It pays to have a valuer

Author: Yuvi June 10, 2022

Ascertaining technical soundness, actual built-up area, and arriving at fair market value of the property are important aspects of technical evaluation of the property. By RP Deshpande

Ascertaining technical soundness, actual built-up area, and arriving at fair market value of the property are important aspects of technical evaluation of the property. By RP Deshpande

A large majority of people who decide to buy a property, after collecting photocopies/scanned copies of documents, rush to an advocate to get a legal report to ascertain whether the seller has legal title to the property and is competent to sell it Seldom buyers consult a chartered engineer/valuer to seek technical evaluation of the property. In reality, the technical evaluation is as important as title verification.

Even after title clearance is obtained by an expert property advocate, if you are missing the technical evaluation conducted by a seasoned engineer/valuer, you would be inviting many risks such as:

Wrong identification of the property leading to buying a property of not your choice.

Constructing your dream home on somebody’s site – leading to disputes, litigations, and chances of losing the dream home.

Avoid risks while buying your dream house.

Selecting a property that is not approved by the competent authorities

Lesser site area, thus losing out heavily on the price of the property

Actual built-up area could be much less than the recorded area in the document

Actual specifications could be of lower quality compared to promised specifications. Construction quality could be of poor quality.

Paying a higher installment compared to the stage of construction, could lead to long delays, escalation in costs, the builder not completing the project, etc.

Deviation from the approved plan leading to even demolition of the unit

What is technical evaluation?

The technical evaluation starts with identifying the property in question, verifying documents such as Sale Deed, Khata Extract, Approved Layout Plan, Approved Construction Plan, and matching the property on the ground (physical verification) by a chartered engineer/valuer.

In fact, the homework for the chartered engineer/valuer starts much before the site visit. He/she will evaluate the property by verifying the documents such as

Layout Plan and Commencement Letter issued by the local competent authority

Site Release order issued by the local competent authority

Land development completion certificate by the local competent authority

Latest Khata certificate and extract with measurements of land and the built-up area

Construction Plan (including Floor Plan) approved by the local licensing authority along with commencement certificate

Working plan (Floor Plan) of the unit, with measurements

Construction details such as type of construction and specifications

Occupancy certificate issued by the local competent authority

Guidance value as fixed by the government authorities

On satisfactory verification of the documents, the chartered engineer/valuer visits the property and conducts a thorough inspection, identifies the property, notes down many aspects which influence the value of the property such as the approach roads to the property, neighbourhood, amenities provided ( electricity, water, sewage connections), common facilities (clubhouse, swimming pool, indoor games, etc.), distance from market areas, banks, educational institutions, religious places, etc.

A detailed inspection for the particular property follows. For an apartment, the engineer/valuer will verify the construction materials used, workmanship, present construction progress and makes a comparative analysis with the specifications as per the sale agreement, the approved plan and construction on the ground (as per actual construction).

The engineer will take physical measurements of the apartment, attached balconies, terraces, etc., give thrust in measuring the carpet area, built-up area, and super built-up area and compare the same with the sale agreement and the approved plan.

The engineer will be able to measure the carpet area, and built-up area with the help of above said documents and by actual measurements. To arrive at Super Built-up Area, he needs the area statement of common areas and the proportionate area loaded to the particular apartment, issued by the builder/developer.

The engineer will issue a detailed inspection report along with a fair market value assessment, photographs of the apartment complex, photos of interiors of the apartment, a table of actual measurements vs the approved plan with deviation analysis, and fair market value of the apartment.

Selling price

Since the selling price is determined as per sital area (in case of vacant sites), built-up area (individual buildings) and for apartments, it is fixed on the super built-up area, one can understand how crucial the measurements are.

Unfortunately, a majority of the builders won’t provide the area statement of common areas and the proportionate area loaded to the particular apartment, and arbitrarily add 50-100 sq. ft. more area than actual calculations. If the purchaser, before booking the apartment, insists the builder may give the said common area statement with which the engineer can arrive at the proper super built-up area. Once the booking is done, it is seen that seldom the builder has obliged to provide the said common area statement.

Technical evaluation of a property is worth the price.

Technical evaluation of a property is worth the price.

Let us analyze the effect of an extra 50 sq. ft. (which is arbitrarily added, which is an addition to the actual calculations) loaded to an apartment of say 1,200 sq. ft.

If the selling price is ₹ 6,000/- per sq. ft., you will stand to lose ₹3,00,000/- on account of 50 sq. ft., which is physically not there on the ground.

On ₹ 300,000 extra money you paid, during the registration of sale deed, you end up paying extra stamp duty and registration cost, which amounts to ₹20,000/- approximately.

On the extra 50 sq. ft., you continue to pay building maintenance charges for the life of the building (50 years+).

While getting the khata transferred after purchasing you will end up paying an extra khata transfer fee of ₹400.

And the worst part is you go on paying property tax for the next 50 years of the life of the apartment, which may run into lakhs of rupees.

Worth it

By opting for a technical evaluation, not only the intending purchaser gets to know the technical soundness, fair market value of the property, and the actual sital area, built-up and the super built-up area, he/she stands to save a few lakhs of rupees, as explained above. The technical evaluation may cost ₹10,000 to ₹20,000 depending on the property.

In view of the above, it is strongly advisable to opt for a technical evaluation of the property, conducted by a seasoned Chartered Engineer/Valuer.

The author is Managing Director, Abhrant Property Counseling Services P. Ltd, Bangalore, and can be contacted on Ph: 93412 13530 or at [email protected]

10 June, 2022, 12:37 pm

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