Barring a slight temporary slump owing to the pandemic situation, the real estate scene has been showing a steady uptick. Most agents and builders offer amazing customer service and accountability as this is an area that sees fierce competition. However, real estate scams too have been rampant in the country which causes severe financial loss to the investors. Meanwhile, the Real Estate Regulatory Authority ensures monitoring and grievance redressal too. But, people are often deceived or misled due to lack of proper homework and planning. Here are some important points to keep in mind before investing in real estate.
The builders often offer attractive packages and interesting deals, at the beginning of a project, to attract maximum customers or investors. This helps them remain visible and significant in the extremely competitive field of real estate. Moreover, this is an easy way to collect the amount that is required to complete the project. Most builders lay the trap through advertisements that promise amazing deals that are often phony. For instance, a real estate developer based in Gurugram had recently deceived around 700 investors by promising to return 12% of the amount that the latter had invested, when the project is completed. The developer had collected about Rs 1000 crore, in this manner, from his investors.
Promising money through rent
Another method to deceive the investors is to lure them with false promises that they could earn a decent monthly income as rent. Fake listings of the buildings or flats that are supposedly rented out would be produced to convince the investors. Most investors blindly believe these promises without properly enquiring about it. Later, they would fall into financial stress when they find it difficult to pay the installments as they cannot find the tenants.
Both builders and real estate agents are equally guilty for deceiving the investors using faulty or fake deeds and documents. Usually, they would create a duplicate copy of the deed of a vacant land/structure or the ones that are legally contested. By the time the investor realizes this, the agent or the builder might have already fled with their money. Another instance of such fraudulent methods is to give house at a different land to those who have booked houses even before constructing it.
Deliberatively delaying the projects or sudden ‘disappearance’ of the builder or the agent is something that the investor needs to be wary of. Projects are indefinitely delayed until the time the builders get enough investors or they collect an exorbitant amount of money. Meanwhile, some others would use the investors’ money to complete another project, thereby delaying the first one. There are lots of investors who have been waiting for years to get the projects completed. In most cases, the purchase agreement is all they have as proof.
Changes in approved projects
Another method of tricking the investors is to deviate from the approved plan while constructing buildings. There are lots of people who are dissatisfied by the quality of materials that have been used for construction or by the features and facilities that do not subscribe to the plans that were approved by them. However, they have no option but to unhappily live in these houses as getting rid of them would push them further into financial distress. In most cases, the owners are forced to spend more money to arrange the facilities that they require.
Difficulty in securing approvals
There have been instances of people frantically running around for getting the necessary approvals, even after owning a completed structure. The investors often complain about the delay in getting approval for electricity connection and water connection. The owner is often bewildered when he/she realizes, after entering into a contract with the builder or when the construction has been completed, that the building stands on a contested land or the floor area doesn’t match the legal stipulations.