There are many reasons you might be tempted to purchase a house before it has been constructed.
When you buy “off-the-plan” you generally only need a 10% deposit (instead of the standard 20%), you’ll probably be eligible for the first home owners grant (if you plan to live in it), and you won’t have to worry too much about budget blowouts that come with building a home yourself.
This type of purchase, however, does come with risks.
Before you enter into any sort of agreement, make sure that you ask the right questions of the right people:
Ask the Property Developer:
What options are there for changing the home’s finishes and fixtures?
Most off-the-plan dwellings have limited options when it comes to the aesthetics of the house, and the final product might be different from the brochure. Make sure you are happy with the finishes and that you understand what you can and can’t change.
How will building defects be rectified?
Ensure that any defects in the final property will be corrected promptly, with no additional expense to you.
How long is the build going to take?
Find out how fluid the projected finish date is. Often, people sign up for an off-the-plan home thinking it will only take six months to build but they end up waiting two years.
What is the likelihood of your company getting the pre-sales needed for development approval?
Developers need to sign a certain number of contracts before they can apply to the council for development approval. Get an idea of how likely the project is to go ahead by asking how close they are to hitting their targets.
Ask the Bank:
Will I be able to apply for finance before the building is finished?
Many banks don’t give loans for properties which aren’t built yet, as they can’t be valued. Find out if the bank you want to borrow from will value a proposed dwelling solely on the contract.
Ask Your Conveyancer:
Are there any penalties for withdrawing from the contract?
Make sure you know if there is a cooling off period during which you can withdraw from the contract, how long that period is, and whether you’ll forfeit some or all of your deposit if you back out.
How long could the developer delay settlement if the build doesn’t run on time?
Check to see if your contract has a “sunset clause” – a date by which the developer must finish the project or give you your money back/draw up a new contract.
If you need legal advice regarding your next property purchase, or want the help of an experienced conveyancer to facilitate your sale, get in touch with Conveyancing Home Queensland by calling 07 3236 2852 emailing firstname.lastname@example.org or filling in our simple online contact form.