So, you have seen some fabulous billboards offering brand new homes and you are ready to buy – but there is a hitch…your dream home hasn’t been built yet…so how do you know if it is a good idea to put a deposit down on a home that does not yet exist?
It is a decision that must be make carefully and you must do your own ‘homework’, so let’s look at the pro’s and con’s of buying off the plan…
If location, design and price fit your criteria, then by securing a property with a deposit of about 10-20%, you will possibly benefit from any market price increases over the period of construction. Property prices in the development can often rise as development nears completion and its popularity increases.
But, if the market drops between purchase and completion, or the build is poorly finished or the developer defaults on construction, you could end up not getting the property you had your heart set on.
- CHECK OUT THE DEVELOPER - previous developments, customer satisfaction or complaints, builder financial status.
- CHECK OUT THE DEVELOPMENT - site proximity to amenities, private and visitors parking, views, neighbours, outdoor space, sunlight, actual size (as opposed to the plans on paper).
- CHECK OUT THE AGREEMENT - use a lawyer and make sure the contract covers all that the developer is responsible for. Any deviations that are allowed from the original plan and finished development could seriously affect you, be it outdoor space, view or storage space. You will want any changes to be small enough not to impact on your living requirements.
- CHECK OUT THE CONTRACT AND FINANCIALS - make sure that you understand any clauses included on the contract, such as cooling off period, exit penalties, the safety of your deposit, strategies for the buyer should the project be excessively delayed (sunset clauses).
- CHECK OUT THE FINAL BUILD - Use an independent building report to satisfy you that it has been done to a legally required and contractually agreed level.
So, to achieve that gorgeous new dream home, you can see that it is a process that requires some serious homework and leg work that must be done by you – after all, it is your hard earned money at risk.
To learn more give Peter Dall a call on 0414 583 233 - he is always ready to have a chat to you about your own unique loan requrements.