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How does buying off the plan work?

Published on 07 Dec 2016 by Fiona Bennett

How does buying off the plan work?

Buying a property off the plan is a very different experience to buying an already established property. The main difference is that the property has yet to be built and you cannot physically see it or walk through it. You are relying on floor plans, price lists, artist impressions and property documents to make your decision to buy, as well as facts and figures to ensure the property is a solid investment.

So if you are considering buying a property off the plan then you might want to know how buying off the plan works.
Here is an overview of the process:

Step 1 – Figure out your budget

The first thing you need to work out is your budget and what you can comfortably afford to buy. Buying off the plan will also typically require you to put down a 10% deposit, so if you do not have access to this yet, then you need to either reduce your budget or create a savings plan to get you there faster.

The best thing to do is to speak to a Mortgage Broker to work out your borrowing capacity and this will give you a clear indicator of your maximum price range and what properties can be avoided.

Step 2 – Make a plan

You also need to make a plan and work out the reason why you are buying a property in the first place. Are you looking for a property to live in? Is this for investment or are you looking to create a strong investment portfolio to allow you to retire comfortably? Depending on what your goals are will dictate the type of property you buy and where you buy.

Step 3 – Speak to a Property Consultant at iBuyNew

It’s now time to book an appointment to meet with a Property Consultant at iBuyNew. As well as going through what iBuyNew does, our Property Consultants can also help you to work out your goals and show you our full range of new property for sale which includes new apartments, townhouses and house and land packages. We can also answer any questions that you might have about buying off the plan and run you through the process.

Step 4 – Choose your property

It’s now time to choose your property. When meeting with our Property Consultants we will take on everything you say to help narrow down your choices to typically two or three projects which sit within your budget.

There’s plenty to consider here and you will need to know the following:

  • How many bedrooms do you require?
  • How many bathrooms?
  • Do you need car parking?
  • Which level do you want?
  • What is your preferred aspect?
  • Do you want a development with communal facilities?
  • Is the property close to key amenities and transport?

Of course, not all of your preferences may be available so you need to determine which factors are a must have and what your would like to haves are. You will then go with the property that best matches your requirements.

Step 5 – Reserve your property

Once you have narrowed down your choices, you will need to pay iBuyNew a refundable $2,000 holding deposit to take the property off the market. This means that no one else can buy this property during this time.

Step 6 – Finalise your contract and pay the 10% deposit

Once your property is successfully reserved and taken off the market, you will usually have 14 days from the issue date of contract to pay your 10% deposit and to finalise your contract and exchange. The contract will be sent to your nominated solicitor or conveyancer for signing.

We recommend that you use a solicitor or conveyancer that is familiar with off the plan contracts as this contract type will differ from your usual established property contract. It’s also best not to scrimp on a cheaper solicitor as this could cost you in the long run. Make sure you choose the best solicitor you can afford, which is usually around $2,000.

Depending on the developer, you can pay your 10% deposit in a number of ways including cash, bank guarantee or deposit bond. Your deposit will be safely held in a trust account and cannot be accessed until settlement.

Step 7 – Receive construction updates

Once your contract has been signed and deposit has been paid, all you need to do now is to wait for settlement, which can take a year or more, depending on the development size and when construction starts. During this time, you will receive regular construction updates detailing the construction progress of your property.

Closer to settlement, around three months prior we will also send you reminders about getting your finance in order, as well as a moving in guide if you are an owner occupier. If you are an investor, then now is a good time to start looking for a Property Manager who can manage the property as well as promoting your property and start to look for tenants who can move in once completion arrives.

Step 8 – Pre-settlement inspections

Once your property is complete, your Property Consultant will arrange a time with you to conduct a pre-settlement inspection of your new property. You can inspect your completed property, note down any defects or quality issues that need fixing and get the builder to fix these issues as soon as possible. Your Property Consultant will also be there with you and will know what to particularly look out for.

Step 9 – Property settlement

When your loan has been approved and finalised, your lender will liaise with your solicitor or conveyancer and arrange the settlement and payment of the balance of the purchase price. Once this is all confirmed, you will receive your keys!

Step 10 – Move in

It’s now time to move in and enjoy your new property if you bought as an owner occupier, or if you are an investor it’s time to get your property tenanted. If you had lined up a Property Manager in advance, then the ideal is to have tenants from day one or as early as possible to ensure you aren’t left with too many out of pocket expenses from loss of rent. It’s also best to get your depreciation schedule drawn up as early as possible, preferably before tenants move in so you can maximise your full depreciation claims for year one.

Congratulations on your off the plan purchase!

You can view our full range of new off the plan apartments for sale here, or why not call the iBuyNew team today to get the process underway. Call us today on 1300 123 463.

Fiona Bennett

Fiona loves to keep our clients engaged and up to date with the latest property news and trends and regularly provides updates through our social media channels.

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