7 Secrets to Buying Off the Plan
There are a million horror stories out there about buying off the plan, we’ve heard them all plus the media loves a bad off the plan story! Is it really a bad idea? We have all heard the reports about shoddy workmanship, developers delivering a sub-par product.
Real Estate Agents over-selling the project and what is built is nothing like the renders. The million-dollar view that can never be built out, but then low and behold a new building is going up right in front.
The Luxury apartments that turn out to be sold to overseas investors.
The secret to buying off the plan comes down to asking the right questions, knowing what to look for and what to avoid. The warning signs of a bad development as opposed to good development, get those key ingredients right and you are more than halfway there.
Schedule A – lower prices available for VIP Clients, however, you need to be on the list, only about 5% of units are sold at this level. Ask us about getting on the list!
Schedule B – generally higher than Schedule A about 50% – 60% of the project is sold at this level and the rest are at schedule C. So, it does pay to get in early. If the project is selling quickly, they may even increase to schedule D pricing.
So, as you can see the early bird does get the worm.
Pay the Deposit and pay nothing more until settlement.
You will initially be asked to pay a holding deposit of approximately $5,000 when you sign an Expression of Interest, this is usually fully refundable if you change your mind. In the next step, the contract is prepared and sent to your solicitor to review and once the terms and conditions meet the solicitor’s satisfaction and you are happy to proceed you will then be asked to pay the 10% balance of deposit of the purchase price.
There are no progress payments, you just pay the balance of the purchase price on settlement along with your legal fees and transfer duty.
Secret 1. – Location
Preferred suburbs, lifestyle amenities, city or beach, commute times to the office or can I work from home 3 days a week and commute just 2?
Other things to consider when looking at the location are the aspect, views, neighbours. Chances are if you are reading this article you are considering an apartment. Factors that you need to consider when purchasing that dream apartment are the floor, proximity to the lift, how many lifts are there? The last thing you want is to be in a high rise with just two lifts where you spend half your time waiting…Luxury apartment buildings will have a high lift/apartment ratio.
Corner apartments v’s middle apartments, corner apartments are generally lighter with more windows and a much better aspect.
Secret 2. – Check the plan
A floorplan illustrated with furniture can be very deceiving, knowing what the scale is on the floorplan allows you to determine how accurate the plans are. A good agent will be able to source the information for you if it is not provided.
Know the dimensions of furniture, working with an interior designer will help you to decide which furniture to take with you and what to purchase new.
Secret 3. – check the marketing
One of the first questions to ask is how accurate is the computer-generated imagery (renders) that appear on the website and in the marketing material. Great developers invest heavily in CGI so that the buyer can see what they are getting, and builders understand what to build. Look at past developments that are already complete and compare the computer-generated imagery to the finished product. This will give an indication as to the quality of the development.
Secret 4 – Check the other buyers.
Neighbours play an important part in our daily lives you want to make sure you are buying in a building where you will be around like-minded people. Ask for the percentage of owner-occupiers/investor ratio’s or better yet look for a smaller boutique building that caters to the owner-occupier market.
Secret 5 – Do your homework on the developer and builder.
The Developer’s past projects will in most cases provide the information you need and more importantly to know who you are buying from and should you trust them. More and more investment developers are getting into the luxury owner-occupier apartment market and sometimes won’t necessarily get the finishes quite right. The same due diligence goes for the builder, check the builder’s background thoroughly and how long they have been in business.
Some developer’s use a “Sunrise Clause” in the contract, that is the date by which the developer deems the project viable or not.
In the contract there will be a “Sunset” Date, this is the date that the developer must settle the contract and it can be up to 5 years. Always consult with your solicitor and ask how these dates work. Hiring a solicitor, the specialises in “Off the Plan” contracts is a smart move.
Secret 6 – Check the schedule of Finishes.
Ensure the schedule includes the brand name, manufacturer’s description and a photo of all kitchen and laundry appliances, tapware, sink ware, basins, toilet, suites, light fittings, switches etc and if there is an alternate available if the developer decides to make a change.
Ensure that there is an options list to choose from, the longer and more detailed the better.
Always check with your solicitor that the contract contains the same schedule you were shown prior to signing the contract.
Secret 7 – What happens at Completion.
When construction has completed and the scheme has been registered and title issued you will be provided with a notice to settle, this can be as short as 14 days. Prior to settlement, you will want to conduct a thorough defects inspection. Have a copy of your floorplan and schedule of finishes with you as per your contract. A good procedure to follow is marked each defect with a numbered sticker and note the defect, that way when the trades come back to rectify, they are clear on the defect. This may not happen right away; however, they are obligated to fix the defect as the building is covered under builders’ warranty.
Make sure that all warranties are supplied for the various appliances installed.
If you are thinking about buying off the plan and want to know more please get in touch, this service is complimentary, and we will be happy to help you shop for your new home free of charge.