5 Mistakes Buyers Make Paying a Property Token Amount

 

5 Mistakes Buyers Make When Paying a Token Amount for Property

Property transactions in India rarely go sour due to any form of fraud. Rather, they fail or take months to complete due to small but easily preventable errors committed in the haste of depositing the token amount. Both the seller and buyer feel anxious, and what should have taken several days is completed in one telephone call.

This is the list of five common mistakes and how you can avoid them.

Mistake 1: Assuming "Interested" Means "Owner"

It is not always the case that the party you will negotiate with will be the owner of the property. This might include a relative, a broker representing a particular individual or an inheritor in case of inheritances where multiple parties own portions of the same property.

Before making any payments, make sure that the party receiving your payment token is authorized to do so by asking the simple question if they are the same person on the title papers. If not, then ask for authorization papers. One simple step will save you from one of the most common problems in the buying process.

Mistake 2: Treating the Token Receipt as a Formality

Many consumers blindly accept the token receipt without reading it since they believe the actual deal will iron out the specifics at a later time. However, the token receipt may become the only documentation of the real bargain – and in case of a conflict, the one thing that both parties will refer to.

The receipt that should be signed by the buyer must contain the name of the buyer and the seller, property description, the value of the token, the total price, the method of payment, and most importantly, the conditions for return or non-return of the token. If the seller refuses to put the terms of the refund in writing, consider this a piece of information.

Mistake 3: Skipping the Loan and Dues Check

It would be wrong to conclude that just because the property is on sale, then it should be "clear" – free from any loans, dues, or claims. This is not necessarily the case. The seller can be paying the loan from the house, as well as maintaining fees and property taxes, even on the day of selling the property.

This does not make the property un-saleable; it just means that somebody should be responsible for clearing it and this should be made known officially and in writing.

Mistake 4: Comparing the Listing, Not the Records

Buyers put in considerable effort analyzing what each of the listed properties has to offer, whether in terms of location, amenities, or square feet rate. Fewer people take the time to analyze their own listing in the context of what the property records state — sale deed, approved drawings, and RERA registration details wherever applicable.

For projects that fall under the purview of RERA, the information about promoters and registration is available in the public domain precisely because it needs to be verified by buyers, instead of depending on promotional material.

Mistake 5: Letting Urgency Set the Pace

“There’s another party interested” is one of the most popular statements used in Indian real estate, and not without reason. However, the need for urgency, either actual or fabricated, is precisely when the process of due diligence tends to be neglected. When a buyer is pressured to make a quick decision, chances are that he won’t bother checking for ownership, pending dues, or paperwork.

In case of a truly good property, it shouldn’t go away because of an additional couple of days spent on confirming simple information.

So What Should the Process Actually Look Like?

Ultimately, the process boils down to just a few steps: verify ownership and entitlement to the payments, look for any loans and pending dues on the property, physically verify details about the property, verify its compliance with RERA, and make sure everything is documented in writing before doing anything else.

Not everybody has to suspect everyone else. The vast majority of deals pass smoothly, but one thing is for sure – it is better not to be a victim and not to pay first and only then find out that something essential wasn't verified.

All the details about the verification procedure, checklist for buyers and documents list for each property type can be found in the comprehensive buyer's guide.Read the full guide on Prooperty: How to Verify a Property Before Paying the Token Amount. If you'd rather read the shorter, story-driven version first, I also wrote about this on Medium.

Where Online Research Actually Helps

In case of buyers beginning their hunt online by doing price comparison, listing out places to live in, and studying the developers prior to visiting the site, the real estate portals truly serve a purpose here. However, it must be pointed out what this purpose is: these portals make it easier for you to eliminate options rather than authenticate them. Even after thorough research on real estates portals of Gurgoan, your search ends at this very point.

A Final Thought

The customers do not lose money due to the fact that they are careless individuals. They lose money when the transaction happens faster than the verification process. The problem is not complex; it is all about sequencing: Verify first, pay second.