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25<br />
Buying off the<br />
plan – what you<br />
need to know<br />
Buying off plan requires all the same due diligence<br />
and care as buying an existing property.<br />
Buying a brand new home off the plans<br />
can seem extremely attractive, especially<br />
if you’re struggling to find a property that<br />
meets all your needs. If you decide to go<br />
down this route it is absolutely crucial<br />
to enter the process with your eyes wide<br />
open. Reading the fine print – starting<br />
with the photo caption advising you that<br />
‘some images are an artist’s impression’ –<br />
is just the beginning.<br />
There are many benefits to buying off<br />
a plan. Not only are you signing up for<br />
a new home that should meet all the<br />
latest building specifications, but you are<br />
buying something at a set price with an<br />
initially low outlay. A long settlement<br />
period (while the development is<br />
completed) gives you time to get your<br />
finances in order. In theory, if the market<br />
remains buoyant then the property will<br />
increase in value over this period so you<br />
will be getting more than what you paid<br />
for at the outset.<br />
However, the process is not without<br />
risks, says chief executive of the Real<br />
Estate Agents Authority (REAA).<br />
“If the market falls, then you may<br />
encounter problems if you try to sell.<br />
Also, the property may not meet your<br />
expectations and the build may take<br />
longer than expected. You are entirely<br />
reliant on the developer, so you are at<br />
risk if their business fails and/or the<br />
development is on-sold to another<br />
company.”<br />
Buying off plan requires all the same<br />
due diligence and care as buying an<br />
existing property.<br />
“Start by putting in some solid<br />
research”.<br />
“Don’t be swayed by pre-sale sweeteners<br />
and flash show homes that may bear<br />
little resemblance to the actual finished<br />
product. Do your homework about the<br />
developer and the construction firm –<br />
find out what their track records are,<br />
examine their credentials and look at<br />
any previous developments they have<br />
been involved in. Remember that you<br />
are giving these people your hard-earned<br />
money and you need to be confident that<br />
they will deliver the goods.”<br />
Generally, buying off a plan means<br />
providing a deposit upfront to secure the<br />
property. The remainder of the money<br />
is due on completion, but you will have<br />
to prove that you have the finance from<br />
the outset. While the long lead-in period<br />
provides time to save money, there is<br />
also a risk that interest rates may go up<br />
or lending criteria may change. Discuss<br />
these issues with your bank or financial<br />
advisor to make sure you are prepared if<br />
the situation changes.<br />
“If a real estate agent is involved<br />
in selling properties in a proposed<br />
development, they can help you navigate<br />
the process”.<br />
It’s also important to engage a lawyer<br />
to help you understand all the details of<br />
the sale and purchase agreement and any<br />
covenants on the title. These may extend<br />
to the ‘look and feel’ of a development or<br />
new subdivision, and include restrictions<br />
regarding fences, landscaping, exterior<br />
colour and cladding choices and may<br />
even include car parking rules for you or<br />
your visitors.<br />
Developers will approach selling off<br />
plans in many different ways. Some<br />
contracts are designed to allow the buyer<br />
to choose their own floor plan; others<br />
may allow the developer to change the<br />
layout without checking first. Every<br />
detail of the property, from the expected<br />
timeline to the finishes used, must be<br />
spelled out in the contract.<br />
It is vital to get legal advice before<br />
signing anything.<br />
“If you don’t go through these details<br />
very carefully before you sign you may<br />
be in for some unpleasant surprises later.<br />
Remember to check the contract to see<br />
if there is a ‘sunset clause’ that specifies<br />
what will happen if the development is<br />
not finished in time. Don’t forget to ask<br />
what will happen if the developer goes<br />
into liquidation and the project is sold to<br />
another company. The last thing you want<br />
is for your dream home, not to mention<br />
your deposit, to vanish into thin air.”<br />
For independent advice on<br />
buying or selling property, check out<br />
www.settled.govt.nz.<br />
Selling your home?<br />
Potential buyers are likely to be<br />
living in your neighbourhood, it’s<br />
an area that they already love<br />
and are actively seeking to stay<br />
in. That’s why it makes sense to<br />
advertise your property in the<br />
<strong>Selwyn</strong> Property Guide.<br />
For cost effective, highly targeted advertising<br />
that delivers results, contact a local<br />
Real Estate Company that advertises in<br />
the <strong>Selwyn</strong> Property Guide.<br />
73<br />
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