Ways to win when you buy off-plan

With the number of existing homes for sale in the affordable price range diminishing, new developments are starting to regain popularity, especially with first-time buyers.

And there are several factors in favour of buying a home “off-plan”, including the following:

* You can peg the cost of your home at today’s price, which is important because building costs are still rising faster than inflation.

* You will usually need only a small deposit to secure your home, which means you can save your cash to cover transfer costs, or to reduce the capital portion of your home loan when you move in and immediately lower your minimum monthly instalment.

* You may find it easier to obtain a home loan if the development has been approved by one or more banks – and some developers will even offer to pay your bond registration and transfer costs. * You can often customise the layout and certainly the finishes to be used when the home is built, so that you get exactly what you want.

* You will save a significant amount on maintenance in your first several years of ownership. Newly-built homes also come with foundation, structure and roof guarantees.

However, says Aida National Franchises operations manager Ester Odendaal, there are also certain precautions that “off-plan” buyers should take.

“They should for example be careful to deal only with reliable developers that have a track record of completing projects on time and with quality workmanship – and with marketing agents from an established, reputable real estate company.

“Also, they must make sure that any deposit they pay will be held in the trust account of an attorney or registered estate agent. Otherwise it is all too easy for a shady developer to present an impressive-looking marketing brochure, gather in deposits from unsuspecting buyers and then vanish with all their money.”

Next, she says, buyers should take the time to decide exactly what they want in their new home, and make sure that the sale agreement spells everything out in detail, so that they don’t face unexpected ‘variation costs’ when building is completed and they are ready to move in.

“And finally, they should really try to ensure that whoever is building their new home is only paid on performance. If they immediately obtain a home loan for the building, for instance, the bank will only pay draws to the builder at certain pre-determined stages of the project, with the last amount being payable only after completion and inspection.”

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