Are you paying fair price for the flat you have zeroed on?

Dhruv AgarwalaPropTiger.comMany people who are keen on buying a flat in India find the process too bewildering. Though real estate investments are as complex as investing in other asset classes, flat buyers are often not too circumspect about their decisions. Buying a home is an emotional experience for most Indians, but a degree of caution and research can save future troubles. There are many ways in which buyers could find out what a flat is really worth. An old-fashioned, yet fairly reliable way to assess the price of a flat is to ask an experienced agent who lists comparable flats in the same locality. As they have many years of experience, real estate agents in metropolises often have a good sense of whether a flat is reasonably priced or not. It is not just that real estate agents can estimate what a house is actually worth, they can also negotiate much better than most flat buyers. As people are often sentimentally attached to their homes, it is quite possible that without a real estate agent, the sellers are likely to overestimate the value of their flat. Real estate agents are more likely to ask sellers to list a reasonable price. Needless to mention, it is impossible to assess the price of a flat without comparing it with the prices of other comparable flats in the same locality. It is a good idea to create a list of comparable properties in the locality. However, to list comparable properties, you should first define the criteria according to which they are to be chosen. After finding a handful of flats which are the most comparable, calculate their average price after adjusting for size, building specifications and location. This will give you a better idea of how much the flat you prefer is worth. If your flat costs much more than comparable flats, you should see that as a red flag. If it costs far lesser than comparable flats, it is possibly a great deal. You can get a clearer picture if you find out the prices of comparable apartments which were sold recently or are in the process of being sold. Finding out the prices of comparable apartments is by no means enough. You must learn more about the housing market in the locality. To guesstimate what a flat is worth, you must try to estimate the price appreciation in the neighborhood. It is possible to arrive at a reasonable estimate by looking into the yield on residential real estate assets in the locality in the past and historical price trends. If property prices in the neighborhood are rising, you should allow for the possibility of the flat being overpriced. If the property prices in the neighborhood are falling or rising, they might be overpriced or underpriced depending on whether they are near the peak or valley. Your flat is likely to be underpriced if a new metro rail or expressway is likely to come into existence in the neighborhood. But, this is true only as long as the opportunity does not wither away in the event of glut in the market when more and more real estate players spot the opportunity. Though real estate websites in India are still in their infancy, they are incomparable as far assessing the price of flats is concerned. You can compare the amenities in a flat with that of amenities in similar flats. You can also judge the price in the context of the project completion time, historical price trends in the locality, cost of maintenance, car parking and other costs. To know whether you are paying a fair price, you can also compare the demand for a project relative to the demand for others projects in its vicinity, and the demand for projects in a locality relative to the demand for projects in other parts of the city. If the demand for flats in a residential project are higher than that of comparable flats in other projects in the neighborhood, you are probably paying a fair amount.Many real estate websites have tools that estimate the value of the property when you enter the address of the flat and its specifications. But, this is far from being perfect and depends on how well the real estate website understands the locality.

You should purchase a flat only after due deliberation. There is nothing more unpleasant than regretting that you have paid more for the property than the prevailing market prices.