Smart property buyers and investors who understand the value of buying property off the plan are getting the jump on other buyers. To help people looking to buy property off the plan Fast Love Homes has a simple checklist to ensure you cover off all the key considerations before you sign the contract of sale.

Buying off the plan means entering into a contract with a developer to buy a property before the completion of construction. Since there
is no physical property to inspect or see, you view the design, building plans and pictures to get an idea about what the property will look like on completion.

One of the biggest advantages of buying a new home off the plan is that you will be the first owner of the property and get a brand new dwelling built just for you.

Follow the checklist below to ensure you cover all the key points before signing a contract of sale.

1. Finance – Work out your budget and/or what you are able to borrow. Confirm with your lender about how they treat off the plan sales.
2. Inclusions – Ask for a clear list of all fixtures and fittings, kitchen appliances, light fittings, and carpets.
3. Contract details – Confirm the details that will be included in your contract. Find out if there are penalties for withdrawing from the contract. Review the contract in detail for clauses about commencement and information on your right to re-sell the property. Get the contract checked by your legal adviser.
4. Builder/ developer /architect history – find out about the team doing the development so you can be confident they will deliver everything promised.
5. Local market research – Investigate sales of similar properties in the local area to make sure you are paying fair market value.
6. Deposit details – Be clear on what amount your deposit will be and what form it will take (cash, Bank Guarantee, Deposit Bond etc)
7. Legal advice – Consult with a solicitor or conveyancer to closely check the terms of the contract to make sure your rights are protected before you sign the contract.
8. Stamp duty and other costs – Make sure you work out all the costs involved with the purchase including stamp duty and other ongoing costs like Owners Corporation fees.

You can always discuss your expectations with the sales agent or developer to ensure you are clear about what you are buying. Make sure there is mutual agreement with the developer on some or all of your expectations and have them written into the contract. This will help avoid disagreement between both parties at the time of completion. Remember, if it is not in the contract it is unlikely you will get it included in the finished property.

With a little understanding, buying property off the plan can be a way of securing a good quality home at a fair market price, and then influencing how it will be finished so it suits your style and needs.

You can grab a full copy of the Simple Guide to Buying Property Off the Plan from our website. Or watch the Guide to Off the Plan video series.

When you are buying off the plan, you will usually be asked to make a deposit, generally 10 percent, so you will need to consider how you will get the money for that. Having a healthy deposit (more than 10 percent) will also open up more lending options for you as the risk is lower for lenders.

The deposit will be held in trust until final settlement takes place. This means your money is protected until the project is completed. If the project does not go ahead or finish as expected, you should be able to reclaim your deposit.

Alternative deposits

There are some alternatives to a cash deposit and they are a Deposit Bond or Bank Guarantee. You will need to discuss with the sales agent or developer if they will accept these forms of deposit.

Deposit Bond

A Deposit Bond is a form of guarantee offered in lieu of a cash deposit. The issuer of the Deposit Bond, like a bank or other lender, guarantees unconditional payment of the deposit bond amount to the Vendor in the event that the Buyer fails to settle/complete the Contract of Sale.

Bank Guarantee

A bank guarantee is basically just that…. a guarantee issued by a bank. Basically it’s a piece of paper with an official stamp on it, and it gives the holder the right to cash in the guarantee in certain circumstances. The approval process for a bank guarantee is pretty much the same as a loan approval process, and the bank will only issue a bank guarantee if they can actually guarantee that you’re good for the funds.

Basically if you’re approved for a bank guarantee you will exchange contracts with the bank guarantee as a deposit. On settlement you will be required to come up with the whole purchase price.

Get expert advice

If you are looking to get finance to buy an off the plan property make sure you understand how it works and what you can commit to. You should speak with your solicitor or legal adviser before entering any off the plan contract, or any property sales contract. Make sure you get someone qualified to check the contract before you sign.

Have you used a different way of paying a deposit?