Home buyer’s gain, loss in off-plan buying strategy

A combination of factors, including lack of enough capital and increasing pressure to deliver affordable housing to the growing middle class, has made off-plan buying a popular home buying strategy, compelling developers to adopt it as an escape route to providing housing solutions to intending home buyers and savvy investors.

Off-plan buying is a unique way of buying a property, at design stage, through a defined payment process that allows for an advance payment of an agreed percentage of the property value by an intending buyer to a developer before the property construction kicks off. The buyer is also expected to make agreed payments at periodic intervals on or before the completion of the property.

A major advantage of buying a property off plan is that, as a buyer, you agree on a fixed price for a property before it is built, hence in the event of property price increase, which is likely, you would not be expected to pay an additional fee on the agreed price. This is a good reason to take up an off-plan buying plan when you see a good one, especially as an investor.

The luxury of buying a home with seamless effort as a result of flexible payment plans is also a good reason to take up an off-plan buying option. This is quite helpful in an economy like Nigeria’s where buying a home outright can be quite difficult.

Buying off-plan is also handy as it affords a buyer the opportunity of choosing property location before construction takes off, choosing interior and other fittings as it affects his choice building unlike when buying where these choices have already been made for you.

However, though off-plan buying seems very beneficial, experts have questioned the rationale behind the plan as an alternative property acquisition method that offers little incentive (discount) to the buyer compared to the huge risk borne by him through the construction process.

One major concern for most subscribers of this plan is the property standard and quality on delivery, as there have been instances where developers who start well later deviate to using sub-standard building materials in a bid to cut cost.

For investors who toe this path with the aim of selling or renting these properties on delivery, the risk is much higher because the property value on delivery might have been lowered either as a result of a supply glut in the neighbourhood or changing dynamics of the property market.

Also, there is the issue of a developer’s inability to deliver within schedule. Unfortunately, sometimes developers prolong the delivery time of a property for one reason or the other. For an investor, this translates to tying down capital without profit or interest, and also for a home buyer, it implies a change in a working timeframe to owning a property.

In the case of unforeseen circumstances where a developer cannot complete a project, this spells “doom” for a client. Worse still, in a case where the upcoming property is destroyed by natural disaster, only a trustworthy developer can restart such project or offer a refund.

Evidently, buying off-plan has its pros and cons. However, before you make up your mind and take a decision on whether or not to exploit this new trend in property acquisition, it is important you understand who the developer is and what is being offered by the developer as regards payment plan and other logistics. For instance, can you get refund if the project is not completed? Also, ensure you talk to an expert to help make an informed decision.

By: ODINAKA MBONU