What does Buying Off Plan mean?
Buying off plan is buying a property that are advertised for sale before it has been constructed and waiting until the construction id finished before paying the remaining balance of your purchase price.
Tips Before Buying Off the Plan Properties
Check the Contract
Before diving in you must review the contract carefully and know where your money is going. Check if you can make changes to the house like the kitchen, bathroom and living room. Visiting the site during construction is a must. Know your rights if the construction got delayed and if there are penalties in case you withdraw from the contract.
Also, understand what happens if the developers experience financial difficulties and what could happen with your deposit if that happens.
Inspect the Display Model Home
Investigate the fixtures, fittings and finishes of the model display home. This will help you determine the quality of finish and fixtures you can expect once the property has finished construction.
Research the Developer
Know how long they have been in the industry, how many properties they’ve already built and try to visit the developer’s previous constructions. Why? You can understand the workmanship of the developer’s regular contractors and get insight in to what you can expect from that developer.
Check the Neighbourhood
Know where the developers are planning the construction. Imagine you were buying a house in a normal sale. Think about what’s important to you in buying a house when considering neighbourhood:
- Is the place near a busy road or workshop?
- Are parking spaces convenient?
- Is the place overpopulated?
- Does the location feel safe?
- Is there a public transport?
- What local facilities are there?
If you’re a first home buyer, some states offer bonuses and reductions in stamp duty. You can prepare for how much you will pay using our stamp duty calculator and determine if you are eligible for a First Home Owner Grant.
Some other concession grants can be available in your state. Find out if you’re eligible for any in your state.
Pros and Cons of Off Plan Properties
You will only pay the current price for a property even if it will be completed in the future.
|Developer may go bankrupt
There’s a risk that developers might go bankrupt even before the completion of the structure. You may not get your deposit back depending on the terms on your contract. Ensure you research the developer.
|Increase Property Value
If the market grows, the property you purchase off the plan may increase value.
Sometimes the final value may be less than expected. The quality of work may also not meet your standards.
|Seven-year Builders Guarantee
Newly built properties in Australia comes with a 7-year builders guarantee which means structural or interior building faults must be repaired by the builder.
|Falling Property Market
In buying off plan properties there’s always a risk that you may pay too much for the property.
If the market falls between the exchange of contracts, securing finance for the full amount
might be difficult.
Always exercise extreme caution when buying a property that is not yet built. Re read your contracts and obtain legal advice before signing the documents and pay your hard-earned money. Like any property purchase, buying off plan requires much consideration and a bit of research. If you do it right, you’ll have a brand-new property to be proud of.