If you are thinking about purchasing a property, one of the things you will need to decide is whether to buy a home that is already established, or goes for something off the plan. Obviously, buying off the plan is exciting as you will be the first person to live in the home, you will have the ability to choose your own floor plan and colour scheme. However, before you jump into an off the plan purchase, there are a few things you should be aware of, including the risks involved.
Before Signing any Paperwork
Before you sign anything regarding an off the plan purchase you should take some steps to ensure the finished product will be the home of your dreams.
– Visit the site and check out the location. If there are other buildings close by, they may affect your view.
– Spend some time inspecting the show home, plans and models, making sure to pay attention to finishes, fixtures and fittings.
– Research the current property market and talk to a professional to determine accurate property prices.
– Research the property developer. Ask questions such as: how long have they been in business? How many properties have they built? If possible, visit their previous builds, inspect the quality and talk to previous clients to find out how happy they are with their purchase.
– Find out exactly what is covered in the purchase price, and what will incur additional costs.
– Let the property developer know your expectations and have them included in the contract.
– Obtain guarantees of the developer’s financial status to avoid the risk of them going bankrupt before the property is finished.
– Carefully review the contract and all paperwork with a conveyancer or legal professional, taking note of things such as: completion date, penalties if you back out of the contract, and if you can visit the site. Also, check to see if you are able to make changes to fixtures and fittings, what happens if the developers get into financial difficulty, and what happens if you find faults with the property once it is complete.
Risks Involved in Buying Off the Plan
While buying off the plan does have its advantages, there are plenty of risks involved that you should be aware of.
– There is a risk that you could pay too much for a property if the market falls between the contract exchanges and the building being finished. If that does happen, you may find it difficult to obtain financing for the entire amount.
– Many builders do not allow you to view the property until construction is finished, which means there is a risk that the home you have imagined is not the home that you get, or the quality of work may not be up to your standards.
– Interest rates could rise before you settle on the property, which could cause problems if you want fixed terms and interest rates.
– It is possible that the property developer will go into liquidation before the property is complete. It is important that you know your options are if this happens.
As you can see, there are benefits and risks when it comes to buying off the plan. Because of this, it is important that you talk to a conveyancer before you sign any paperwork.