Off-the-plan property is a type of real estate where the contract is signed before the building has been constructed, allowing you to buy and own property that has not been entirely built yet. You also benefit from buying the property at a lower price with an excellent opportunity to secure a larger property value once the project is completed.
However, it’s important to remember that there are benefits and risks associated with buying off-the-plan property.
Pros and cons of buying off the plan
Buying an off-the-plan property or a property that does not yet exist can be both exciting and scary. These are the pros and cons for you to consider before buying your off-the-plan property.
A special price is available for you
Buying an off-the-plan property is often cheaper than buying a developed property as developers will offer a discounted price to early homebuyers. The earlier you purchase off-plan property, the bigger the discount on the property is likely to be. So buying an off-the-plan property often means that you will get a much lower price.
Peace of mind
Off-the-plan property comes with a structural warranty designed to give homebuyers peace of mind about any defects that come with a newly-built home. But in case the developer missed this, you should always make sure that your home is covered by this warranty before you sign a contract of sale.
When you buy an off-the-plan property early, you will be more likely to get a better choice of units. You’ll also get a brand new home that is often better than many others on the market.
If a developer declares bankruptcy you may not get your deposit back. To avoid this, ensure you research the developer. You may even wish to consult legal professionals for increased peace of mind.
Your expectations may not be met
When buying an off-the-plan property, you are assuming three main things: the building is going to be completed on time, it will appear exactly as it was advertised, and there will be ample interest in purchasing your property. This is not always the case. But by doing research, and ensuring the developer is reputable, you can avoid this happening.
The ‘sunset clause’
Sometimes, the construction of an off-the-plan property can be delayed due to unexpected problems coming from the developer's side. If this happens, the developer may choose to sell the property at a much higher price. To avoid this, make sure your developer updates your contract so that the sunset date falls at a later date than construction.
Our top tips when buying an off-the-plan property
Get to know the market
When you know the market, you know what you are faced with. Whether you are buying an off-the-plan property to live in, or as an investment, you want to know the future prospects of the housing market.
Choose a reputable developer
A background check is definitely a must when it comes to buying an off-the-plan property. Choose a reputable developer with a track record of completing projects on time. To do this, spend some time researching their past performance and visiting the finished projects they have worked on.
Early buyers get bigger discounts – and the bigger the discount, the more money you save. Not only that, when you’re an early buyer you will have more empty units to choose from.
When buying off-the-plan, you should review the contract thoroughly to understand exactly what you are buying. Carefully check what is stated in the contract, and always obtain legal advice from professionals. Understand what you become liable for if you break the contract or the other way around.
Buying an off-the-plan property can be an exciting and rewarding experience. You will become part of a new community and likely get much more for your money. But buying an off-the-plan property does come with significant risk factors that you should be aware of before making your purchase.
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