Ways to Evaluate Assurances and Buy Back Guarantees
Apr 04, 2017 Legal Guidance
Due to the constant lag period in the economy, it has also put an adverse effect on the real estate sector where the real estate market has come to a standstill for a while. So to revive it and increase the sales, developers come with different offers to attract the buyer. But the buyer should be aware of all these offers as certain offers may tend to sound loud but at the end, after every calculation its worth tend to be either nil or of very less consideration.
So let’s see how to know the right worth of the offers lay down by the developers.
So to capture more of the market share developers have come with the offer of assuring guarantee which means assured buyback. So the developer promises to buy back the properties at a 30-35 percent higher price within a stipulated time period. So as said developers buy it back at a certain rate of interest this really help them to meet the monetary requirements in a slow market. This helps to build confidence in the mind of buyers that there will be a hike in the property rates and it will be a profitable proposition. Also, it surely interests the buyer because of the assured return rates. But as it’s said “everything which shines is not gold” so is it with this offer. One needs to make sure that if you are buying property then make a purchase with a reputed developer so that even if the projects is delayed for up to a year or more you can be self- assured that you will get the possession as quick as possible or either developer will pay the penalty. Do not blindly buy the property weight and take every decision carefully as it has its own pros and cons.
Risks involved with buy back guarantee schemes
There may be lots of hidden costs with it as investors must be suspicious of revealing such costs. So it looks attractive from the outer side but it’s really risky proposition to invest in. there is no strict rules and regulations made regarding this schemes.
There are chances where lack of regulations offends allow the developer to run away from the project and putting the money of buyers on risk.
The buyer does not get sure sort guarantee that the money will be used for the same project only. Developer makes a fake account where it's seen money goes for the same project but there is no such law which forces developers to do so and buyer also has very few rights right to take action under such conditions.
Usually under these schemes, developers ask to pay around 80 to 90 percent of the property worth which is a major chunk of payment. Chances of developers default are very high and if the work gets stuck up in between then it may take a lot of time in getting the project ready and the returns are also badly affected.
These schemes are usually offered by new budding developers as they want to meet the ends and their capital requirements so they come up with such schemes. So it’s only advisable to invest in such schemes if you have detailed knowledge of real estate where about and if you have been in this industry for a reasonable amount of time.
Hence, make the best out of what you have. Do a lot of research and ground work as you do not want to waste your money on any crap. Also, make sure to invest in the best location and all the contracts are well documented so that you can stand in the court of law in an occurrence of any dispute.
So let’s see how to know the right worth of the offers lay down by the developers.
So to capture more of the market share developers have come with the offer of assuring guarantee which means assured buyback. So the developer promises to buy back the properties at a 30-35 percent higher price within a stipulated time period. So as said developers buy it back at a certain rate of interest this really help them to meet the monetary requirements in a slow market. This helps to build confidence in the mind of buyers that there will be a hike in the property rates and it will be a profitable proposition. Also, it surely interests the buyer because of the assured return rates. But as it’s said “everything which shines is not gold” so is it with this offer. One needs to make sure that if you are buying property then make a purchase with a reputed developer so that even if the projects is delayed for up to a year or more you can be self- assured that you will get the possession as quick as possible or either developer will pay the penalty. Do not blindly buy the property weight and take every decision carefully as it has its own pros and cons.
Risks involved with buy back guarantee schemes
There may be lots of hidden costs with it as investors must be suspicious of revealing such costs. So it looks attractive from the outer side but it’s really risky proposition to invest in. there is no strict rules and regulations made regarding this schemes.
There are chances where lack of regulations offends allow the developer to run away from the project and putting the money of buyers on risk.
The buyer does not get sure sort guarantee that the money will be used for the same project only. Developer makes a fake account where it's seen money goes for the same project but there is no such law which forces developers to do so and buyer also has very few rights right to take action under such conditions.
Usually under these schemes, developers ask to pay around 80 to 90 percent of the property worth which is a major chunk of payment. Chances of developers default are very high and if the work gets stuck up in between then it may take a lot of time in getting the project ready and the returns are also badly affected.
These schemes are usually offered by new budding developers as they want to meet the ends and their capital requirements so they come up with such schemes. So it’s only advisable to invest in such schemes if you have detailed knowledge of real estate where about and if you have been in this industry for a reasonable amount of time.
Hence, make the best out of what you have. Do a lot of research and ground work as you do not want to waste your money on any crap. Also, make sure to invest in the best location and all the contracts are well documented so that you can stand in the court of law in an occurrence of any dispute.
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