Six tips you need to know about buying off the plan
PARTNER CONTENT
Unfortunately, waiting until a development is completed is a sure-fire way to miss out on the best opportunities within the complex.
Buying a property off the plan may be one of the only options you have to purchase a property within a popular area. So here are six tips you need to know about buying off the plan properties to make sure you get the place you want.
- Take advantage of displays.
Despite the fact that you can’t see the finished property, you need to find out what kind of quality you’re purchasing.
The developer should have a display set up where you can see the finishes and fixtures you can expect within your new place. Then, ask for previous projects they’ve completed and how you can get in to inspect how they’ve lasted. - Learn to understand floor plans.
This may seem fairly basic, however it is essential to understand how large rooms are when buying off the plan. Measure it out in an existing property and work out what space you have. Does your bed actually fit into your new bedroom? A good tip is to mark out your new room and use newspaper on the floor to represent furniture sizes. - Finance clauses are worthless, or are they?
Due to the potentially lengthy time before completion of an off the plan purchase, banks are generally not willing to give unconditional approval on the loan in the event the market shifts. As such, if the market declines you could be dipping into your savings when you finally settle, so budget for this just in case.
It is still a good idea to include a finance clause in your contract and get a valuation (‘as-if-complete’) when you’re getting your initial approval. This will allow you to gauge how the property stands within the current market, as well as how the bank views the area and the property’s potential.
- Befriend your council
Most city councils have online databases with zoning, neighbourhood plans, infrastructure works and development application details. It’s quick and easy to check what’s going on around your potential purchase, as well as making sure your new view will stay the same, at least for the foreseeable future.
- Use the time wisely
buying off the plan can have benefits other than just getting the pick of the complex. Generally off the plan purchases only require a 10% deposit with the balance due at settlement; so you can keep saving until then to reduce your mortgage.
Getting in early also allows you to customise your new place; ask the developer what finish options you can change to truly make it your own.
- Get early legal advice
Even though settlement may be 18 months away, get legal advice as early as possible, preferably before you sign any contracts. Amongst other things make sure you understand the delivery timeframes of the projects, the sunset clauses and confirm what you’re actually purchasing.
By conducting your due diligence and taking your time, you can take advantage of what off the plan purchasing can offer buyers; a way to secure a quality property in the future, at today’s price.
ANDREW HERBERT is partner of My First Place.
My First Place is offering a buyers club to support buyers in finding their property. For August, club membership is free to Property Observer readers.
For First Home Buyers there’s a package worth $4,200 that covers solicitor fees, mortgage application fees, building inspection, insurance and utilities.
For investors the package is worth $3,350 and it covers solicitor fees, mortgage application fees, building inspection, landlord insurance and a depreciation schedule.