Whatever the term used to describe this prepayment, the effects on the buyer are the same. You must pay a certain percentage of the transaction value as proof of their intent. Typically, owners allow buyers to book homes by accepting as little as Rs 1 Lakh as token money. Sellers will also ask for at least as much money in each real estate market to initiate the dialogue. Therefore, if you plan to group a larger contribution from your end, you should use 80% real estate credit, otherwise the seller will ask for a higher down payment. In this case, your risk before registering real estate is limited to 20% of the counter-value. Use 80% payment by the bank and advance home loans for the amount of funds used within a few months. My client has benefited from an 80% home loan and plans to pay 50% of the value of the real estate to the home loan in advance next month. TDS or tax deducted at source is the number 1 on the list, the banks in advance consisting of a real estate deal.
If you resort to real estate credit, then bank/real estate credit providers will insist that you deposit the TDS in advance. The amount is huge for TDS on NRI under section 195. In almost 99% of cases, the bank insists that the buyer pay the TDS advance before paying the end of the bank and provide the payment receipt. It`s pretty ridiculous. The rule is that TDS is only due at the time of payment. How can you force a buyer to deposit TDS in advance? The quantum of advance in a real estate transaction determines the risk to a buyer. The cash payment in real estate is BIG NO. If you pay in cash, you risk all your money.
In addition, a cash transaction of more than 20,000 aff. in a real estate case is ILLEGAL. Always remember that the title to the property is transferred only at the time of registration. In fact, I have received some requests from buyers who want to make 100% payment on the day of registration. The reason is that some of their friends, family members, etc., have had a bad experience because they have received higher advances as part of a real estate agreement. Note here that this payment is not very important. You must first make this payment and then pay at least 10% of the value of the transaction while they sign the sale agreement. As long as payment is limited, the buyer does not take any financial risk. Even if you have the money to make the payment in advance, the buyer should avoid paying more money than this until the balance of the sale is recorded.
In other words, the advance in a real estate transaction also depends on the lag between the date of the sale contract and the amount of the sale. Based on my experience, I can say that if the delay exceeds 6 months, the probability of closing the real estate agreement is only 1 in 5. The seller may resign if he gets a better price or an increase in the price of real estate. The buyer may resign if he thinks he will get a better offer or lower house prices. You must pay a down payment (based on the value of the property) so that the property you have chosen is withdrawn from the market and the agreed price is set. A private contract (which will also serve as proof of payment) will then be signed. It is quite surprising that, in some cases, banks insist on advances as part of a real estate agreement. Such cases are contrary to existing rules and regulations. In short, deliberately or unintentionally, banks put the buyer`s money at stake.
In other cases, buyers are captured by smart brokers or sellers. In very few cases, a seller`s intention is to commit financial fraud. I only share very common scenarios.