save the one to two percent commission that would otherwise go to a broker. Additionally, direct contact with the seller allows you to negotiate the price more effectively.
However, to negotiate successfully, you need to have a good understanding of the property prices in that area. To gather price information, contact a few brokers in the area and ask about recent sales prices. Pay attention to the location and size of the properties sold. Multiply the size by the price to convert the property cost into price per square foot, meter, or yard. This will give you a fair estimate of the area’s property prices.
Ready-to-Move Properties Are a Better Option
If you’re investing in property for rental income and can afford it, opting for ready-to-move properties is a better choice. You can start earning rental income immediately from such properties. You could also consider properties that are expected to be ready for possession within four to six months, meaning the project is in its final stages. In such cases, you can negotiate with the builder for discounts on parking, club memberships, and other fees.
However, ensure that you thoroughly examine the property’s documents before making a purchase. I often remind real estate investors that “a property does not reveal who its owner is; ownership is established through documents.” Therefore, whenever you finalize a property deal, make sure to thoroughly check the documents and register the property in your name without any delay.
(The author is CMD, ORAM Developments. Views are personal)
