What are the pros and cons of buying a resale house?

While most people prefer to buy a home from the primary market, the secondary or resale market is another option they can explore. Here are a few of the pros and cons of buying from this market.
The advantages The biggest advantage of buying a house in the resale market, at a time when the real estate sector is witnessing a slowdown, is that you can get handsome discounts. “Many speculators, who had bought several flats when the market was on an upswing, now find that they are unable to hold on to them. Such speculators are now willing to sell their holdings, at a discount,” points out Bibhash Surya, head of Sri Sai Dreamlands, a Noida-based real estate consultancy. The slower the market, greater the discount.
Many genuine buyers also offer discounts, when they have to sell their flats. Suppose that a buyer purchased a property at Rs 2,500 per sq ft, four years ago, in the Dwarka Expressway area. Now, the builder may be selling the same flat at Rs 4,000 per sq ft. If a buyer wants to sell his flat, he will have to offer a discount of say, Rs 500, compared to the builder’s rate. If he quotes the same price as the builder, people will prefer to buy from the latter.
Ready-to-move-in options are easily available in the resale market. A home seeker can opt for projects that are close to completion and can take possession of the apartment, within six months to one year of purchase.
The risks and disadvantages The risks associated with cash payments exist in a resale market, as well. Suppose that the seller had originally purchased the apartment at Rs 2,000 per sq. ft and its price subsequently moved up to Rs 3,000 per sq. ft. He may ask you to give him a cheque payment at Rs 2,100 per sq ft and demand the remaining Rs 900 per sq. ft, in cash. “As most working-class people depend on bank loans to buy an apartment, it becomes impossible for them to rustle up so much cash,” says Surya.
The payment schedule, when one opts for a house in the primary market, is usually construction-linked and enables the buyer to pay in instalments. In the resale market, you may have to pay the entire amount upfront, or in a few instalments over a short period of time. Moreover, the cost of a resale apartment will invariably be higher, than the price it commanded during its construction. “Thus, you need a high amount of money upfront, in the resale market,” says Manish Gupta, a south Delhi-based real estate consultant.
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Buying a house in the resale market, may also involve utilising the services of a broker and one needs to ensure that the broker does not resort to unfair practices.
Precautions you should exercise On payment of a token amount, the seller will give you a photocopy of the ownership documents of the apartment. Get those documents checked by a lawyer, to ensure that the title to the property is clear Check if the seller has any dues pending with the builder. You can do so, by getting an updated account statement from the developer, which shows how much payment has been made as well as the due amount. Watch out for late payment fines, or interest charges that may be due from the first buyer Developers may also charge a transfer fee, if the apartment owner sells the flat before the conveyance of the project is completed. You can bargain with the seller, over the share of the charges that you have to bear.By: Housing.com/news