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What is pre-launch offer? How much it is safe to buy a property in a pre-launch offer?

Now a day’s Pre-launch offers are very rampantly practiced by most of the builders and developers in metropolitan cities. The pre-launch offers are interest-free and risk-free for builders and developers who pool the money from investors who in turn get the property Flat/Villa/Plot a lot cheaper than market price about 25-30 percent. If the developers lend the money from banks the cost of the project may increase many folds and in turn, they tend to make fewer profits by paying the interests to the banks. Here the interests have to be paid by an investor if he opts for a loan. So now a day’s companies have come up with a concept called pre-launch offers.

In prelaunch offers, the customers get the property at a bargained price way cheaper than its current market price. Here the customer gets the opportunity to bargaining, and economically rewarding because he is paying whole money to the company where the project is only proposed, and is only on papers. However, there is a risk involved in this pre-launch and reward if the project is handed over to the investor on time.

Pre-launching a project starts with the concept projected by word of mouth and marketing campaigning by giving attractive discounted prices. Developer attracts the investors and brokers about the project that has not been launched yet by luring with attractive amenities, prices before it is made public.

Here in pre-launch offers, there are many risks and rewards involved in it which we have highlighted.

Risks involved in Pre-launch offers:

  • Buying the property has not yet started and it is proposed only on paper.
  • The project might not get necessary permissions and approvals from various statutory permitting authorities like Municipal Development Authorities, Pollution Control Boards, Fire Safety Authorities, Airport Authorities, Civic Authorities, Town Planning Authorities, etc. Clearances from many such authorities if any of these did not get its nod the project gets delayed and it affects investors.  
  • From commencement of the project till its completion is a time taking process because development phase-wise approvals may take time.
  • Like untoward incidents like pandemic Covid-19, the developers couldn’t hand over the project to investors on time due to a lack of masons and labourers and in some cases not being able to pool sufficient funds.
  • If the project doesn’t get on-time approvals the banks may deny the loans to the buyers.
  • In some cases, developers lack credibility and run away with pooled money of investors. Many happened in the recent past.

Advantages of Pre-launch offers:

  • It is economically rewarding for an investor who is buying the property at a way cheaper than the market price.
  • In prelaunch offers, the buyers get a lot more bargain opportunities.
  • It is price advantageous than regular launched offers.
  • Return on investment is more when invested in a reputed company in a prime project.

What should buyers look at before buying in a Pre-Launch Offers?

  • Buying in a pre-launch offer is a risky economic affair. So one should not buy a property from a developer blindly without due diligence. Firstly the buyer has to know the track record of the developer’s prior projects had on-time delivery of flats/villas/plots.
  • Buyers must know developers’ experience, credibility, and faithfulness.
  • Know about prior defaults, delayed projects, legal glitches in the projects.
  • Buyer must know whether investor put money in the clear titled and marketable land by validating all the documents.
  • Before investing, buyers must check that the project has a Commencement Certificate (CC) and Intimation of Disapproval (IOD). The IOD contains instructions that a developer must follow to legally construct the building.
  • Buyers must check if the developer a RERA registered or not.
  • Know if the builder is constructing with all clearances, approvals and permissions.
  • Developer/Builder must be trustworthy with all transparency in dealings, compliances, legal formalities, contracts.
  • Buyers’ money is safe only when the project is handled by an experienced developer who has a reputation in the market and assures buyers investments are safe.  
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