Friday, July 17, 2015

SERVICES OF REAL ESTATE AGENTS

SERVICES OF REAL ESTATE AGENTS

It is the cherished aim of many to have a shelter over their head. But jumping into action for purchase of property without proper calculation of his financial status for the next couple of years requiring expenditure on various counts could put such persons into financial strain upon investing in real estate. The property buyers firstly have to take into stock their financial position, present and the future keeping in mind the financial requirements for the next couple of years which would help them to know the likely budget for the real estate investment. This exercise would help them to search for a suitable property in a locality of their choice within their budget. Searching a suitable property for purchase is not an easy task. Real Estate agents would come to your rescue in this regard.

For Purchase:
Before you purchase a home or make an investment you must begin by knowing your investment capacity which includes your financial reserves and your capacity to borrow.You should let your real estate agent know some fundamental facts about your available savings, income and present debt so that he can refer you to the right lenders.The majority of these lenders are banks and housing finance companies.

The ultimate selection of the right property has to be done by you. It is a time for increased excitement and emotion. You may be helped in the selection process by your real estate agent who provides objective know-how regarding every property. The first thing you will want to know is whether the property has the environment you desire for a home or investment, and the second is whether it will have resale value when you want to sell. Once you know for sure that the property is right for you the process begins of obtaining finance. Different financing choices can be understood with the help of your advocate and in pinpointing financial institutes with the ideal financial terms of payment.

You should complete the evaluation of the property before negotiation. There are several factors for negotiation which include price, financing, terms, date of possession and the inclusion or exclusion of repairs and interiors. However they are not limited to these. There should be a period of time for you to finish all the formalities in the purchase agreement.

Your agent can help you to find a responsible, professional advocate depending on the area and property to give you written opinion on the title of the property. The ownership of property is indicated by title. There will be some limitations in the title to most properties such as easements for utilities. Some matters which cause problems at a later date can be resolved with the help of your advocate.

For Sale:
If you want to get a fair price for your property, it is wise to utilize the services ofa real estate agent who would help you to know the prevailing market conditions, availability of competing properties, the demand for the property in the locality, marketing strategies, etc. After this information, you may have a marketing plan of your own. In order to fetch higher price for your property, your agent may suggest some repairs and cosmetic work. To increase the marketability of your property, it is necessary to expose your property to other real estate agents and the public which is carried out by your agent since in the real estate market throughout the country, more than 50 per cent of real estate dealings are conducted through chain actions.

The sale dealings may be concluded either by your agent or through other agents to whom the information regarding the sale of your property has reached. Thus, your real estate agent acts as a marketing coordinator and furnishes information about your property to other real estate agents through the media of marketing networks, open houses for agents etc. When, where and how to advertise your property sale could best be done with the help of the real estate agent. Most sales in real estate are through the contacts of the agent with earlier clients, referrals, family friends and personal contacts. Sometimes, newspaper advertising of the sale of property leads to phone calls to the real estate agent's office or to the vendor. While advertising through media, care should be taken not to give an impression that the property under notification is a distress sale. Therefore, it may be noted that if a property is overly exposed in any media, the buyer may get an impression that the vendor is distressed or desperate to sell his property and thereby the prospective purchasers would start bargaining.

In the matter of purchase and sale of immovable property, the point at issue are more or less the same negotiation process. Whichever proposal the buyer brings can be objectively evaluated with the help of your agent in a way that does not compromise your marketing position. This beginning agreement only starts a process of appraisal, inspection and financing. With an advocate's help your agent can assist you to write an agreement that is positive from all angles which is legally binding.


Every area has its own special customs for finalizing the sale deed. You can be guided through this process by your real estate agent. The paperwork needed is itself too much for some sellers. The agent can best help you objectively to resolve these matters and take the transaction to closure of sale deed.

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Thursday, July 16, 2015

PARAMETERS FOR OBTAINING AN IDEAL PROPERTY

PARAMETERS FOR OBTAINING AN IDEAL PROPERTY


Every person would wish to own a house, whether spacious or a small house according to their financial status. A person desires to own a house since it is not only a concrete structure but also involves an element of emotional bonding towards the same.

Nevertheless, it is not easy to either buy a new house/apartment or to construct on the plot. If a desire of a man is to buy an apartment, then it is necessary to identify the right location and a reputed builder and if the desire is to construct a house, then a reliable and right person, is very necessary. 

Selection of a location
Before acquiring any property, more impetus should be on the location since it plays a paramount role in almost all aspects of the real estate. However, the process of identifying the location for owning any property depends upon the purpose for which such person intends to invest, which could be either for residential or commercial, since the priorities differs according to the purpose for which  the property is  intended to be purchased.

The following are some of the guidelines required to be considered while choosing the desirable location are mentioned below:
1.The first and foremost thing that should be kept in mind at the time of identifying the property is that the property intended to be purchased should not be located within the vicinity of slum area or  place of worship or in  close proximity to a drainage line. It is better if the location is populated with people having diverse culture with cosmopolitan outlook and free from anti-social elements and anti-social activities.

2.If the person wants to own a house or a flat for his own occupation, it is advisable to prefer a purely residential area than a commercial one.


3.It is always appreciated to opt for purchase of an apartment built on a Layout approved by the competent authority, since it would ensure better amenities to such occupants.

4.It is also important that such layout should also comprise of well-laid roads with good sewerage system, along with regular garbage clearance.

5.It is advisable to avoid owning a house in the low-lying areas since such property often runs under the risk of inundation of water during heavy monsoon.

6.Care should also be taken to ensure that the location is not very far from the work place, Market place, Educational institutions, hospitals, Bus stand, Railway station or other basic and important destinations.

7.Apart from the above, it is also necessary banking facility, ATM’s, public conveyance, public telephone booths, Internet Centers and others are also not very far from the property. Last, but not the least that the location must also be free any kind of pollution or congestion.

8.Needless to say, the area should have good and regular supply of water, power and in case of bore-wells, then good ground water table is also necessary.

9.To ensure good sleep and less pollution, pick an area, which is free from any factory or workshop in the precincts of your location.

10.As regards maintenance of good health is concerned, it is also very important to inculcate the habit of jogging or walking regularly, for which Public Parks or gardens having jogging track is necessary in such circumstances, it is preferable to own a house or a flat wherein such parks or gardens are easily accessible.

11.Further, it is also seen that the concept of Vastu has gained much momentum now-a-days, which is subjective. In such circumstances, importance should be given to the size of the plot and the Floor Area Ratio along with the price tag than banking upon the Vastu alone.

12.One thing that always concerns everyone is the parking and other logistic issues, which we should be ascertained before purchase. The infrastructure facilities should be good in all respects.

Necessity of a reputed Builder
Real Estate is booming like never before due to various factors viz. IT Boom, High salaried people, soaring share prices, and wide range of home loans available easily. The Builders/promoters are having a field day, as the demand is mounting. That being the situation, it is very important to opt for the purchase of a flat/apartment constructed by any reputed Builders, because some builders, having no experience in the filed of construction may take undue advantage of the mounting demand and may cause damage to the intending purchasers by making false assurance, with poor result and high prices.

 We get to hear a lot of stories about such bogus builders, whose motto is to cheat the people to a tune of millions, collect money and vanish with them, which situation has to be brought under control.The following are few of the information given to enlighten about the ways to tackle and overcome such instances:

1.At the outset, before making any kind of investment either in apartments or plots or in any type of property, it is very necessary to obtain the list of reputed builders of the city, who are involved in the real estate business from quite few years.

2.Once such list is available, then it is necessary to make a thorough investigation about the antecedents of the short listed builders.

3.The next important aspect after finalizing the builder from whom the property is intended to be purchased, other aspects such as promptness in delivery, construction standards, strict adherence to the agreed costs without any escalation, providing all the basic amenities as promised at the time of booking.

4.It is advisable to try and meet the residents residing in the apartments constructed by such Builder.

5.If an offer to sell a flat/apartment is made for the price which is much less than the prices prevailing in the market, then it is advisable to think it over than getting carried away over the throw away price as such purchasers may be vulnerable to some unknown problems, leading to lot of problems in terms of legal and quality of construction.

6.Investing in an independent house or flat built by any unknown builder is always a risky act.


7.Now a day, many Builders are making use of modern and unique techniques and are creating alluring brochures depicting unbelievable designs just to attract the customers to invest in their projects. On the basis of such brochures, heavy claims are being made by the builders and in turn the purchasers are not benefited in any way. 

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Wednesday, July 15, 2015

JOINT VENTURE IN DEVELOPMENT AND CONSTRUCTION OF BUILDINGS




Urbanization has accelerated migration of people to the nearby cities in search of jobs and other means of livelihood. This increased influx of population to the cities has in turn caused the paucity of residential accommodation. The employees prefer to have accommodation near to their job centers to avoid wastage of time in commuting, resulting in vertical growth of city instead of lateral growth. Vertical growth saves lot of land and can accommodate number of families in a small space. But, vertical development of land requires heavy investment; which led to joint venture.


Joint venture is joining of hands. The dictionary describes the joint ventures as “a business activity by two or more people or companies working together”. In land development also, two or more people or companies work together.

As stated above, vertical development of land comprising number of flats requires lot of money, manpower, expertise and experience which an individual cannot undertake. Many a times, the owner of the land may own lands, but may not have funds to fully exploit its potential. Similarly, the builder/ developer who have the resources may need land to employ his resources profitably. Both the owner and developer join hands to develop the land. In order to avoid disputes, misunderstandings in working, both the parties reduce the terms and conditions into writing. This is called ‘Joint Venture Agreement’.

Unlike construction of independent house, the group housing or construction of apartments is more complicated. It requires approval from various agencies like water supply board, sanitation department, power supply board, Airport Authorities and of course  approval of plans. The project requires to be approved by banks for finance. Joint venture agreements clearly earmark the duties and responsibilities for each of the parties. 

In order to avoid huge amounts to be spent for the procurement of the property, the developers venture jointly with land owners through joint venture agreements, develop the property and hand over certain number of flats to the land owner. The number of flats / apartments given to the land owner depends on the prevailing market value of land in that area at the time of project commencement. 


The developer or builder enters into an agreement with the owner of the land and it is known as Development agreement or Joint Development Agreement or Joint Venture Agreement. An immovable property for development may be either vacant land or land with structures thereon.

A developer or builder enters into an agreement with the owner for purchase and development of the land. The development agreement contains obligations and rights of land owners and builder, like obtaining statutory permissions, ratio of sharing the developed property between owner and developer, process of finding prospective purchasers and funding the project, time duration of completion and penalties for violation.

WHAT CONTAINS IN THE J V AGREEMENT?

The agreement contains the particulars like the liability of the promoter to construct it as per the approved plans and specifications approved by the local authority; possession date, price to be paid by the purchaser and the intervals at which the installments for the full payment are to be made specifying the stages of construction; the precise nature of the body to be constituted of the persons who would take the flats; details regarding the common areas and facilities specifying the percentage of undivided interest in the common areas and facilities appertaining to the apartment agreed to be sold; a statement of the use for which the apartment is intended; the copies of the title certificate issued and a copy of the approved plans and specification, a list of fixtures and amenities including provisions for lifts to be provided/provided for the flat to be sold should be attached to the agreement. 

A promoter, while he is in possession, and where he collects from persons who have taken over flats or are to take over flats, sums for payment of out goings even thereafter, has to pay all out goings until he transfers the property. The outgoings would include ground rent, municipal and other local taxes, taxes on income, water charges, electricity charges, revenue assessment and interest on any mortgage or other encumbrances, if any. 

One should also ensure that the area of the apartment has been mentioned in the agreement. It is also mandatory for the developer/promoter to convey the land in favour of the society/association of flat owners /Condominium /Company within a stipulated time.

REQUIREMENTS:

The development agreement must be in writing and the registration is not compulsory. If the developer meets the above requirements, he is well protected and starts construction work. But in case the developer commits any breach of the contract, this defense under Sec.53A cannot be availed.

Apart from the equities, the developer would have a right against a subsequent transferee of the property with notice of the developer’s right or a gratuitous transferee of the property under Sec.40 of the TP Act but not against the transferee for consideration and without notice of the rights of the developer against the property.

PROCEDURE FOR JOINT DEVELOPMENT

After examination of the property of the land owner, the developer offers him for development of the property. This offer basically consists of the percentage of the built up area which shall be offered to owner towards cost of the land and the amount of security deposit that would be paid. This security deposit is a refundable advance which has to be refunded back to the builder on successful completion of the project.

The percentage of area offered to the owner is arrived at after taking into account several factors such as cost of the land, cost of construction, escalation in cost of construction, cost of obtaining approvals for the building, marketing and administrative expenses and most importantly the selling price of apartments in that area.

If the offer is attractive, the land owner will give his acceptance and hand over a copy of the title documents to enable the builder to get the same verified by his Advocate.

If the Builder’s Advocate approves the title, a draft copy of the Joint Development agreement laying down the terms and conditions of the development is given to the landowner for his approval who generally gets it vetted by his Advocate.

If the draft of the Joint Development agreement is found to be okay, the same is prepared and prescribed stamp duty is paid. This agreement is signed by the Builder & landowner and the builder pays the first portion of the refundable advance to the landowner.

Along with the Joint Development Agreement, the landowner also gives a Power of Attorney to the Builder to apply for the various approvals required for the construction and also to sell the portion of the area coming to the Builder’s share.

All the procedures & formalities & costs for approvals are taken care of by the BUILDER.

The Builder then gets the plan prepared by an Architect, taking into account the requirements of the landowner. Once the plan is ready and approved by the landowner, the same is submitted for approval to the Government authorities.
After the plans are submitted and approved, the builder takes possession of the land from the owner. At this stage, the balance portion of the refundable advance is paid to the landowner.

After taking possession of the land, the builder proceeds to demolish the old building if any and prepares the site ready for commencement of work.
On receipt of the approval, the builder commences the construction and marketing of the project.

As and when the apartments coming to the builders share are sold, the proceeds are received by the builder in stages and the builder will register the apartments in favour of the buyers.

Out of the apartments coming to the landowner’s share, they may like to retain some apartments and sell the balance. The landowner can decide to sell his apartments initially or sell the same when the building is 50% over or when it is nearing completion or after completion. Based on the requirement, the builder will sell the landowners apartments and pass on the proceeds to the landowner as and when the same is received from the buyers. When the landowner’s flats are sold, and a certain percentage of payment is received, the landowner will have to register these apartments in favour of the buyers.

On completion of the project, the apartments retained by the landowner are handed over to them and the advance which was given by the builder at the time of commencement of the project is refunded to him.

The builder, land owner will facilitate the formation of Flat Owners Association and hand over the title documents to the Association.

RIGHTS AND OBLIGATIONS OF A DEVELOPER:

As per Sec. 54 of the Transfer of Property Act, an agreement for sale does not create any interest in the property in favour of the purchaser though the consideration is paid partly or fully unless and until a deed of transfer by way of sale or lease is executed in favour of the purchaser. Many Joint Venture agreements are supported by Power of Attorney executed by owner in favour of developer for the development works and entered into agreement to sell and sale deed to the extent of developer share after completion of the total building.


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Monday, July 13, 2015

SELECTION OF PROPERTY

SELECTION OF PROPERTY

The registration has commenced pertaining to all the properties consequent to the relaxation of the ban imposed on the registration of certain properties. The ban on the registration has created an awareness in the public not to invest on the property which is improper.On the other hand, the recent demolition drive undertaken by BMP in Koramangala has created a sense of fear among the public to invest on the property in and around Bangalore. Walking on the road involves risk; nevertheless we cannot sit at home. Likewise, investing in the property also involves certain risk, but we have to take certain calculative risks which will help us to live in a dream house and also appreciation on our investment.

Unknown Area
No advocate can give clear cut assurance on the properties. There may be few transactions which cannot be traced from the documents produced for scrutiny, such as previous agreement entered into with somebody, pending court litigation between the family members or outsider, etc, which are the risky areas that cannot be traced by seeing the property documents. However, advertising public notice in the leading daily, having wide circulation in the area where the property is situated, will help to trace certain adverse claims, if any, before purchasing such property. However, such Public notice is only a precautionary measure and may not be binding on any one having interest in the property if the same is ignored or may have not seen the notice at all. If the same is noticed by anyone having any kind of interest over such property, then opportunity will be given to them to file the objection before the purchase of the property and subsequently, issues cropped pursuant to such objections could be sorted out by the Vendor. The purchaser can also back out from such transaction.

Registration and Title
Even though all the properties can be registered by the concerned Sub-Registrar, mere registration would not convey the title. Registering officer will act only in the ministerial capacity and do not have power to asses the Genuineness  and marketable title of the property. Infact, the Sub-Registrars are more concerned with the stamp duty and registration charges. No one can give better title than what they themselves have, is the basic principle of the Transfer of Property Act. A vendor having marketable title can lawfully convey the property and  register in the concerned Sub-Registrar in favour of the purchaser and if the vendor has defective title, conveying the same and getting it registered will not perfect his title as there will be a lot of confusion as to whether the property is legally valid or not.

Clear Marketable title
Before purchasing the property, marketable title, Genuineness of the document, enforceability of the title has to be scrutinized along with a thorough verification as to whether the relevant provision of the laws and other rules and regulations of the revenue authorities has been duly complied. Origin of the property, flow of the title and present status has to be verified with the help of an advocate, who is having experience on such matters.

B.D.A.Sites
Bangalore Development Authority, previously known as City Improvement Trust Board, allotted sites having the perfect title, compared with another title. BDA, being a statutory body, has got its own procedure envisaged in the BDA act in acquiring the lands from the private parties, formation of layouts along with all infrastructure like power, water and roads. Generally, impetus is given for providing civil amenities and width of the roads as per the town planning act. Layouts already developed has been provided with all the facilities immediately, for which we will have to pay moderate rate. Likewise, Co-operative society’s layout, private layouts approved by BDA are governed by the rules and regulations of the BDA only. However, purchasing such property is advisable after scrutiny of the title thoroughly.

BMP Sites
A property falling under the BMP Area is generally old properties. Vacant properties are very few. Generally  ready built houses or old houses are available for sale. Title of the property is required to be traced from the origin with successive deeds of transfer, computerized Khata and computerized Khata extract to be checked up. If required, city survey map and Building sanction plan has to be verified.  Sometimes, larger extent of properties would be divided into smaller portions and in such case, only certified copies of the title deeds would be available. Old 7 CMC area, 1 CMC  area including 111 villages  included in the BBMP area from 16/01/2007. The newly added BBPM  area do  not have proper infrastructure facilities such as Road,  water, sewerage line etc.,most of these  sites and houses do not have A Khatha or Building Plan Approved by  the competent authority and purchasing this type of property having high risk.

BMRDA Approved Sites
Recently,lot of layouts approved by BMRDA i.e.,Anekal Planning Authority(APA),Nelamangal Planning Authority(NPA),Magadi Planning Authority (MPA),Hosakote Planning Authority(HPA),Kanakapura Planning Authority(HPA), Bangalore International Airport Area Planning Authority [BIAAPA] are coming up in the outskirts of Bangalore, with  proper planning and development.This is due to the recent ban on registration of such properties without BMRDA Release Letter.

Recently, BMRDA has changed its rules and regulations, wherein only 60% of the sites would be released at the time of approving layout plan, while remaining 40% of the sites will be released after completion of the entire layout.Accordingly, the Sub-Registrar refuses to register such sites without the release letter. So it became mandatory on the part of the developers to develop the entire layout and get the release order of the balance 40% of the sites. After the relaxation of the ban on registration, Sub-Registrar is registering BMRDA sites without release order, which, in fact has affected the developmental activities of such layouts.

Few of the promoters are selling the sites without providing basic facilities with an assurance to develop the same, but fail to do the same. The government has to take initiative and should make it mandatory to submit order of release of sites at the time of registering BMRDA approved sites, in order to safeguard the interest of such purchasers.

Gramathana Sites
These are gramathana sites, originally available in Village Panchayat areas, and which are few in number. They can be distinguished from Kaneshumari number, assigned to them. The agricultural lands have survey numbers. In such properties, it is necessary to examine village records along with Form No.9 and 10 which confirm that the particular property is original Gramathana site or not. But many village Panchayats issue form No.9 and 10, though they are not Gramathana sites.Many such sites fall in green area belt areas, where construction of residential building is restricted. Extra caution is necessary while buying Gramathana Sites.

Revenue Sites
These are the sites formed in an agricultural land. Unless it is converted for non-agricultural residential purpose,it remains as agricultural land. Formation of layouts is not permitted on agricultural land. Further, layouts need the approval from BDA or BMRDA. The revenue records such as Pahani and mutations of these lands remain in the name of the original owner even after it is purchased by others. It is not advisable to purchase the Revenue sites.

Advent of Apartments
The rapid growth of demand for Apartments in Bangalore, within a year, has totally changed, wherein, average rate of a standard apartment per sqft of  Rs.3000/- has now enhanced to present rate of an average standard apartment attaching to the city area at nearly Rs.4000/- per sqft.Now a days people prefer to live in the apartment concept because of the safety, social life and facilities available there.

Increase in the land cost, increase in the construction material and construction labour cost, government levies like service tax, sales tax, stamp duty and registration charge have also contributed for the tremendous growth of the apartments in the recent times..

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Saturday, July 11, 2015

TIPS ON REAL ESTATE DEALINGS

TIPSON REAL ESTATE DEALINGS

The process of buying and selling of immovable properties has become complex and the people who make things happen have increased. Now, you will have to deal with real estate brokers/agents, appraisers, financiers, lawyers and other personalities that will be needed in the process. It is better to get the right people to represent you and protect you from possible unusual circumstances.

Availing of the services of professionals is the first step in protecting yourself from fraud. These professionals know indicators of bad deals and they can easily advise you on your possible next moves to avoid negative experience.

The best person to protect you from frauds is a realestate lawyer. You have to find one who will only be loyal to you and nobody else. He is the person to trust and he is responsible for protecting your interest. You have to make sure that you will be hiring somebody who is trustworthy, experienced and credible. Sometimes there is a higher price tag for this type of lawyer but it is surely worth the difference in price when you get somebody you really do not know. In your hiring process, never trust recommendations without doing your background check.

Purchase of Apartment

When you already have a trusted property lawyer, you can avoid fraud by not signing any document that your lawyer did not approve. There are many cases when people sign documents without the advice of the lawyer and end up discovering that there are stipulations in the document that were not agreed on. Always use the services of your lawyer whatever is your concern. You have to be honest and tell him about your observations and listen to him as he will always have recommendations that can make you benefit even more.


The most important way to avoid fraud is to know what the law says. You also have to do due diligence in updating yourself about the state of the real estate industry and improve on your level of understanding in the field. The knowledge that you gain can make you do away with suspicious and fake dealings.

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Friday, July 10, 2015

VALUATION OF IMMOVABLE PROPERTY

VALUATION OF IMMOVABLE PROPERTY

Immovable property needs to be valued for sale and purchase to determine the price payable. Financial Institutions, Banks and moneylenders insist on valuation of immovable property to ascertain the margin available, worth of the security offered to Loans. It is a prerequisite for financing Home Loans. Generally the financial institutions or the housing finance companies get the property valued by their appointed approved values, while the tax authorities follow valuation as per tax laws and the land and building method.

Valuers  : 
Valuers are usually engineers or architects appointed by the Central Board of Direct Taxes under Section 3A of Wealth Tax Rules 1957. They are also members of the Institution of Valuers, which, incidentally, has a branch in Bangalore. These valuers do not have any personal interest in the properties, which they value.

Factors that determine Fair  Market Valuers
There are various factors, both controllable and non-controllable, which affect the fair market valuation.Non-controllable factors are macro-economic conditions, political stability, government policy, and price index. Controllable factors are location, condition of the property, its surroundings, reputation of the seller; whether the property is free hold or Lease hold, purpose for which the property can be used, whether the building byelaws are applicable, floor area ratio permitted, nature of the soil, size of the plot, occupant of the property, the shape of the property frontage available and infrastructure available. With the vastu being the rage of the day, the shape, road facing also plays vital roles.

Fair Market Value
Any seller who is moderately intelligent and prudent, would not accept a price lesser than the market value. The same goes for any purchaser who would definitely not pay more than the market value at any given time. Thus, fair market value is the price that a normal prudent willing owner/seller, not obliged to sell; may reasonably hope to get from a normal prudent and willing purchaser, with regard to its existing conditions, with all its merits and demerits, and its potential possibilities. It is to be noted that the fair market value of the same property keeps changing and valuation is relevant to the time of valuation. Various methods and techniques are adopted to value the property and arrive at a fair market value. They are as under:

Land and Building Method
This is most the frequently used method and is used by direct tax authorities with slight modification. The cost of the land is arrived by referring to the recent sales in the area. The cost of the construction of the building is arrived which is reduced by the permitted depreciation.Other infrastructural factors like availability of water, power connection and the relevant deposits are also considered.Some valuers consider the government rates fixed for the land instead of market value. Tax authorities follow this method by some modifications, wherein the cost of rebuilding the structure on the land less allowable depreciation is considered.

Comparable Sale Method
In this method, sales of the adjacent immovable properties having similar merits and demerits; with bonafide intentions; transactions between willing seller and willing purchasers are considered. The proximate date of valuation and the date of sales are very important. Generally it is assumed that an actual transaction, with respect to specific property of recent date is a reasonable guide. Unregistered sale transactions and agreement to sell are not considered. All the available sales of adjacent immovable properties with the proximate dates are to be considered and one cannot pick and choose. This method is more convenient, reducing the element of speculation to minimum.

Rent Income Capitalization Method
This is based on rental income of the property. In this method gross annual rental income of the property is arrived. From out of the gross rental income and the outgoings to maintain the building and statutory outgoings are deducted. The available net rent is multiplied by certain preconceived number of years. The multiplier factor is very important.In early part of 1950's, the multiplier factor was 20 years rent, having regard to the rate of interest on gilt-edged securities.

This was gradually changed in 1960 during which period the banks offered interest at the rate of 7 % to 10% and at present, the rate of interest is reduced on bank deposits as well as gilt edged securities. In certain cases the net rental value is multiplied by the remaining age of the building. This method suffers from certain limitations. The rent may be unreasonably high or unreasonably low. The property might have been let out long ago and rent might have remained unchanged for years. This method is more suitable in case of residential property where is the property is let out recently on prevailing rents / standard rent.

Average method
In this method, the value of the property is arrived by adopting different methods such as Land and Building Method, Rent Capitalization Method etc., and the average value of all these methods is arrived at.

Standard rent method
This is akin to rent capitalization method. However, the Standard Rent under rent control act is used to arrive at the gross rent.

Obtaining expert opinion
There are experts in valuation of immovable properties with necessary expertise on subject of valuation and have acquired sufficient practical experience in the field. They are capable of forming independent opinion. The expert must be given sufficient time to analyze the issue and arrive at the valuation of immovable property. The opinion of the expert is admissible in evidence.

Other Sources Wealth tax returns
The person who owns property falling under Wealth Tax Act 1957 has to disclose the market value of the property and pay taxes accordingly. The disclosures made by the owner in his wealth tax returns should be a good indicator of the market value of the property. This market value is more relevant and finds favour with the government while compensating the owner on acquisition. However, the values disclosed in Wealth Tax Returns cannot be deciding or conclusive in determining the fair market value but throws some light on the issue.

Valuation on the basis of the rate fixed under urban land (Ceiling area regulation act 1976)
Central government has repealed the act during 1999, but many states have not yet repealed the said act. The Government of Karnataka has, however repealed the act. Under this act government fixes the rates of market value of the land in exercise of its power for particular localities from year to year, which will be guiding factor in arriving at fair market value of the property. Usually the Land and Building Method, comparable sale method are the much favored methods with the seller and the purchaser.

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