- Falling property market – There is a risk that you may pay too much for a property if the market falls between the exchange of contracts and building completion. If this does occur you may find it difficult to secure finance for the full amount.
- Rising Interest rates – Interest rates could increase before you settle on the property which is problematic if you wanted to fix the term of the loan at the current interest rate.
- Bankruptcy – Many buyers fear the developer could go into liquidation before the project is completed.
You need to ask what the options are if this occurs; will you get your money back and what guarantees do you have?
The golden rule is not to release your deposit until settlement.
- Failed expectations – As many builders do not allow you to see the property until construction has completed, there is a risk that what you envision is not what you will receive. The quality of work may also not meet your standards.
- Therefore continue to research the developer, the property and the builder before you sign on the dotted line.
- Visit the property site and check the location. If there are other constructions in the area, it may affect your view.
- Carefully inspect the display unit, models and plans. Investigate the fixtures, fittings and finishes.
- Find out how long the developer has been in the industry and how many properties they have built.
- Visit your developer’s previous work, inspect the quality and if possible speak to previous clients to determine their satisfaction with the property.
- What is the builder’s track record?
- What happens if the developers run into financial problems and what happens to your deposit?
- What happens if faults are identified post-completion?