Would you buy a house sight unseen – or before it’s even built? As it turns out, a lot of people do exactly that.
It’s called buying off-plan and it’s a common way to buy into new, as yet unbuilt developments, including townhouses or apartments, or house and land packages.
As with any type of property purchase, there are pros and cons to buying off-plan, and it’s something every buyer needs to weigh up very carefully.
Beat the market
In a fast-moving property market, there is real value – literally – in putting a deposit down to secure a home before it is built. The remainder is then payable when the development or your build is complete, which gives you more time to save in the interim. Plus, you get a set price and a timeline to work to.
Seems like a good deal right? But...
Keep in mind that the value of the property you’ve purchased can rise but also fall, and interest rates can change by the time you get the key. It’s imperative to seek professional advice from someone who knows how the system works, like a mortgage broker, so you’re as informed as possible.
Ensure that you’ve thought ahead to future budgets beyond just the mortgage. Developments sold off-plan often come with a body corporate, which requires a regular fee.
Get what you want, hassle-free
One of the major advantages to buying off-plan which appeals to many people is being able to choose what you want and how you want it, then have someone else make it happen.
This will often mean choosing your fixtures and fittings, even your entire kitchen, ahead of time.
Be aware that some contracts allow the developer to make changes without your permission. As they say, always check the small print.
A very obvious downside to buying off-plan is the inability to see what will be your future home in real life. For some, visualising paint colours and benchtops is easy, for others it’s impossible.
Modern technology means there are some pretty amazing tools available to help but you can also ask to view a similar development or spec home to yours.
Ask all the questions. Where will the sun will be in relation to your layout, will any surrounding buildings block your view, are there potential noise issues? Will you see straight into your neighbours’ kitchen or washing line from your living room? Are you even allowed a washing line?
Consider factors out of your control like subdivision covenants including fencing, and body corporate rules which may dictate whether you can make changes to your home in the future.
Check your developer or builder
Before signing anything, do a bit of detective work about the developer or builder that you’re looking to engage with.
Do they have many other developments, and are they all completed?
How long did these projects take to be finished, and how long did each one take?
Have any stalled, and have there been reports of issues with the construction?
If a red flag gets raised during your investigations, then take time to follow it up. If there’s a sea of red flags, consider yourself warned – and run.
Don’t watch your deposit disappear into the sunset
With any property purchase it is important to engage a solicitor, and that’s even more important if you’re buying off-plan.
Talk to your solicitor about including a “sunset clause” that lets you, and your deposit, exit stage left if the project is stalled or delayed.
Other considerations include protecting yourself against changes to proposed floor plans or car parks including changes to the use of certain materials that you’d agreed to.