What to look for when buying off-plan?

Real Estate
1

Hello everyone,

I am looking at buying a house, and have found what looks to be at first glance something interesting. It is an off-plan project.
Thing is, it’s looking a bit too good (great location and still somewhat “reasonable” price), and there are a couple of things that looks like red flags to me (offer appears to have been online for months now). I don’t have too many details yet though. The promoter does look legit (2k+ constructions over 20+ years).

Are there some resources you could recommend (or simply advices from experience) for things to be aware of, and what to look for especially when buying off-plan. In this case I believe it would be a forward sale.

I am thinking in terms of:

  • legal considerations
  • land (size, utilities, access rights, …)
  • the construction itself
  • finances (I feel like they’re going to push towards their preferred lender, but I believe you can choose? How much prepayment is reasonable?, …)
  • …

Basically, I’d like to be able to know whether they’re taking me for a fool or not.

Thanks!

2

Since you are saying that the promoter does look legit, I wouldn’t say that they are taking your for a fool.

The most important thing is the reputation of the company, so before you plan on making the purchase, take the time to check the reputation, experience (previous projects, quality of those) and solvency.

I know of a case where somebody bought an off-grid apartment and then it didn’t meet up to the expectations - not subjective, but quality-wise. Obviously they then complained, but the developer said all is good and then they got into legal stuff, which means more money and time. I don’t know what the contract was, just make sure it is good for you.

For the construction company having their project already partly prefinanced for 0% interest (since you give them your money as I understand) is more favorable for them, because then they have to get less money from banks and banks might give them more favourable terms.

I don’t know exactly what terms this company offers, but this I found online:

Financing your project

There are two ways to buy an off-plan property:

#1 The first, called a forward purchase, involves paying a deposit varying between 10% and 20% of the total price. The balance is then paid when the property is handed over, and this is usually paid through a mortgage obtained beforehand.

From my perspective you are buying renderings, which always look good on paper ))

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3

In which phase are you? Do you already have a detailed description (Baubeschrieb in German) oder contract draft and clarified your questions?
Out of curiosity, any link to this or a similar project if you don’t want to share “your” project?

If you’re not an expert on construction, I would recommend hiring one to consult and check on your behalf both before and during construction phase.
There’s also some books for beginner, depending on your level of knowledge. I had one that also outlined specific contractual terms when it comes to guarantee etc. Unfortunetely, I don’t remember the name, but there were severals in the library.

Besides, I would clarify how much flexibility you have if that matters to you and at what cost. I mean on the room layout, bath, electricity, door and windows, whatever matters to you.
I’ve seen big differences both between project sizes but also individual contractors.

Also look up the budgets for the items you can definetly chose yourself. In my opinion it tells how eagerly they expect to up-charge you.

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4

It was the very start, I had just seen the ad, but after looking a bit more in details on the constructor’s site, it looks like it’s already reserved. :frowning:

There’s no detailed description of what’s included.

I guess the small plot size might play a role in the prize. Also it’s starting from, so you said you might get something basic and they nickel and dime you for every changes.

Thanks for all the answers so far!

5

If you are interested, get on their waiting list and make an appointment. Even when this one is not yours, you can get some experience and fine-tune what to look for or how the process works with individual offers. When you are really interested, you might have to move quickly. Depending on the local market even before a project is even online.

I typically had a first call and got the specifications and plans shortly after. It should describe in more or less detail what is included, materials used, who pays which fees and options available etc. Some larger projects I once looked at also had them available for download and offer some standard version, the price range etc.

In some regions the asking price would be for the plot only :neutral_face:

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