The real estate market has a fluctuating behavior and the introduction of reforms by the Modi Government in the past has made the sector restructure itself. This let the realtors work on various ideas to attract the homebuyers and the Buy Back Scheme is one of these marketing ideas and not the gimmick.
Concept of Buy Back Scheme:
The term buyback speaks for itself as the developers/builders/realtors give homebuyers the confidence to sell the property that recently bought property. In simple terms, the property buyer gets a fixed tenure from the developer to either complete the property purchase process or sell it back to the developer. Thus, the homebuyer gets an upper hand as he/she need not worry about what if my mind changes in a couple of days. In short, this scheme allows a person to plan investment conveniently as the chance of losing money is minimal.
In fact, the prospect has to take the final call and the decision comes wisely as you get ample time to consider all factors carefully.
The real estate expert define the Buy Back scheme as an assured return policy as the developer sell the property at an appreciated value and for a tentative period. This timeframe gives the developer an option to re-purchase the same property from the homebuyer at a prefixed value. This fixed-term period usually comprises of 18-36 months from the completion date of the project.
Advantages of Buy Back Scheme:
- The flexibility involved in this scheme offers advantages to both the developers and the property buyers/investors. Apart from being an assured return option the Buy Back Scheme also has a greater ROI i.e. Return on Investment as the developer repurchase the property at a predetermined value at the end of lock-period.
- The property buyer has another advantage of the buy-back scheme and that is selling the property in an open market. Yes, while considering the market value of a particular property a buyer can put the capital asset for sale in the real estate market instead of selling it back to the developer.
- The developer can enjoy a massive benefit of this scheme especially at times when the market is performing slow. The predetermined value of any property under the buy-back scheme can yield huge income as first the prospect pays for buying a property and then selling it back according to the prefixed amount makes the developer gain more.
The developer finds selling of its project/inventories easy and also gets a chance to the raise capital funding easily for the project as the fund collection from the individuals can be made at a lower interest rate.
The non-availability of regulatory in the Indian real estate sector adds a risk factor to some schemes. Thus, the property buyer is suggested to check the developer’s background, delivered projects, legal dispute clearance and approvals for the project.
Don’t ever opt for any property under the buy-back scheme that has a controversy floating around it as something are better to be delayed inspite of hanging in the middle.