Developer Verification Guide for Homebuyers

A brochure or hoarding will always show a developer and his/her projects in great light. The offers seem tempting, the project looks amazing –all in all, the project is made to appear like a dream come true. However, if you get stuck with the wrong builder with no credibility and legacy, the dream could soon turn into a nightmare. Be sure of the competence and resources of a builder before you make the purchase.

Regardless of whether you are looking for luxury apartments in Thane or affordable new residential projects in Dahisar, Dynamix Group suggests the following developer verification guide for homebuyers:

1) Basic credential background check

Customer reviews, blogs, past projects, project sites, and past property locations can tell you a lot about the developer. A simple search of the builder or company can disclose a plethora of relevant information. Apart from secondary research, you can also do some first-hand questioning and inquiries from brokers, they can further connect you to people who have purchased the same developer’s property at another location. Compare the prices of past projects in a certain locality with other similar houses/ apartments to gauge the developer’s work and standing. If it is significantly lower, chances are they have short-changed you on the quality.

2) Developer’s past accomplishments

It is advisable to buy from a developer who is experienced and has successfully implemented and delivered past projects. If developers have a good delivery record, they would have a more professional approach, with systems and processes to get their projects up and running. If there is not enough information about the track records and execution of past projects – the lack of transparency should raise a red flag, preventing you from being associated with such a builder.

3) Compensation due to delay in completion

At times a project is unable to be completed within the promised time frame due to reasons beyond one’s control. For instance, due to the COVID-19 pandemic, many housing projects would have witnessed delays beyond anyone’s control. Also, being a highly regulated sector, the time from land acquisition to project delivery is significantly long.

However, if the delay is due to mismanagement of funds or incompetency, the developer should be held accountable as per the agreement. The agreement has a clause that imposes a daily penalty on the developer for delay beyond the possession date. Builders should not try to wriggle out of this clause and should be taken to consumer court if the excuses continue.

4) Strong financial standing

Another thing to be sure of is the financial stability of the company. You don’t want your project to be stalled due to a company declaring bankruptcy halfway through the project. Have a look at their balance sheets and cash flow statements. Indicators like high debt show that the chances of default on loan repayment could be high. Strike off such developers! On the other hand, strong cash flows are green indicators that the project will be completed on time.

All this financial information should be available on the company’s website or if not, you can reach out to the Registrars of Companies office or check the Ministry of Corporate Affairs website.

5) Quality should be guaranteed

Before signing the agreement, you must ensure that the project has all the approvals from the concerned government authorities in place. At times, builders get the agreements signed assuming that the project will be approved but at times that does not happen, leaving the project stuck in limbo. You need to confirm that your builder is an ISO-certified organization as such organizations are expected to be professional in their approach, before finalizing a housing project. Being an ISO 9001:2008 qualified entity means they have fulfilled certain quality criteria and other principles including customer focus and satisfaction.

Make sure that the builder gives a certain guarantee against construction defects for at least a few years.