Many new homes currently offered for sale are bought straight off the plans. This often requires purchasers to pay a 10 per cent deposit into a trust account, where it sits until the home is completed and the new title is issued.
Subject to the size of the development and the stage it is at when the Agreement for Sale and Purchase is signed, buyers could be waiting a year or even longer before their new home is completed and title is issued. While anticipating the completion of their new home, many buyers use this time to save an even larger deposit toward their mortgage.
The construction supply chain often encounters delays. Often a great deal of a developer's time is spent chasing after all the elements to ensure their project is approved, and then keeping it running efficiently once construction starts. There are several layers of complexity to building new homes, which probably count for how popular ‘turn-key’ developments have become. Remember there is just as much incentive for a developer to complete the job and get paid as there is for buyers to gain entry to their new homes.
The price that is paid on the day that the Agreement for Sale and Purchase is signed is usually the market price at that time - and is locked-in. If the market prices increase while construction of the home is underway, the capital gain is an added bonus made by the purchaser without even having paid in full for the home. The opposite could also be true, and that is the risk buyers take. Before signing up, consider which way prices are going and the effect that may have on your financial situation.
The Agreement for Sale and Purchase used when purchasing a new home is a little more complex than the standard agreement used for transacting existing homes. The new home sales agreement will typically include details of the new titles and construction. If the purchaser’s lawyer hasn’t approved the agreement before signing, they should ensure a due diligence clause is included to allow enough time to obtain a legal opinion.
If finance is yet to be approved before the Agreement for Sale and Purchase is signed, the purchaser should always make sure to include a clause that allows them ample time to obtain this. Many purchasers opt to engage the services of a mortgage broker to help complete their bank application for finance, to ensure a smoother, stress-free transaction.
The Professionals’ sales team are all licensed under the Real Estate Agents Act (REAA) 2008 and as such, have a strict code of conduct to follow. All of our salespeople are answerable to the Real Estate Authority (REA), who have powers to penalise them if they breach the code. It is essential that buyers have a great trusting relationship with their salesperson, and if they ever feel this has been compromised, complaints can be made to the REA.
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