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Be double careful if buying property at pre-launch stage

Be double careful if buying property at pre-launch stage
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First Published: Fri, May 14 2010. 12 30 AM IST
Updated: Fri, May 14 2010. 10 41 AM IST
While buying a property at a soft launch stage or a pre-launch, you need to be very sure about the developer’s capability to deliver on time and the future prospects of the project and the location.
What is a soft launch or pre-launch? Often, in order to test the interest level in the market, a developer offers limited stock within a closed circle without gathering a lot of public attention. Such an arrangement is known as soft launch or pre-launch. This is also done to attract bulk investors and companies which book five or more flats in the housing project. Often this is done when the developer is at the stage of getting the necessary approvals to start the construction. Once the construction plans are approved, the developer announces the project on a large scale.
What is the benefit? End-users and homebuyers can get such properties at cheaper rates than prevailing market rates in that region.
Where’s the risk? When a buyer books a flat at an agreed price, the developer will give him a tentative flat number. This may or may not change depending on the sanctioned construction plans. Also, if there is a sudden market crash or the developer runs out of his operational cost, or his bank funding is stopped, the project may be in a limbo. In this case, buyers may not get back the money they invested. So, it is advisable to take professional advice before investing in such a project. A lawyer can help you assess the legal status by cross-checking it with the local development authority. A market analyst or a brokerage firm can give you some idea about the execution capabilities of the developer. Your broker may also be of help regarding the status of the project. However, never rely on a single source.
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First Published: Fri, May 14 2010. 12 30 AM IST