Primary Buy Versus Secondary Buy – What Should You Opt For?

For anybody looking to buy a property, there are generally two options: Primary Buy and Secondary Buy. Primary buy includes new launches and projects undertaken by the builders. Whereas, a secondary buy includes properties that are already owned by someone and are at a later stage released for a re-sale.

As a homebuyer, which option should you choose?

There is no one correct answer to this question. Both types of investment have their pros and cons. Before making a decision, it is important to mentally go down both roads and analyse which is more suitable for you. Here are some pointers to help you analyse both options and make the right decision.

  • Time to possession: In today’s world, time has an immense value. Why wait for a year for when you could have it now? Buying a new property could often mean a wait period for possession depending on the construction stage of the project. Even if the construction is done, there may be some time before all amenities are functional. On the other hand a secondary buy is available immediately, with internal furnishings, electrical fittings, plumbing, building amenities etc. already in place.

Insight: If time is of essence to you – to move in immediately or to start earning rental income – it’s better to choose a pre-owned property.  

  • Freedom of Choice: For many of us, our home has a high sentimental value. We all want a personal touch and a house built according to our choices. And while you many renovate the secondary property after the purchase to fit your style, major changes will cost you. The model of the house, the colour of the paint, the kitchen cabinets, the lighting points etc. are a few of the many compromises you will have to make. In a Primary buy you have plenty of options to customize. Right from the design and architecture up to interior decorations and colour of the tiles the decisions are all yours. Freedom to choose also gives you a better sense of satisfaction from your investment.

Insight: If a personalized home is important to you and you do not want to spend additional money and time in renovations, then it is better to choose a new property. 

  • Money matters: While at a glance a secondary property comes cheaper than a new property, in some cases it could cost you more in the long run. One is the upfront investment needed. While under construction properties have a phased pay out plan, you may have to shell out the entire value of a secondary property in one go. Secondly, the repair and maintenance costs could be prohibitive. If you haven’t conducted proper due-diligence on a property up for re-sale, you may end up with a poorly maintained one. This could require significant investment in getting it cleaned up and functional again. There are also additional costs like registration fee, transfer fee, stamp charges, utility charges, etc. Finally there is the consideration for bank loans. Is there already a loan on the secondary property you are buying? The age of the property also impacts the eligibility for loan. The financing is easier and more streamlined for primary properties.

Insight: Unless you are very sure that the secondary property has everything you want, it is better to choose a new property. 

  • Risks and returns: Be it a primary buy or a secondary, the huge financial investment cannot be made without estimating the risk and return involved. One, the primary buys has lesser depreciation and hence more resale value. Two, there is more transparency today in the primary market with acts such as RERA in place. All documentation and payments are online as compared to a secondary buy where you will have to be cautious about documentation and cash components asked by the seller. You won’t even get a loan if you agree to make cash payment. Three, the valuation of property is also important. It is not easy to ascertain the market value of a primary property beforehand. Whereas in a secondary buy, the market value of the property is already estimated at the time of purchase, and thus you very well know what you are getting into and what to expect.

Insight: In the new digitized, transparent, and regulated real estate market, a primary buy might be less risky than a secondary one.

  • The thrill of the new: Most of us would prefer to own something brand new and only when tied down with some obligation, would go with the old or the used one. The same mentality holds good for houses and properties. The decision of primary buy simply comes from the idea of owning something new and unused.

Insight: If you prefer owning something new and unused, primary buy should be your choice.  

While these are key factors to consider while choosing a primary or a secondary buy, every decision must be unique. Before making the lifetime investment, it is important to analyse your financial status, personal needs and preferences, and the purpose of purchas

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