Buying Off-The-Plan has many traps!

While they are all “shiny and new”, purchasing Off-the-Plan (OTP) can be
attractive, but it also comes with many risks.

Tips to consider before proceeding :-

  1. Paying a Premium :- The purchase price is attributed to the market at the time of the sale. The developer estimates the ‘selling price”, not when you purchase, but say, two years when the building is completed. You pay a premium for this period. Should you decide to sell prior to completion, you may be subject to a lower selling price.
  2. Oversupply :- Location has beenthe “golden rule” when purchasing real estate. However, with OPF developments there is likely to be an oversupply, and the value of your property may decline due to
    competition. Also, the value of your property may be lower once completion is near, which could affect your final borrowing amount.
  3. Strata and Building Risk :-
    Consider purchasing into a Strata that’s at least five years old. This will indicate whether the Strata is a good building or not. Ask for Owners Corporation financials and peruse notes for the past three years to see if there are any issues with the building such as maintenance, or past or present litigation. If purchasing a new development, research the reputation of the developer, and whether they have completed their projects on time and their quality of development. Many developers are entering into difficulties, and may not be able to complete their developments.
  4. Legal representative :- Always engage a property lawyer/conveyancer who has experience with OTP contracts prior to signing a sales contract.
  5. Sunset Clause :- This entitles both parties to walk away from the contract IF settlement has not taken place by the end date included in the clause.
  6. Deposit :- Ensure you understand the deposits required, and what the financial implications are.
  7. Insurance and warranty :- Strata Insurance should be obtained on or prior to settlement. Ensure that you complete a Building Inspection of your apartment before taking possession. CHECK EVERYTHING.
 

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