Purchasing property off the plan can be the most suitable option for buyers who need time to get their finances in order or for first home buyers who want to take advantage of generous government grants. But there are some important things you need to do before buying a property off the plan.
Purchasing property off the plan is both exciting and nerve wracking at the same time. It is exciting to get to lock the price in and choose your own fitting and fixtures and nerve wracking as to whether or not the development will go 100% to plan.
I have compiled a list of 10 things you must do before buying property off the plan. Consider this a simplified checklist that can help put your mind at ease a little bit.
1. Hand Over Your Best Contact Details and Let Them Know You’re Interested
When it comes to selling properties off the plan in most cases the first properties (and usually the best properties) go to those who are quick to act.
Most sales people hate cold calling, so if you really want a property make yourself a warm lead.
Give your contact details to the agency or sales rep in charge of the account and keep in contact with them letting them know you are interested.
Don’t be a pain in the ass, but be obvious enough to them. Ask them lots of questions about the property, tell them you are interested, if you have organised finance let them know.
Don’t be so keen that they smell a fool, but let them know you are able to buy. They just need to convince you to buy their property, not the one down the street.
2. Research The Area…Heavily
Buying property should be 99% research and 1% action. You want to do your research so you know you are buying the right property in the right area.
Look into things such as
- Demographics – what types of properties does your demographic want
- Economics – what can people in the area afford
- Government housing – what percentage of the area is government housing and does this suit your investment strategy
- Amenities – Distance from employment, public transport, shops, schools etc
- Developments – What other developments are in the area and will this cause an over supply
- Infrastructure – Is the government investing infrastructure to the area, if so this is a good sign
- Population growth – Is the population in the area growing or declining?
You can use an advanced suburb research tool like Ripe House to do your research.
I cannot stress the importance of researching the area enough. It is so important I committed an entire module of Positive Property Academy to researching the area and being confident in your investment decision.
3. Make Your Decisions Before You Have To Make Them
One of the best negotiation tactics I know of is to have made your decisions before you enter into negotiations.
When you know exactly what you will accept and what you will walk away from it makes getting what you want 100 times easier. The same goes for closing the deal on an off-the-plan property.
Do what you can to prepare ahead of time so when the time comes to purchase a property you are ready to jump if it is the right deal.
- Decide how much you are willing to pay and what you will walk away from
- Decide which units or blocks you are interested in and which ones you aren’t (if your favourite blocks are all taken)
- Get finance pre-approved
- Talk to your spouse and make sure you are on the same page
4. Choose The Right Solicitor
A solicitor is a solicitor is a solicitor right? So wrong! Just as you wouldn’t go to a GP for brain surgery and you wouldn’t pay for a consult from a brain surgeon for the common cold you need to choose your solicitor wisely.
There are solicitors who specialise in off-the-plan purchases and other’s who have never done them before. Do yourself a favour and hire a solicitor who knows that they are doing and who has been through enough of these that they can actually advise you on common errors people make.
5. Be Prepared To Not Become a Millionaire Overnight
Understand that while you are locking in the price of your property today it is usually based on a forecast of what the developer thinks the property will be worth at the time of settlement, not what it is worth today.
They want to make as much money as possible. So while you may get a steal and buy a property that is $100,000 undervalued at time of settlement I wouldn’t count on it.
Chances are the property market won’t boom as much as the developer is ‘predicting’ and the unit may be worth slightly less than what you paid for it.
Have clear exit strategies before signing the deal so if and when this happens you know exactly what to do and how to handle it. Property markets have dips but almost all property goes up eventually over time.
6. Research The People Involved in the Project
Get to know the companies and the people involved in the build project. Look at previous projects they have completed and if possible go door knocking and talk to the people living there and find out if things are as good on the inside as they look from the outside.
People you want to get to know more about
- Project Managers
- Interior Decorators
7. Treat The Agent With Respect
When was the last time you did something nice for someone who was a complete jerk to you. If you a saint then it was probably 5 minutes ago, but chances are it doesn’t happen very often.
People like to do business with and do favours for people who are nice to them.
When I was a pharmaceutical sales rep I had accounts who treated me with the utmost respect and accounts who took their frustrations out on me. I would go above and beyond for those accounts who respected me, even if they were small accounts.
It wasn’t something I did intentionally but it is something inbuilt into all human beings.
Find ways to be nice to the agents and get on their good sides. A little smile and some gratitude goes a long way. An agent is more likely to put you on the top of the list and help you get the property you desire if you are courteous and nice to them.
Buying off the plan is extremely exciting and with the current government grants available for first home buyers purchasing newly built or soon to be built properties it may just be a great time to buy off the plan.
Always do your research and speak to a professional financial advisor before making any investment decisions.
Oh…and good luck!