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Buying Off the Plan vs Established Build: Pros and Cons
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Buying property is considered to be a steady and valuable investment. However, before signing on the dotted line, you’ll have a crucial decision to make early in the property hunting process. Should you buy off-plan or buy an established build?
In this blog, we’ll outline what that means exactly and run through some pros and cons for each to help you make a well-informed decision.
What's the Difference?
Buying off-plan is when you choose to purchase property before it's been fully built. This might sound like a risk, but if you're looking to move into a market where property prices are high and rising fast, it can have its rewards.
As you’d expect, buying an established build is purchasing a home or condo that is already built. As soon as everything is agreed upon, you can move in right away.
Off-Plan: The Pros
Developers never want to be left with empty homes that they’re struggling to sell, especially if they already have their eyes set on their next lucrative development. This means they’re often willing to part with high-end properties at prices that are lower than you might expect. You’ll struggle to find the same desire to sell at below market value in established builds.
An unfinished build is just that — unfinished. Often, there’s still time for you to make recommendations and suggest those final details so everything is exactly as you want it to be. This isn’t always the case, so you’ll need to speak to the developers in question. However, as we’ve already said, many developers want to get those homes sold and if a little bit of customization can finalize the sale, they’ll be happy to oblige.
Growing Property Value
If you're lucky enough to complete a sale of an off-plan property before it’s ready, then you could benefit from a lucrative resale value. Generally, the property market is moving in a healthy upwards fashion, particularly in popular parts of the world. If you’ve purchased below market value, then you can benefit from growing market prices and sell for a profit.
Off-Plan: The Cons
The Market Might Fall
The keyword here is ‘might’. The market can be volatile, so it’s essential to examine how things play out in different scenarios. Like with any investment, there's a risk, so proceed with caution and only commit to a property once you’re happy that it’s the right course of action for you at that time.
No matter how big or small the development, project delays are commonplace. If the property isn’t ready until a little later than planned, then don’t panic. What’s important is open communication. If your developers are providing regular updates, then you’ll always know where you stand and what the latest situation is.
Difficulty Finding a Mortgage
We’d always recommend speaking to a specialist mortgage broker before you commit to any off-plan property deal. A lot can change in the mortgage market over a short period, for example, interest rates can rise and fall. So, it can be more complicated than it might first appear to get the mortgage you need. Be aware too that mortgage offers usually expire after six months, but you may be reserving a property for a year or more in advance.
Established Build: The Pros
No Waiting Time
Off-plan properties might require you to wait 12 to 18 months before they’re ready to move into. This isn’t the case for established builds. In most cases, the property is ready to move into immediately once everything is agreed upon and all parties are satisfied.
Want a closer look at the dining room? That’s a simple request for established builds. Unlike with off-plans, you can easily visit the property and measure up rooms to make sure they suit your needs. Off-plans might have model homes you can tour, but you may not be able to visit the exact home you are looking at buying.
Established Build: The Cons
Traditional property buying involves chains of buyers who all must wait for their turn to complete the purchase. Any single link within that chain could break, leaving many disappointed potential homeowners.
The older the property, the more chance you need to carry out major work once the keys are yours. Poor energy efficiency, in particular, is something that many new buyers have to tackle once they’ve signed on the dotted line.
Interested in a Second Home?
Let us introduce our Hotel Condominium model, available now on the island of Bermuda. The condos at Bermudiana Beach are conversions. That is to say, they are existing build, but not key-ready because they are undergoing renovation and redesign. Download our free advertorial now to see how many prospective buyers just like you are taking advantage of our model to buy their dream vacation home.
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