Tips and Traps
Pros for buying of the plan
- Without doubt the biggest single benefit of buying off the plan is one of choice. It follows the old adage “first in best dressed”. The best apartments and townhouses invariably sell off the plan first, so those not willing to purchase off the plan will be left with little or no choice.
- Over the last five years in a rising market, buyers have experienced large capital gains from buying off the plan. This is not to say this will continue but for those willing to hold and who do the proper market research and purchase off the plan, there are generally savings - and one should remember that due to limited development sites, increases in building cost and the baby boomers demand - that apartments with lift access are increasing in value at a faster rate than standard houses.
- The ability to choose finishes is important to many purchasers, particularly owner-occupiers, and basically all developments today afford a choice of at least two schemes. Many of the better developers also allow minor customization, but this is usually restricted to the first buyers only, which is another benefit.
- Buying off the plan also gives you the benefit of time when selling your home. At Domain we offer a variety of solutions that put you in control of timing when selling your home. Generally, I find from client's experience, it is less stressful than buying off the plan, than selling and then not being able to find the right home, having the market move upwards in the process, or having to sell quickly under pressure and receiving less than you feel fair value. Any home will generally sell within six months if correctly priced and in the hands of a capable agent.
- I normally suggest clients get a least two to three agents to appraise their home and deduct 5% to 10% of the lowest value. If they would move forward at that figure then generally you are in a safe area, and more often than not experience the expected or better than expected result.
Cons of buying off the plan
- Possibly the greatest stress is one of timing for those who have sold. In the history of mankind only about four developments have been finished on time and as a result this causes great anxiety, but I would argue less anxiety than waiting until you are forced by circumstances beyond your control to move at a later stage down the track.
- Undoubtedly the biggest pitfall of buying off the plan is size. It can be extremely difficult for first time buyers to relate to size. This is particularly important for down sizing owner-occupiers to whom size is incredibly important, due to existing furnishings and the size of the home they have just left. This is made even more difficult by the fact that many floor plans are not to scale and contain combined sizes for internal, external and car parking.
At Domain we strongly suggest that potential purchasers take the following steps and follow a couple of guide lines;
- Deal with companies like Domain who know what they are talking about.
- Visit new developments that are similar in size to what you think you need.
- Consider that third flex rooms are better than third bedrooms because they offer versatility and do not cramp living rooms etc for one week a year when family or friends may stay over.
- Look at general flow and hallway usage etc and separation of spaces that still allow flow and openness but also allow a bit of privacy, as well as separation of adjoining homes and external areas.
- Remember that you are moving for a reason and that is to upgrade your home while minimizing maintenance etc so it is smaller for a reason.
- Owner- occupiers should use to scale building plans, establish the size of all rooms (the agent should help) and relate these to sizes in their own home. Specifically how do main bedrooms compare? You can physically measure this out and tape it to the ground on your home if this helps. Please ensure that the sizes you compare are the same. Strata and architectural sizes are different and strata are generally about 5% smaller as walls are excluded.
- Two bedroom apartments should be around 100 square meters internally with those around 110 and over being ideal for owner-occupiers. Those in the low 80's and high 70's are better left for investors.
- Three bedroom apartments should be 135 square meters internally or more. Those any smaller will have bedrooms that are compromised and those below 120 will generally not be suitable for owner-occupiers.
- Town houses should be a minimum of 130 for two bedrooms and over 150 for three bedrooms and remember stairs take up a large amount of space.
- Once you go over 150 meters internally then you are starting to feel comfortable whatever the size home you are coming from.
- A minimum size for a bedroom should be 3 meters by 3.2 meters excluding robes.
- The level of finish is not always what is promised, so try to deal with local developers with a good track record and you often find extras that you where not expecting.
- Check ceiling heights as generally better quality developments have ceilings of around 2.8 meters. Higher the ceiling the bigger the home will feel.
- Ask for a list of the architects, developers and builders last three or five developments. It is important to ask for all three, as any new development is only as good as the entire team.
- In terms of deciding on the particular value of two similar developments divide the internal square meter area by the price to give you an overall cost per square meter.
- Check building plans to check what is next door. It is not ideal to have your neighbour's bathroom directly behind your master bed for instance.
- No development is ever finished on time. For investors this is fine but for owner-occupiers this can be extremely frustrating. Add 12 weeks to what you are told.
- A study should be a separate room, not a nook or a desk in a hallway.
Domain Project Marketing's hot tips.
- Research research and more research.
- Prior to exchanging on any off the plan sale visit a completed project’s apartment of the same size (this can save the down sizing owner-occupier emotional meltdown).
- If you are downsizing remember your new home is smaller for a reason, but do not get caught in a shoebox.
- Always look for a lift to add both lifestyle value and resale value.
- Avoid odd shaped rooms that will be hard to furnish, it is often a sign of cramming too many apartments on one site.
- Never buy the first home you see, and use internal square meter rates to determine real value as well as good design and reputation.
- Use long term established specialist agents if possible.
Please also make use of the following link for NSW Office of Fair Trading's website for further advice;