Buying off the plan is a common way of purchasing a property these days. Buying off the plan means buying a new house before it is completed.
There are many benefits to buying a new house in this way. There are stamp duty savings and extended settlement periods, meaning you have more time to save. Sometimes it is the only way to purchase new houses that are in high demand.
For many buying off the plan can be daunting. We have compiled the 5 top concerns we hear among buyers and provided some tips so you can buy off the plan smartly and worry-free.
Concern 1: The builder will go broke and I will lose my deposit.
This is the most common concern we hear. Buying from a builder you trust and who has a good reputation can help to minimise this risk.
Look at the longevity of the builder. Have they been building new houses for over 30 years, or are they new to the industry? Where have they built previously and what is their track record? Read testimonials to see what previous buyers have to say. Speak to people who work in the property industry. Looking at a builder’s reputation and experience provides the much-needed security and assurance that they are trustworthy and financially stable.
Concern 2: The final product will look different to what I expect.
People are often hesitant to purchase new houses off the plan because they are worried that their expectations won’t be met. This hesitation can be quelled by a thorough inspection of the floor plans, understanding your contract and reviewing the marketing material provided by the seller.
Visit the display home and if there is no display home, then are there any other homes that the builder has built that you can visit, that may look similar on the inside to the new house you are interested in? If you can’t physically visit these homes, ask for photos or a video of the builder’s finished product.
And of course, if you have queries, ask questions. It’s never a good idea to make assumptions.
Concern 3: There will be delays.
Many people worry that new houses won’t be ready on time due to unforeseen delays. You can minimise this risk by purchasing from a builder your trust. Read testimonials. Often delays are the first things that past buyers will mention.
But also, ask the builder for updates on timeframes during the build. Good communication is a simple way to reduce worries and fears.
Concern 4: The property will fall in value.
Since new houses bought off the plan are purchased before their completion date, buyers may feel fearful that their property will fall in value by the time they settle and moved in. While this is a valid fear, we’ve found that, most commonly with our homes, the opposite happens.
When you are buying a new house that is in a good location; relatively close proximity to the CBD, transport, amenities etc., ideally has land i.e. is a townhouse or house and is in an established suburb, history has shown us that typically this property will increase in value over the long term. And when it comes to buying off the plan, there is actually the potential to incur capital gains even before settlement. So it all comes down to finding a good asset. If in doubt, do your research. What is the average growth in the suburb you’re interested in? How has that growth increased over time? What is the growth of neighbouring suburbs? The more you understand the area and the value of the type of product you’re buying, the better.
Concern 5: The contracts are complex.
Like with all property purchases, the contract includes all information about the new house. The contract can be a big and confusing document.
For assistance in understanding the contract, we always recommend consulting a lawyer/ conveyancer. Asking your builder or real estate agent to clarify the information you are unclear about can also be a good approach.
In the market for a new property? Our latest development, Seven Eighty Five at 785 Plenty Road Reservoir, is on the market and bound to sell quickly. If you are looking for sophisticated residences of Easy Northside Living, in a suburb rich with verdant greenery and luscious parks, Seven Eighty Five may be the one for you. Click here to explore further. Planning has also commenced at 62 Liston Avenue Reservoir. Here we are building 3, 3 bedroom townhouses. Click here to find out about pre-release opportunities.