How to Avoid Real Estate Scams in India

Lipika Pandey L

Introduction

Real Estate in India had a blast in the last decade and a half. However, without any guidelines set up, property fraud has also boomed at a similar rate. However, investors these days are better informed, but real estate scammers have spared none. From NRI investors to HNIs (High Net-worth Investors), from provincial landowners to the top corporate chiefs, everybody has at some point or the other suffered. Although we can’t give you all the information that will eliminate all of your concerns, we have tried to bring to light some of the significant real estate scams in India and how you can keep away from these scams by following a few preventative strides before investing.

REAL ESTATE SCAMS_ © The Economic Times

Top 10 Real Estate Scams

  1. False Promises: The builders are constantly trying to draw the attention of the buyers only in the initial phase of the project, and advertisements play an important role in making this type of false promise.
  2. Assured Rental Returns: Some builders publish their fake rental listings for their projects and if the buyer doesn’t conduct their research, then there are chances of the buyer getting scammed.
  3. Title Fraud: In this sort of property fraud, scammers produce property title documents and guarantee themselves as the proprietor or legal authority holder for the property. The trickster by and large targets properties that are either lying vacant for a long time or properties whose proprietors are staying outside the state or country. After the documents are forged, he would offer the property to innocent purchasers, and when the fraud is on the verge of getting identified the scammer escapes.
  4. Rushed Sales: It is a procedure used by real estate marketing experts to cause the investors to trust that if they don’t act now, they may miss the opportunity. For example, they will let you know that they have just 3 units left in the project at this rate and the rates will get increased in the next 5 days. Just to save your money you might get rushed and make a decision that you will regret. By and large, the hurried deals method is utilized by somebody to conceal realities and to push deals.
  5. Delayed Projects: This is one of the most used scams of real estate scammers. Here the customer is promised by the developer to hand over the project within a certain time limit, but in the end, they are scammed.
  6. Pre-Launch Scam: But in an ideal pre-launch project, the developer should have applied for approvals, and the approvals should not be rejected at any cost.
  7. Deviation from Plans & Specifications: At the hour of selling, all developers show a wonderful flat and guarantee incredible amenities. When you are offered ownership, you can see cost-cutting across the complex. Sometimes, to extract more funds from the investors, the developer might build the super region of the property without expanding the actual carpet area.
  8. Encroachments: This type of fraud is mostly seen in plotted developments. The lands which are unoccupied for a long time or where the owner lives outside the state or country, are encroached by the local land mafias. 
  9. Selling the same unit to multiple investors: Now, all investors are fighting legal cases. The builder is on the run. There are also cases where the same property is being sold to multiple investors by scammers. There are even cases of the developers selling more units than possible in the given area.
  10. Delayed Approvals: There are many cases reported where purchasers are left wringing their hands in despair even after possessing the property since a few assents for utilities like electricity, water connection, and so on were pending.
REAL ESTATE SCAM_ © European Property

Top 10 Tips to Avoid These Scams

  1. Check Builder’s Track Record: Investors get attracted to lucrative schemes and prices. Such schemes are generally never seen in the daylight. Hence it is very necessary to check the developer’s records and projects before getting attracted to reduce the fraud risk.
  2. Hire services of a legal advisor: It is better to hire a legal advisor and take property-related advice before signing any agreement with the developer.
  3. Choose bank-approved projects: Banks perform their research and investigation before becoming a financial partner of any broker. Hence the chances of fraud for bank-approved projects are less.
  4. Don’t Rush: Don’t make hurried decisions. Finish up your research and invest only where your criteria meet.
  5. Ask Questions: If you are skeptical at any point ask your developer and agent. Ensure that you should not be regretting ignoring minute details and doubts later.
  6. Get Assurances in Writing: Developers can promise star and moon in their advertisements. But if you look at the footnote there will be a disclaimer stating the images, plan, and amenities are for illustration only. Even while construction, they will give you verbal assurance which has no meaning. Hence it is necessary to get everything in writing.
  7. Delay clauses: Before confirming the agreement, ensure that the agreement for the delay is there or not, along with the timeframe for construction being mentioned clearly and a copy of the approved plan.
  8. Get assurances in black and white: There is an ocean of contrast between developer advertisements and legitimately enforceable affirmations with regards to guaranteeing you are getting what you are paying for.
  9. Seek Personal Recommendations: If you can get personal suggestions from any of your companions, relatives, or associates about their involvement with some developer or agent, it is generally better compared to depending on internet-based sentiments, a considerable lot of which might be one-sided.
  10. Understand Details: As the well-known saying goes, “The devil is in the details” while purchasing a property you should have total clearness on reports and transaction details.
TRAPS OF REAL ESTATE_ © Weetas

Concluding Words!

However, a great deal you may encounter, before getting into any deal, you must take all the measures to avoid real estate scams. Before signing the deal, you must pass all your tests. Always keep in mind that, a little research can save you lakhs of rupees and complete mental agony.

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