is buying land off the plan right for you?
There are some rarely known benefits to buying land off the plan during the pre-sale phase but few people know what they are. The question is, is buying land off the plan right for you?
There are times when land is offered for sale off the plan, or in other words, before it is ready to be built on. This is what is known as a ‘pre-sale’ or ‘off-the-plan’ purchase and is made before land titles have been issued or before construction of the subdivision and roads is complete. Developers sometimes go down this path because the costs involved in developing a new estate are substantial. By holding back the development of the roads until a certain percentage of the land has been sold, the developer can realise a more immediate return on their investment. This is quite common, and there are several reasons you may consider making such a purchase that can work in your favour.
could the following advantages benefit you?
- You don’t have to pay for your block until settlement, giving you extra time to save.
- Because you haven’t yet paid for the block, you’ll have no holding costs such as interest payments on a loan.
- You can secure the best block with a minimal deposit and pay no more until settlement.
- Sometimes developers offer incentives, such as rebates or special offers on pre-titled blocks.
- Buying during the pre-sales phase provides an excellent opportunity to negotiate the price, as developers may be highly motivated to sell during this stage.
Buying off-the-plan does require a level of visualisation. If you are buying land this way, ask for a look at the development plan. A development plan takes into account the whole area, not just the estate you are buying in. It will include future lifestyle features, nearby future developments and local infrastructure plans. A land buying advocate will help you identify what you need however, this step in The Building Home Masterclass will give you the knowledge to know what to find out.
Buying land off the plan has significant advantages but there's some really important factors that you need to consider before deciding whether or not buying land off the plan is right for you.
You only pay for your block when it settles which means that it is possible to experience capital gain from the time you commit to purchasing the block to the time when it settles and you actually have to pay for it. Safely purchasing a block off-the-plan can in some circumstances, be a terrific way to earn free equity.
Trust. We all want it, we all need it, heck our happiness depends on it. So why then can it be so hard to give? Call me jumpy, but a phone call this morning from one of our members has got me fired up. Mistruths in the Real Estate Industry are so 1990’s. Seriously industry, it’s time to rise.
This is about people who are buying land being told lies and I’m calling it.
I’ve dedicated my life’s work to helping families stay safe when planning to build a new home. My purpose is to help them avoid the biggest mistakes made. It churns my stomach and boils my blood to see people fall victim to the wrath of desperation that comes from real estate agents needing to get that next sale. As agents of this calibre drift off to sleep at night, their pillows can’t possibly feel fluffy.
Let me paint a picture. Here’s a couple who are downsizing from the farm. A man with the warmth of a life well lived and his beautiful wife who evokes fond memories in me of my own childhood where cousins, aunts and uncles come together to reconnect around a country kitchen table.
They have sold their home. It settles in eight weeks. They need to find somewhere to live. They can see the benefits in building however that would mean having to rent or move some four hours away to live with family. If they are going to build, it needs to happen fast.
They called me to let me know that they’d found a block of land that would be titled in the next two to three months. Incidentally, I’d already done my homework on this land and was aware that civil construction to build the roads had begun just the week before. It’s July. It rains. Heavily. Even if the weather is kind, civil works may take around five to six months at best. How did hearing this make me feel? Angry. Mistruths in real estate destroy lives.
Here’s what I would have told them:
‘Civil Construction works have just begun. Depending on the size of the development works can typically take between five to six months however being winter it’s in the hands of the Gods somewhat. It’s the developers hope that they’ll be completed before Christmas within five months. Once construction is completed, local authorities such as water, gas and electricity need to sign off on the subdivision for it to gain what’s known as certification. This can take from weeks to months depending on certain variables. Then once certification takes place, the subdivision is sent to the titles office. Depending on how high the pile is on their desk, that can take around two to four weeks. And finally, depending on the settlement period, you might get your title as soon as fourteen days after settlement. At best you’ll be able to start building in around 6-8 months, at worst 10 -12.”
Honesty first, sale second. Rather, here we see a real estate agent from one of Australia’s largest and most successful agencies who seemingly knows little about the process of developing land, telling an innocent couple a mistruth that could have devastating consequences for them at their age. As for the real estate agent who sold them the block? His commission has been locked away Eddie. High fives over coffee in the board room. Next please.
This is where the value of working with a land buyers advocate comes into play. Buying a house and building a house are two completely separate processes and it makes sense to buy land from someone who understands civil construction and home building. A land buyers advocate works for you and their job is to protect your interests.
Real Estate mistruths are the thorns on the branches of a rose bush. You’ve got to know how to dodge them to avoid getting stung. And while a prick from a thorn can ruin your day in the garden, a prick in real estate can ruin your life.
Thankfully, because you're here, you'll know how to avoid this scenario.
It's better to walk alone than in a crowd going in the wrong direction
- Diane Grant