Pre-selling properties are those sold to home buyers or investors early on in the construction phase of the condominium or real estate property. They can be also called “off-plan” since they are buying nothing more than a plan. Lots of developers are pre-selling condominiums to buyers in order to finance the construction and development itself. The buyers or customers on the other hand, as very early adopters, are given a discounted price and the promise of capital appreciation once the property has been turned over and, in cases of townships and mixed-use projects, all infrastructure and amenities have been put in place.
Buying a pre-selling property is not for the faint of heart, there is a chance that the buyer will get disappointed when the turned-over product looks nothing like the modern model unit the property agent showed them. Similarly, like when a studio is adapting your favorite book into a film, and you only discover that those characters did not turn out to be all that you imagined.
1. The risks of buying a pre-selling condominium
There is a risk of the place stagnating in a few years’ time. Since the turnover date would be 2 to 3 years away, you can’t ever be sure if your chosen area will deliver that much-publicized capital growth.
2. Have some Down-payment
Even when you apply for a bank loan to finance your purchase of the condominium, you still need to give out a certain amount for down-payment. This usually costs up to 20 percent of the purchase price (high-end condominiums usually require a higher down-payment). Other developers also would need you to require a reservation fee, that which will eventually form part of the down-payment should you decide to push through with the purchase. However, in most cases the reservation gets forfeited if the buyer decides against buying after a certain number of days, so make sure to ask about this. In addition, it is also prudent to have at least an amount equivalent to 5 percent of the purchase price ready for the taxes and other fees associated with the purchase.
3. Choosing a good Developer
Choose your developer wisely, some buyers are apprehensive about buying a pre-selling condominium because they fear that the finished product wouldn’t turn out how the sales agent promised it to be. Or even worse, the project may not materialize at all. This sadly occurs sometimes, but it can be prevented by being careful in choosing your developer.
This is an easy toss between developers who’ve just launched their first project and established ones who are generally well-funded, have a good reputation for the project, and are highly unlikely to default. First-time developers are generally cash-strapped and are up against the odds when trying to market pre-selling condominiums and properties. Hence, they are in urgent need of buyers and customers to help them cover their upfront financial requirements and help to ensure the success of the project. However, when they fail at this, the project will definitely not materialize.
Well-established developers, on the other hand, are more financially secure and are highly likely to deliver their promise since they have a reputation to project. Therefore, it makes more sense to purchase from them.
4. Location is key (most of the time)
There is a saying that the worst house in a good area is still better than the best house in a bad area. The same is true for pre-selling condominiums. Though this doesn’t mean that only those within the newly minted township or mixed-use projects are worth your money. If you are not able to afford to pay a premium for a luxury apartment, why not look for a less pricey one located along the fringes of big cities. Make sure you do your research about the area though, like if it is served by a good transport link? Is the area prone to flooding? Knowing these things will allow you to plan your purchase to a pre-selling condominium accordingly.
5. Get financing ready
If your plan is to purchase your pre-selling condominium through bank financing, then make sure to have your loan approved. The first step to getting your loan approved is to have all the necessary requirements and documents read, which typically will include your credit history, financial statement, bank statements, and proof of income.
In Bria Homes, they offer a very affordable house and lots, town houses, as well as condominiums, but that doesn’t mean you have to purchase a property immediately. Firstly as aforementioned above, it is important that you have your finances ready, you should be employed and have a stable source of income in order to secure the monthly payment or pay loan installments.
In addition, one of the most common mistakes that many homebuyers commit when applying for a home loan is getting the lowest rate without carefully studying the terms. In most cases, very low loan rates are offered only on a promotional basis, and the borrower gets hit with the “real” rate later on. This is often the case when interest rates have been falling for some time. Borrowers should instead focus on a stable rate, not necessarily the lowest that their monthly income can accommodate.
6. Look around the area
Any homebuyer would want their environment and neighborhood to be safe and beautiful, luckily in Bria Homes, they have both. The house and lots are near commercial buildings and near main roads and highways, they also have a close-gated community where there is security 24 hours a day and amenities inside the vicinity which children can enjoy like a covered basketball court, parks, playgrounds, etc.
A resourceful and prudent buyer knows the advantage of looking around the area before making a major decision to purchase. Before you enter into a contract with a developer, do a bit of a background check by visiting the company’s website and get to know more about the developer’s integrity and reputation first before saying yes to anything they offer. Another way to guarantee the developer’s financial status is to have the same written into the contract if possible, to avoid encountering financial complications with the developer. Also ask to see the developer’s balance sheet to determine its financial strength, if the developer goes into liquidation before the property is finished, you may lose your deposit and other costs.
7. Read the Contract
When buying a pre-selling property you’re most likely to be coordinating with the developer’s property agents or consultants. Make most of your interactions with these people by asking them the right questions. Sit down with them to discuss the contract thoroughly, and remember to ask important questions to determine what is covered as part of the purchase price. Expectations for the property must also be discussed with the developer, if possible have them written into the contract to avoid disagreement of any sort at the completion of the said project.
8. Inspect the display home or model unit
As you are buying a non-existing property, carefully inspect the display home or model unit. In most cases these are the poshed-up versions of the actual property (fancy lights, decor, and lavish draperies are the usual tricks to make the place more photogenic), so make sure to ask questions as to what type of finishes, furnishings, and fittings are included in the contract. However, as developers are up against time to complete the project, they usually are given plenty of flexibility in how the project is to be completed. A pre-selling contract will usually stipulate that the property will be constructed in accordance with the finished and materials described, but as a buyer, you should be aware that it also provides the developer the sole right to change the finishes and materials in certain circumstances, provided that the alternatives are of no less quality than the planned.
In the case of defects in the turn-over unit, pre-selling contracts normally stipulate that the developer is to fix any defects identified by you as the buyer, prior to you selling on your purchase so make sure to inspect your property.
Written by Aaron Cruz