moazahmedIt is always necessary to consider purchasing an off-the-plan property because the buyer can get a home cheaper and then receive a house turnkey.
Different from the “traditional” marketing strategies, it also has its potential drawbacks and difficulties.
It is imperative to know these risks and avoid them as much as possible so that your investments are safe.
1. Understand the Contract Thoroughly
Of especial importance when buying off-the-plan is the contract situation; this we will discuss more in the next section.
These contracts are normally unsophisticated from other property contracts because pull-apart agreements point to future developments and construction characteristics.
These are crucial areas that warrant thorough look at all the laid down terms including duration of development, consequences in the event that the development is protracted, and your legal rights and options in the event that the developer renege on their promise.
The legal structures that related to transferring of property are indeed complicated, but with the assistance of conveyancer or a property lawyer, one will be in a better position to minimize or ward off any loss that may come along the way.
2. Research the Developer’s Reputation
Investing in an off-the-plan property is risky, therefore the risk of the project depends on the accomplishment of the developer.
Learn how many of these projects have been completed as contracted, the quality of those that have been executed, and customers’ satisfaction.
Did they had any legal problems often or in the past, what can you find in articles and can people who already bought share their experience?
If a reputable developer with experience in delivering quality projects within the agreed time frame is contracted, the costs associated with project delay, poor workmanship and even the potential collapse of the development company are eliminated.
3. Be Aware of Market Conditions
Off-the-plan properties are subject to market changes between the time of acquisition and occupancy of the property.
There is likelihood that the market may drop and this may pose a huge problem to the potentials of the property by the time of completion.
Getting to know the current market condition and other associated factors of the locality will assist you in making a proper decision on when to embark on the purchase.
One should seek the services of a real estate agent or an accountant or each in order to assess the market factors and challenges.
4. Inspect the Property Plans Carefully
As much as you may not observe the completed work you must look at property plans keenly.
Know the features and specifications of the layouts, dimensions of the units, inclusions and the kind of finishes.
Ensure that all these agreed features and specifications are well spelt out in the contract of the project.
Take note of any legalities that state that the developer is to change some plans, this should be considered because it may change the material outcome you receive.
5. Understand the Financial Implications
There are some issues that are really and really important to deal with: the deposit and when it will be returned, the payment methods, are there any ways to suppose certain additional costs, how is it with the final cost.
It is also found that some of the off-the-plan contracts contain terms and conditions, which make the variations in the prices based on the factors such as the rising cost of construction and the resultant rising costs.
Anticipating such changes and the possible consequences can save a lot of money as well as time which otherwise would be spent to counter such changes.
Also, obtaining pre-approval of mortgage means in turn, a better understanding of how much one can afford and how interest rate fluctuations affect the affordability over build period.
6. Consider the Risks of Project Delays
Time overruns of a project can have tremendous economic effects, for example if a specific date has to be met for other financial or personal reason due to the building’s completion.
Before making conclusions, one should know more about construction delays and their potential consequences both for the pharmaceutical company as a client and for the construction company as a contractor and further, about possible kinds of compensation or ways to proceed in case of a delay.
Some of the off-the-plan contracts will include provisions in favour of the developer such as a sunset clause under which the developer will be given a certain period of time within which to complete the project.
Being informed about this clause, the precise wording of this clause and readjusting the terms so that protect your mortgage investment can be of importance.
7. Stay Involved Throughout the Construction Process
So, the moment you sign that contract all is not well if you just sit down and watch the game from the bench.
What they can do: Keep communication with the developer and track the construction work in progress.
Getting in touch with the developer at least once a week, visiting the site occasionally and keeping in touch with your conveyancer will make him or her spot any problem early enough.
This way one can avoid any mishaps that are likely to occur while implementing the project in the construction phase.
8. Plan for Settlement
Last but not least, know when the actual negotiations for the settlement are due.
Find out what is expected of you as the buyer, make sure you have all the necessary funding and know any further fees that may occur at the time of settlement.
Being prepared, one will avoid some of the common pitfalls that come with transferring ownership of the purchased asset.
Conclusion
Although there is flexibility in investing in an off-the-plan property there are ways to protect yourself, and it needs time and effort to ensure your investment is safe.
Some of the risks that may be avoided if a buyer is to engage in an off-the-plan purchase include the following; failure to understand the contract, lack of research on the developer, lack of information on market conditions, and lastly, failing to monitor the construction progress.
Engaging services of a conveyancer or property lawyer will also help to ensure that your position is guarded all through.
