Five ways to check a Builder’s Reputation.
Investing your money in real estate is always a big deal and Investing in real estate has become increasingly popular over the last 50 years and has become a common investment vehicle. But before investing you need to know about the builder background and history. Here are fives ways to check a builder reputation…
1. Background report
You can do a quick Internet search by company name since customer forums, blogs, news reports, property sites, etc., typically have a lot of information. However, it is still a good idea to go in for field research. Talk to people who bought homes in old projects as well as local brokers/agents. The current market price of the past projects in comparison to peers in the same locality is also an indicator of the builder’s standing. You should check the credentials of the contractors associated with the project as well.
2. Previous record
It is good to buy from an experienced builder with a good delivery record since he is likely to have a more professional approach, with systems and processes up and running. Besides, you can check his track record and find out how well the past projects have been executed. Remember, lack of transparency is a good enough reason to not buy. A reputed builder will also typically be a member of an industry association, such as the Confederation of Real Estate Developers Association of India (CREDAI), or the Builder’s Association of India (BAI). These are self-regulatory bodies that have strict norms for builders and any deviation may lead to the company being blacklisted by the association.
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3. Financial stability
Is the company overleveraged? Get hold of the company’s balance sheet, and if the business has too much debt or is unable to repay its loans, strike off the project. Some listed builders put up their financial details on their websites. For others, you can contact the concerned Registrars of Companies (ROC) office or visit MCA website also has the details. Log on and register yourself to view all company documents under the view public documents section. The site will ask for information like company CIN/FCRN, registration number, ROC details, also check the cash flow statement. Companies with strong cash flows are likely to complete the projects on time.
4. Realty ratings by CREST.
The Crisil Real Estate Star Ratings (Crest) provide city specific assessment of real estate projects, and can help you compare and identify quality projects in a particular city. They also have a National Developer Ratings list, which rates a developer on parameters such as good track record of transfer of clean title, maintaining legal and construction standards, and timely project completion. However, the developer has to register with Crisil to be rated and not many projects are on its radar yet.
5. Quality certificate
The International Organization for Standardization’s 9001:2008 certification criteria for a quality management system is based on many principles, including customer focus and satisfaction. Therefore, an ISO 9001:2008 audited and certified builder is expected to be more professional in his approach, and it is a good idea to check this before investing in on a housing project.