Buying off the plan for many Australians can be a great option however, in some cases home owners are being left disappointed with less than pleasing results and a more complicated than necessary process to completion.
For this reason, we thought it would be good to share with you the most common mistakes purchasers are making; so that you can have a better experience and know what to ask and what to look out for.
Let’s start with what you should consider…
Be careful not to overpay: you should consider that your property won’t be built for at least a year in most cases and therefore it is good to factor in the profit or loss you could make during the building phase. Research the demand for that type of property, the anticipated growth for the area and the vacancy rate too.
Always ask what kind of finishes and features are included in your contract: sometimes properties are advertised with a demonstration model before building has begun; which means you can’t guarantee what the finished product will look like.
Strata Levy contributions: often unknown when a unit is being advertised so factor in extra costs into your budget.
Building defects: you could also run a higher risk of unforeseen building defects after completion, which may require a special levy fund to fix.
Sunset date: could be up to a year later than the anticipated completion, so don’t get your heart set on the property being available on time; sometimes an extended delay is normal.
Now focusing on the positives:
Secure a property quickly: you don’t need to have all funds available when you exchange, just a minimum deposit to hold the property until completion.
You could switch lenders closer to settlement: if another lender is offering a better product or rate you could potentially switch to them closer to completion.
Repayments are only paid after completion: you don’t need to make repayments during the building stage only once the property is completed and has settled.
The property could increase in value during the building phase: making this a good return on your investment.
First home buyers benefit: if this is your first purchase you should be eligible for the First Home Owner Grant.
Prices are usually firmly decided upon by advertising stage: which can be good for some if you don’t like competing against other people or negotiating on price.
Here is a handy short list of good questions to ask…
- What are my rights if construction is delayed or the design is altered?
- Is my deposit secure if the building doesn’t go ahead?
- Can I on-sell the property to someone else during the construction period?
- Can I make changes to the finishes?
- Can I select appliances or items such as floor and wall tiles?
Note: It is always best to first ask the above questions and then discuss the answers with a licensed Conveyancer, as they will be able to read through your contract and secondly help explain your rights and obligations after you sign.
Of course, we are here to help too! So if you or someone you know are considering buying off the plan, then please get in touch today as we can provide professional, experienced advice and support along the way.