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CHAPTER-10
Reap the benefits

Exiting the market

On what basis should I decide to sell my property?
Your decision to sell your property depends on the following factors: Property market in your city/locality: The residential property market is locationspecific and the prices will vary for different areas. How soon do you need the money? Do not sell your property in a hurry if you do not need the money urgently. Getting the best deal may require patience or even spend some money to add value to your house. You also need to consider the rental return from the property as it will be a source of steady income. Price it right: The biggest mistake sellers make is in pricing their property too high. The best way to determine the ideal price for your property is to check with brokers in the locality or by listing it on property portals online.

Winding up

Consider the taxes: How much you actually get after you sell the property will depend on how long you held the investment. If you sell your house within three years of buying it, you will lose the tax benefits. In case of a mortgaged property: Selling a house that has an outstanding loan requires a lot of documentation. So, try to pay the loan and then sell the house.

How do I sell my property?

Selling property is much more difficult than buying one. Unless you know of people who are willing to give a good price for your house, a property broker may be your best bet. Brokers usually have a wider reach and are more clued in to the local property market than an individual seller. You can also list your property online. Property portals such as MagicBricks.com allow individual sellers to list one property for free. It is also worth listing as a nominally paid service as the portal offers additional services for the fee.

What is considered as the right time to exit a real estate investment?

Real estate is not a get rich quick investment route. It pays off only when one invests in a property for at least 3-4 years. Even with a long-term investment horizon, one needs to have a clear exit strategy in mind before one buys real estate as an investment.

How to make a safe exit from real estate?

Selling the property as fast as possible in challenging market conditions is a wrong investment strategy. The only safe and consistently profitable route is long-term investment. This is why it is extremely important to know what will happen a few years down the line to the property market in general, the location and property in particular and ones own finances. A savvy real estate investor must know unrealised gains are meaningless and when to take money off the table.

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What is considered What all things should be kept in mind before exiting the market? the right time to The property investor must decide on the investment horizon (period between exit a real estate purchase and re-sale). A detailed analysis has to be done on the tax impact of investment? exiting a property investment. Expenses such as legal fees and brokerage expenses
need to be factored in pre-payment penalties for early loan closure and stamp duty impact for the buyer must be considered. Irrespective of the timing, a property investor must always focus on having the highest-quality asset base. This means the quality and specifications of the building, the specific location, the depth of the infrastructure and accessibility.

Real estate pays off only when one invests in a property for at least 3-4 years. There is no scientific method to calculate but one should exit a property based on its return on investment achieved and cost of funds.

Is the commercial market bleak as compared to the residential market?

Commercial property market has been hit more than residential property due to slowdown in industrial growth. Surplus commercial realty space has also put pressure on lease rental values. Commercial projects in Tier-2 cities have been negatively impacted by escalation in construction cost and weak demand for commercial real estate.

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What documents are necessary if one wishes to sell off his property?
The main documents required to sell a residential property are the housing society share certificate and the sale/purchase deed of the property. The Sale Deed confirms that the land is in the name of the seller and that he has the right to dispose it off. If

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Can an NRI/PIO/ Foreign National buy property in India? Yes a NRI/PIO/ Foreign National can buy Property in India. NRIs can own non-agricultural NA land only. If you have agriculturist relatives you can buy agricultural land, in the name of your blood relatives.

the property has changed hands more than once, the buyer may also ask for a copy of the previous deeds, in order to confirm the authenticity of the deal and property.

What are the documents I need to sell a property in a housing society?

The housing society share certificate and the sale/purchase deed of the property are the main documents required to sell a residential property. If the property has been sold and bought multiple times, a copy of previous deeds may be required to prove the authenticity of the deal. Other than these, copies of Stamp Duty and registered house documents will also be needed. In case of property being mortgaged, these papers will be held by the bank and you can use a photocopy of the required documents to initiate a deal. Depending on the kind of property and ownership, some more documents, such as a No-Objection Certificate from the housing society and a documented consent in case of jointly owned property, may be required.

Can a Non-Resident Indian sell his property in India? Who can he sell his property to?
Yes, an NRI can sell residential or commercial property in India. He can sell to:
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A person resident in India the definition of resident in this case will be as per Foreign Exchange Management Act (FEMA) An NRI A Person of Indian Origin (PIO)

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What are the benefits of investing in commercial real estate compared to residential for a salaried person? It is better to invest in a residential market where demand is fairly predictable. Commercial real estate is influenced by multiple factors including corporate requirements.

However, an NRI can sell agricultural or plantation land or a farm house only to a person who is resident in India and a citizen.

Can an NRI sell and repatriate proceeds of property received as a gift?

Yes, an NRI can sell property received as a gift. The sale proceeds of such property should be credited to NRO account only. From the balance in the NRO account, NRI/PIO may remit up to USD 1 million per financial year, subject to the satisfaction of authorized dealer and payment of applicable taxes.

Our panel of contributors for this chapter are:

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Anuj Puri, Chairman & Country Head, Jones Lang LaSalle, India Kunal Banerji, President, M3M Group Vikas Vasal, Executive Director, KPMG India (The Times of India) Niranjan Hiranandani, MD, Hiranandani Group of Companies Kaustuv Roy, ED, Cushman & Wakefield Sunil Mantri, CMD, Sunil Mantri Realty (The Economic Times) Ramesh Bhojwani, a Mumbai-based financial expert (The Economic Times)

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