Understand The Difference Between Pre-Launch And Soft Launch

You might have seen real estate ads flashing 'Special Pre-launch Offer' or 'Exclusive Soft Launch Prices'. Ever wondered how these two terms are different and what do these prefixes imply? Here's a deep dive into some real estate jargons that you should know if you are considering investment in real estate for the first time?

What is a pre-launch stage?

A project is said to be in a pre-launch stage when a builder announces his project without initiating any process for getting regulatory approvals. This is a mere plan which is being sold by the builder. The risk associated is very high as approvals are not in process yet. The agreement on which the both parties have agreed upon can be twisted as developer usually mentions the clause of change in development plan as per the permissions received.

What is a soft-launch stage?

A project is said to be in a soft launch stage when a developer starts selling his project while the approvals are in process. Soft launches are less risky than the pre-launch as the documentation is underway and are legally recognised. These type of offers are often extended to first-time home buyers who have a modest budget and are looking out for a property as they are easy to lure. 

Also read: First Time Investor? Follow These To Make Money Out Of Real Estate

The legal way out

Though the risk associated with either type of projects are too high, the incentive and discounts offered are too appealing to be missed. The returns promised are almost 20-30 per cent and the prices are up to 40 per cent less. Some of these offers are fraud and investors often fall into the trap.

Legally, pre-launch projects have no validity in the eyes of law. Therefore, the risk associated is way too high. While soft-launch projects also lie in the risk zone but are legal as the majority of the approvals are already in place.

Apart from this, in a pre-launch project, there is no commitment to project completion while the funds invested can never be retrieved because there is no legal recourse which a buyer can subject to. There is no legal protection which can safeguard the home buyer's interest if he/she is investing in pre-launch phase. However, once the regulatory authority notifies the norm on when a developer can actually start selling the project, home buyers can get better clarity.

Tips to buy soft launch project-

1. Always keeps the receipts of the investment.

2. Invest with developers who have sound track record and market reputation.

3. Ask for approvals which have been claimed as received by developers.

4. Consult a property lawyer for due diligence of the project.  

Also read: Pre-launch Projects: Are Buyers Still Ready To Take The Risk?