How to Check Credibility of a Builder?

Builders play a vital role in real estate sector. Today, a huge number of small builders or real estate companies have joined the battle to grab a share of this promising market. Prospective buyers often get confused about choosing the best builder. There are many cases where the dream of property buyer is crashed when the words are not kept and promised facilities are either not available in time or ever. Building a home is a major investment of a lifetime, and you would not want to take chances. Before investing or choosing a builder, you need to know more about your builder.

Selecting the ‘right’ builder

Real estate is considered a good investment which gives you a steady income as well as tax savings if you opt to finance your purchase. Right builder helps you to get your dream property or home easy. Therefore,  selecting a right builder is vital or important because the builder is the person/supplier who builds your dream home.

 Here are some tips to assess your builder before purchasing the property:

• Word of Mouth Referrals: This is the simplest and easy way to get first hand details of a builder who has worked recently for your family, friends or colleagues. Some developers are so good, they deliver “wow” experiences to their customers. This produces a good word of mouth review for the developer.

• Background Check: Conduct a check on the background and reputation of the builder. You can get a list of good builders from a variety of websites and local newspapers. Do a basic research on the projects they have completed, in progress and planned. Visit your builder’s office two or more times to examine the builder’s office premises, office address, and verify the phone number. If possible ask for a reference and contact details of customers who are using the service of company or used the service.

• Builder’s reputation: While checking reputation of a builder, research on projects they have completed, in progress and planned. Visit these projects they have completed and collect customer responses about the builder. If possible ask for reference and contact details of customers who are using the service of company or used the service.

• Builder’s Association: Ensure that the builder belongs to a respected trade organization or builders association. The organizations or associations such as Builders’ Association of India (BAI), Confederation of Real Estate Developers Association of India (CREDAI)  etc provide an ethical code of conduct that is mandatory for all the member builders and developers. They lay down certain rules that need to be followed and builders or members defaulting or violating these rules are blacklisted. These associations can also facilitate in easy approvals for financing as they have close relationship with many of the housing finance institutions and banks.

• Quality Assurance: You must ensure that the project has been fully approved by the concerned authorities of the Government before you invest or sign the agreement. ISO 9000+ certified companies usually offer good quality services and products. Check if your builder’s firm is an ISO certified company. Ensure that the builder gives you a guarantee for at least a couple of years against construction defects. Ensure that corporation water connection is available as the provided tube wells may dry up sooner than expected. Further for a long-term sustainability, you need to have a municipal water connection.

• Caveat Emptor: Caveat Emptor is a Latin phrase for ‘Let the buyer beware.’ All buyers must exercise “caveat emptor”. A buyer should select a builder after verifying the credentials, delivery track record, taking feedback from banks and other home loan lenders about the builder’s past performance. A buyer should not be solely guided by the cheap pricing or freebies which ultimately are proven to be more expensive due to project delays or abandonment. After choosing your builder, you can continue with documentation procedures. Ensure that you get the things and offers made by builder during your meeting or interview in written. You need to seek lawyer’s assistance before you sign the contract. You can renegotiate before you sign the contractor. If the price or offer made by builder do not suits your need or budget, don’t worry, you can contact other builder. Remember, once you signed the contract, you are liable to follow the rules and condition in the contract.

• Compensation agreement clause: There are situations in which projects gets delayed and are out of the control of developer as real estate development is a highly regulated sector with a production cycle of five years from the time of land acquisition to the project delivery.

However, if the builder has delayed the project due to diversion of funds from the project in order to acquire more land or projects, or is simply incapable of executing the project due to lack of competency or has not kept the promise made in the agreements, he must pay Compensation for the delayed possession. Often, builders have an agreement clause that assures buyers a daily penalty for the damage or delayed possession, but few buyers, if any, invoke it. Builders who give unreal excuses to escape paying penalty should be taken to the consumer court.

The builder must deliver the project in time along with 100 per cent transparency in all the dealings. He must stick to the promised terms and conditions and pay penalty if the project delivery is late. Trust is the most important element in a buyer-builder relation and that should be well taken care by the builder. Get all promises or agreement made by builder in writing. It should outline the work to be done, date of completion, amenities or facilities promised.

• Liability insurance: If you builder does not have liability insurance, you will have to pay compensation for accidents or injuries occurred during construction of your house. Check whether builder has liability insurance.

• Group buying: Group buying is a recently developed shopping strategy which is found successful in the real estate sector. In team/group buying, several people – sometimes friends, but possibly strangers connected over the internet or online platforms where they agree to approach the vendor or builder in order to get discounts. Group buying always helps in fighting the case against cheaters or defaulting builders.

To choose a builder, start to make a list of top builders who are offering ongoing or upcoming properties in your city. If you can ensure that you choose top five builders from them and contact them for knowing the prices and deals offered by them. Usually, reputed builders will publish list of homes and townships they have completed and the projects that are ongoing. Speak to as many people as possible, about the builder and the project, before signing the cheque. Remember, once you signed the contract, you are liable to follow the conditions in the contract.

You can also get a list of top builders in your city from your bank or lending company. Some banks approve home loans only if the builders’ details are available in their list. Once you have a list of builders, ask the builder or the builder’s representative about the previous & current projects they have completed and try to know more about the project you are planning to invest.