As an enthusiastic owner of a Dream Home, you may fail to do certain things which many other owners would have learnt the hard way. Is it not wise to learn from other persons' mistakes?

1 Clear Title: Many people buy a land and due to irregularities in sale of the land they suffer. One person who I know bought a land in a Metro. The same land was bought by another person. Now they both are fighting in court for the past five years.

2 Approved Plan vs Actual Plan: Many builders draw the approval plan as per the legal requirements. But when they implement it, they deviate from the approved plan. As long as the builder interacts with government officials, you won’t have any issue. Once the builder gets his/her money from you, the challenge begins. I know a friend who bought an third floor apartment built near an Airport who is facing legal issues as there is no provision in law to allow third floor in that locality. He told me that he along with his neighbors in the same third floor is paying huge amounts to the government officials to ‘set right’ the issue.

Learning: Ensure that Actual Plan is in accordance with Approved Plan. If the deviation in plan is suggested by you, then be prepared to face the government officials for few years.

3 Non-Refundable Advance Trap: This is very common thing in a ‘hot’ locality. People, out of enthusiasm, panic and pay a huge Non-Refundable advance even before looking at the agreement or the apartment location or facilities in the apartment. After paying the advance they realize that the apartment they dreamt was not what they were allotted or the agreement would have been completely in favor of the Builder where even minor modifications would be charged a hefty amount. Since the advance amount is huge, people hesitate to withdraw from it and go for the one provided by Builder. One guy who was trapped in similar situation told me “The kind of respect the Builder showed before paying the advance was excellent. Once I paid the advance, I was treated with no respect when I enquired about a few things about my apartment.”

Learning: Don’t get into the Non-Refundable Advance Trap. Go to a professional builder, do a micro planning, get this micro plan approved by Builder, get everything clear, prepare a new agreement and then pay the advance.

4 Vague Agreement: For a prospect owner of a Dream Home, each and every small items in a house matters a lot. For a ‘not-so-professional’ builder small items in a house don’t matter much. Unfortunately all these small items decide our quality of living. When the Prospect Owner and Builder write the agreement, the emphasis is given more for schedule, cost, high level items like total area, floor type, doors and windows, modular kitchen, basic electrical circuits, painting, etc. Low level items which are part of the high level items are not described in detail in the agreement.

Few examples of vague agreement:

a) The agreement may say “Flush Doors will be provided in all rooms. Teak Wood Door will be provided for the Main Door”. There are flush doors available ranging from Rs. 900 to Rs. 20,000. Neither the builder nor the customer bothers to mention the quality or rate of such doors in the agreement. Which one does the customer deserves and what do you think the ‘not-so-professional’ builder will provide based on the above agreement?

b) The agreement may say “Vertified Tiles will be provide in all the rooms.”. Customer may not be aware of the fact that there are at least three varieties of Vertified Tiles in each brand (1^st quality, 2^nd quality and 3^rd quality). You know what variety of the tile a ‘not-so-professional’ builder would lay if the agreement said just as mentioned above.

c) The agreement may say “CP Bath fittings will be provided in all bathrooms”. (CP means Chromium Plated). In India, there is a CP Water Tap for just Rs. 50 and also for Rs. 5000. The cheap CP Taps will become useless in a few months as the quality is very low. Some expensive taps (say Rs. 250 CP tap) will serve a long life and they may also have 7 to 10 year warranty. The agreement doesn’t talk about warranty in many cases. The things that we use very often should not go wrong in few months. Then there is no point in spending a huge amount from your pocket for your Dream Home.

Learning: Many people sign a vague agreement with the builder. They are disappointed with the builder after the building is constructed. If you don’t want such disappointments, first do a micro planning (will be explained later in this book) and then write down all the expectations in the agreement based on that Micro Plan. I’m not sure how many of us in India do this or did this.

5 Changing Requirements: This is one common mistake many of us do while building a house. The builder would have given an initial estimate based on certain requirements. The Prospect Owner would change the requirements very often and the initial estimate will go for a toss. It may be true that the owner is not a builder to know everything before building the house to give 100% accurate requirements. But it is important to do some homework before providing the requirements to the builder. I had seen some honest builders getting bad name because of customers who change the requirements on the fly and get irritated when the builder provides a bigger bill compared to the initial one.

Learning: Every prospect Owner should do some homework before giving the requirements to the builder. Also a detailed micro planning should be done before the actual agreement is made. This book, if followed properly, would help “Ignorant Customers” to understand what requirements should be given to the builder before the agreement is made. Micro Planning reduces these changing requirements to a great extent and helps both Builder and Customer reduce cost and save time.

6 Ignorance about Quality Products: If it is a product like a bike or a car, the manufacturer would ensure that all the vehicles have very high quality because quality product alone can stand in this competitive market. In Real Estate, since each and every house built by the builder is specific to the customer, the builder may not worry too much about quality. Customers’ ignorance about Quality aspects is the main reason for the builders to show this attitude.

Learning: To get quality Home, the customers should be first aware of quality aspects in a home. It is not important to know just what products are of good quality for their home, but they should also know what would be the price difference (compared to the total cost of the home). This knowledge will help the customer get high quality Home at cheaper cost. 

7 “Paise wise and Rupee Foolish” Customers: Some customers, due to their ignorance, think they saved lot of money in buying a product. In reality, they would have saved a few hundreds and lost few thousands in that transaction. It is better to explain this particular topic in detail.

PWRF Customer 1: This customer had tight budget to build his house. So he went for cheap materials for everything. Instead of buying a tap for Rs. 250 which had a 7 year warranty(means, it won’t go wrong and even if something goes wrong, the manufacturer would repair the tap free of cost during the warranty period), he went for the cheapest tap which costed him just Rs. 50. Over a period of 2 years, this customer changed the tap at least 5 times and also paid the plumber the service charge. In total he spent around Rs.500 for both material and labor for changing this tap. Not only that, he had to have several days where he couldn’t use the tap for his day-to-day activities.

PWRF Customer 2: This customer also had a tight budget to build his house. So he went for cheap quality “door lock cum handle” which didn’t have any warranty. Over a period of 3 years, he changed at least 4 locks as the lock was also used as door handle and his young kid didn’t handle it properly. Once he had to break open the door when the “cheap lock cum handle” failed to open as the spring inside broke and his young kid was trapped inside the room. He was thinking that he saved few hundred Rupees in building the house with cheap materials, but over a period of time spent more money, energy and got mental tension free.

There are several PWRF customers I know especially when it comes to real estate. For example: If the total cost of a 1000 square feet building costs Rs. 40 Lakhs, only about Rs. 15 lakhs goes to the construction cost (assuming the construction cost per square feet is Rs. 1500). If the customers spend another Rs. 200 to Rs. 250 per sq. ft extra for quality products, they may get a very high quality house which would still be just Rs. 42 Lakhs. I don’t see much difference between Rs. 40 lakhs and Rs. 42 lakhs if the quality difference is going to be very high for these two amounts.