Things to Consider When Buying an Off-Plan Condo

One of the terms that you will often hear spoken in a real estate office is “off-plan”. These are units that are made available by the developer at the initial stages of the project, often before ground has been broken. The prices are usually considerably lower at this stage and you will have the opportunity to choose the best units in the project. Prices also tend to increase during construction with “flipping” been an option that some investors take.

There are benefits for both the developer and the owner for choosing this option. The benefits for the owner have mostly been covered but for the developer, they a little more complex. It is likely that a certain percentage of units will need to be sold in order secure financing, usually from the big banks with few financial institutions agreeing to financing or for the project to begin until around 30% of the units have been sold.

Deposits and Payment Plans

If you agree to purchase a unit off-plan, typically you will only need to make a small deposit, often as little as 50,000 Thai Baht. The buyer will then need to make periodic instalments that are often negotiable but typically, two instalments of 30% during the building phase and the balance payable on completion. This means that investors get to purchase a high-value asset with relatively little initial outlay.

The Developer

Naturally, the developer will have a significant role in influencing your decision whether you are prepared to buy or not. You should always opt for an experienced developer with an excellent track record. Ideally, they will have completed other projects in the area. This gives you the confidence that there is a good chance that they will stay around long-term and also that they can raise the financing if required.

Dusit Tower is the brand new project for high-rise of the well-established Dusit Group

Market Conditions

Of course, there are pitfalls and we have touched upon this with the quality of the developer. However, if market conditions are not favourable, even the strongest of developers can be vulnerable if they don’t have any buyers. This is an opportunity to pick up a bargain but the risks are potentially a lot higher.

Due Diligence

Although it is impossible to eliminate risk entirely, you should always conduct due diligence to minimise the risk. You can do the due diligence yourself if you are experienced but it is probably advisable to use a reputable local law firm or real estate broker. They will be aware of any whispers that may be circling as well as knowing the FACTS about the developer, project and the market conditions. It is important that the project has attained EIA approval as this means that it can legally be built.

The role of the real estate agent is crucial when conducting due diligence. The agent will be able to offer impartial advice as well as acting as an intermediary during negotiations. They are also working on your behalf so, if any complications do arise, they will be able to help you to resolve them.

The latest project of multi-awarded successful Riviera Group

Conclusion

Buying off-plan can potentially be a win-win situation for both the buyer and the developer. However, the investor should be aware of the risks involved which could mean that they lose part or all of their investment. Due diligence is essential as is choosing the right project for you. You don’t want your dream to turn into a nightmare.