According to PSN Rao, founder-chairman of National Association of Realtors (NAR-India), "A home buyer visualises most of the things that he is going to get. Whether his dreams are going to become a reality depends more on his luck and the developer's goodwill than anything else. A flat with a forest attached, a house with the sky and stars above, and so on these are not merely catchy lines in advertisements; they are downright misleading." He adds that in the absence of any law on compulsory disclosure, advertisements tend to take customers for a ride. "Real estate is perhaps the most expensive one-time purchase that a buyer is going to make in his lifetime. The outcome of that purchase cannot be left solely to chance."

BE WATCHFUL

In such a situation, home buyers need to be extra-cautious while making a new booking. They must make sure that the developer has the ability to deliver what he has promised, the project does not get delayed because of the developer's financial difficulties, and there is no compromise on quality. "There is great risk involved in buying in such projects. Buyers must read the fine print and take the plunge only after double-checking everything," says Rao.

Experts suggest that even if one is willing to compromise on certain negatives, a reduction on the actual rate should be preferred to any structuring around the quoted rate. "Buyers must read the terms and conditions of their agreements carefully. Unless they are completely clear and satisfied about all the clauses (especially those related to the payment cycle, penalty on late possession, and penalty on the project getting changed or scrapped), they should not buy," says Sharma. He adds that technically prices in most of the markets in India have declined by 20-40 per cent. Now, these lowered rates are getting reflected in the primary market (new launches).

To reiterate, attractive payment schemes and discounts are typically a bust-time phenomenon. If the market gets its pace, developers will quickly dispense with such schemes. If you wish to take advantage of them, act now. At the same time, do examine the offer carefully before making a decision.

RATING OF DEVELOPERS

Rating of developers and projects by a third-party rating agency can be a useful thing for a home buyer. It benefits all the concerned parties in the sector. According to Raman Uberoi, senior director, CRISIL, the country's largest rating agency, "Real estate being an unorganised sector, a third-party opinion can be beneficial to customers, financial institutions and even developers."

One, says Uberoi, a good rating mitigates the high construction and market-related risks that a customer takes when buying from a developer. Two, a rating service also creates an incentive for developers to maintain the standards regarding legal and construction practices. Three, a good rating also enables developers to sell the project to customers and raise funds from institutions. And finally, financial institutions such as banks and mutual funds that lend money to developers can consult these ratings in addition to doing their own due diligence.

Developers too agree on the merits of rating. "A good rating definitely enhances the saleability of a project and attracts buyers. It should, in fact, be made compulsory for all projects. Such an evaluation will reward developers who adhere to quality and deliver on schedule," says Navin M Raheja, MD of Raheja Builders.

STANDARD NORMS IN PLACE

Clearly, there is a need to develop standard norms so that the developers cannot obfuscate in this matter. Says Rao: "Any product must have a clearly defined method of measurement, so that the consumers are able to make informed decisions. For instance, in a department store, we are able to see the product, read its contents, know its weight or volume, price, and so on. Only then do we decide whether to buy it or not. In case we have doubts, we can actually have a check conducted. Even in real estate we need a statutory framework to ensure that all the specifications are clearly mentioned. And secondly, we need random checks at periodic intervals to make sure that the regulations are adhered to in practice. Unfortunately, all this is not done in the real estate sector at present."

Further, says Rao, legislation needs to be passed that provides for compulsory standard disclosure norms. The legislation should define these terms and should mandate their usage in a manner that is easily understood. This, he says, would go a long way towards protecting consumer interests.

Before purchasing a property, a buyer needs to be alert whether the developer has obtained all the approvals required for project development. In case any sanction is pending, he should try to find out the time required to obtain it. In case the time involved is too long, he should refrain from investing in such projects.

Two, buyers should also read the buyers' agreement carefully and understand fully what they have been promised. In case a project is re-invented, the buyer should press for a refund.