Till a few years ago, buying a flat meant approaching a hole-in-the-wall broker, poring over newspaper ads or depending on word-of-mouth information. But the new breed of property dealers has changed the rules of the game so that property can be virtually bought off the shelves.

Propertt lists five questions you should ask your property dealer before buying a home:

Who is the developer?

Ask the property consultant to provide the maximum possible details on the developer and the company’s background. The developer’s record gives a valuable insight into quality, efficiency and punctuality.

It is not a bad idea to visit one or more of the completed projects of the developer and ask a few flat owners about their experience in dealing with the promoter and their feedback on the quality of construction. This becomes most important if you are buying from a non-branded, small or medium-sized para developer.

Is the project approved by a bank?

Ask your property consultant if the project is approved by a bank or a housing finance company (HFC). An existing approval from a bank or an HFC means that the project’s legal papers have been checked and validated. Therefore, you don’t have to worry about the validity of the land and building documents involved.

The approval also helps in speedy disbursement of funds. A bank/HFC will never disburse money if a project is not approved by it. However, a bank/HFC approval does not ensure quality of construction, delivery of all promised facilities and amenities and timely completion.

What are the down payment and instalment options?

Ask your property consultant about the exact payment schedule of the developer. Find out how much discount is being offered by the developer if you make a complete advance payment (down payment).

It is safe to make a down payment in case the developer is a branded corporate or a joint-venture company with the government. It is better not to go for down payment in case you are buying from a small/medium developer even if the discount is extremely attractive.

Some branded developers offer only 4 to 6 per cent discount while others promise as high as 12 per cent. Any down payment discount less than the prevailing home loan rate should not be availed of as it does not make financial sense.

Can the developer be penalised for delay in delivery?

Most branded developers agree to pay a penalty if they can’t deliver the project on time. The penalty usually is a fixed amount payable for each month of delay beyond the time agreed upon in the sale deed.

This clause in the sale agreement is more of a safety net for buyers than an adequate financial return.

The penal provision — a standard clause in the agreement — is also seen as a sign of the promoter’s confidence in his capability to deliver on time. The developer knows that he has the financial and technical capability to ensure timely delivery and so does not mind offering the penalty to the buyer.

However, small/medium developers usually do not offer such a safety net. As a buyer, you should bargain and insist on a penalty clause if you are buying your home from an unbranded developer.

What’s the exit clause?

You should have a clear picture of the road in front if you decide not to go ahead with the transaction after paying a few instalments.

Do you get back the money or do you lose it? It is important to ask your property consultant and find out the exit norm. In branded developments, the cancellation charges usually vary from 10 to 25 per cent. This means if you cancel the deal after paying Rs 5 lakh, you may have to sacrifice up to Rs 1.25 lakh as cancellation fees.

Therefore, it’s important that you sign on the dotted line and pay only after you are sure you want to go ahead with the transaction.