Owning a property is associated with a sense of security and safety. However, buying a property is not an easy task to do. Regardless of your purposes and intents, it requires thorough research to avoid even the slightest mistake.
A question that usually troubles almost all home buyers is whether to opt for an under-construction property or a completed property. While there are advantages and disadvantages to both options, it is imperative to know the pros and cons.
How do you decide? Here is a quick guide to help you make the decision.
Also known as the “sell and build” concept since the developers start selling the property before construction work begins. The locations are generally in the non-established parts of the city; hence, the potential for price appreciation due to future development is good. However, this is not true in every case. One has to look at the location and plans around that area. Moreover, it is popular among home buyers because of the discounts and freebies from the developers.
Easier on the pocket
If the location, area, property type and builder are all the same, an under-construction home usually offers cheaper entry costs. The developers also tend to offer many types of discount to attract more home buyers.
With a cheaper purchase, comes higher risk. There have been cases when the developer goes bust due to various reasons such as lack of financing. And if it happens, you still have to serve the loan you have obtained from a financial institution. You will have to bear this risk until the completion of your home.
Once the house is complete, it will usually yield a higher return on investment due to an extended window period between the buying stage and delivery timeline.
Keep in mind that the developer might fail to deliver on time or the development is infinitely delayed. In such instances, as a new home buyer, you will be compensated according to the terms of your SPA.
New developments often showcased at a fair or property launches. Otherwise, you can always walk into their office or showroom anytime.
A discrepancy in the final product
One of the most common glitches is the risk of not getting the promised product at the time of possession. Usual inconsistencies include smaller area than promised, changed layout and deficient amenities.
Defect liability clause
The Sales and Purchase Agreement (SPA) of a brand new property typically includes a defect liability clause for a period of 18 or 24 months (whichever is applicable). It entitles the buyer to repair any defects on the property at the developer’s cost.
Uncertainties of the surrounding area
Many surprises may await you and you will get to know only after living in the property. As you buy the property based on the current plans, you might not know about the possibility of new developments in the future.
Everything is brand new
As you are the first owner, everything is brand new, from ceiling to floor. You will have peace of mind about overall home maintenance.
As the property is still under construction, you usually have to wait for 2 to 3 years until it is complete. During this period, it might be difficult for you to buy another property because your credit with the financial institution will be locked for the total loan sum.
You get what you see. There is no risk of potential changes in the future because all the construction is complete and the property is ready for immediate occupancy. The construction quality and physical infrastructure can also be ascertained before the purchase of such a home. This also means you get to save yourself from the risk of delays or escalating costs.
One of the main advantages of a completed property is the absence of any waiting period. The property is already there and ready for you whenever you want to move in.
Higher initial cost
It will be unlikely to get a chance for a downpayment rebate. Also, be prepared to fork out extra cash for the necessary legal document fees.
You get what you see
Get the feeling of the property you are buying. You have ample chance to inspect and inquire. No risk of discrepancies with the promised layout, features and amenities. This includes getting to know the existing neighbourhood, facilities, traffic conditions, etc.
Age of the house
Buying a completed property might not always ensure you a brand new property. It might have been up for sale for a long time. Hence, if it has not been maintained properly, it might start looking old.
Since the property is complete, the transaction period is usually shorter. All you have to do is make the payment, go through all the legal documentation work and move in.
Completed property tend to be from an older development area and might have fewer facilities within the common area or the residential area as compared to the new property in a new development area.
Old is gold
Many completed properties are located in more mature neighbourhoods within close vicinity to various eateries, shops and offices. Connectivity is usually better too.
Lesser option to choose from
It is difficult to find a good deal as there will be more work involved. Until you find one that is suitable for you, you will have to view individual units in various conditions. And the option is usually not as much as the under-construction property.
There you go! Have fun with house hunting and do your homework before making your decision.
This article is intended to convey general information only. It does not constitute advice for your specific needs. This article cannot disclose all of the risks and other factors necessary to evaluate a particular situation.
Any interested party should study each situation carefully. You should seek and obtain independent professional advice for your specific needs and situation.