In The Flip Wilson Show which aired between 1970- 1974 in the United States, Flip Wilson, a comedian, playing the character of Geraldine Jones first uttered the now very common phrase “What you see is what you get”. This phrase has been a common quote and has been frequently used in several contexts. It can also conveniently summarize one of the best approaches to maximizing the advantages of buying a new-build property from an off plan stage. How so? This would be discussed soon in this short write-up on off-plan purchases of new-build properties.
Off-Plan Purchases and New-Build
A new-build can be described as any residential or commercial property development that, as the name suggests, is newly built. When a new-build is intended to be sold by the developer, the sale can commence even before the construction commences. When a new-build is on sale before or during the construction, it is generally described as being sold “off-plan”.
Off-plan sales of new-build can commence as early as when the project is first conceived, right from the drawing board. The sale continues until construction commences, and as construction progresses to conclusion. An off-Plan sale of a new-build ceases or stops as soon as the new-build is completed.
The Benefits and Disadvantages of Purchasing a New-Build Property at Off Plan Stage
There are a number of benefits associated with buying a new-build at off-plan and they include:
New-builds sell at their lowest prices during their off-plan stages. Right from the onset, a new-build may be discounted for up to 50% or more. As construction approaches, begins and progresses to completion, the price will keep going up in measured and strategic increments until the actual market price for the property is reached at the conclusion of the construction, when the new build is ready, fully completed and delivered.
Obviously, the best time to get the best price is at the very beginning. However, property developers will often not sell all available units at off-plan prices so that the project cost and other exigencies can be covered by the sales price. Property developers also want to sell some units in the new-build at market price to get their returns on investment. That being said, the best time to get the best deal on any new-build still remains during the extended duration that the new build is still on off-plan sale. The off-plan sales price is not static. It keeps changing from time to time but at any given time, it is lesser than the market price and it is always a better deal than the market price. However, it always is a game of time during the period the new-build is at off-plan sale. It is better to get in as soon as possible, but anytime during the sale of the new-build at off-plan is still a good time, no matter the price at that point in time.
A new-build purchased at off-plan stage is affordable in the context of the fact that payment is not outright. This is the second advantage. The fact that a buyer does not have to lay out the entire purchase price at once is a great advantage. A completed new-build does not have the same payment flexibility as a new-build at off-plan stage. This advantage is even greater than the advantage of price. The reason is that for some buyers, their cash flow may be unable to pay for a new-build when completed. The reason is simple. Because their cash-flow is relatively predictable and a completed new-build sells at the full market price to be paid outright or within a short period of time, it may never be possible to have enough time to put the total purchase price together to purchase a completed new-build. The advantage of affordability is that at off-plan, there is fairly enough time to pay for the new-build in instalments supported by the cash flow of the buyer. This is a great advantage which is not totally reliant on the price of the new build at off-plan, although this is also an advantage. Where a buyer has an inadequate cash flow rate which is insufficient to buy a new-build at completion, that buyer would prefer to buy a similarly priced new-build at off-plan stage but with enough time to make the payment rather than a completed new-build of relatively the same or higher price but which requires an instant outright payment thus making it unaffordable, although the price is roughly the same. Affordability is as important; if not more important than the price of a property in any property purchase as price is not necessarily the most important factor.
This advantage is another veritable advantage of a new build. It is comparatively easy and definitely more convenient for a buyer to pay in instalments than to lay out the total purchase price of a new build at once. Once the price of the new-build is locked in by the initial deposit, the balance to be paid in instalments can conveniently be raised. This convenience is not eroded even when the buyer has the full off-plan price of the new-build. This is because the buyer now has the option to pay as due and when due. The fact that the buyer has that option is a very important aspect of convenience. Another item of convenience is the fact there is breathing space and time between one instalment and another as the project progresses.
This is another major advantage. A buyer who buys at off-plan has control over certain flexible aspects of the design of the new-build. The buyer may want larger room space in some rooms and smaller room space in other rooms or over some aspects of the finishing. A buyer may even opt to do the internal finishing on their own after the shell of the new-build has been completed. All of these options are not open to buyers who buy a completed new-build, even though such buyers would have paid a much higher price for the completed new-build.
Another advantage of buying at the off-plan stage of a new-build is the opportunity to pay exactly for what the buyers is certain the developer has done and completed in the project. This is described as payment according to project milestones. This is how the saying ““What you see is what you get” by Flip Wilson applies to new-build. I will say more on this in a moment.
Are these advantages without any drawback?
No. There are certain drawbacks associated with off-plan purchases. They are:
Uppermost in the mind of off-plan buyers is the probability that the developer will not deliver the project. This worry is at its highest when the project is still at the pre-construction stage and has not commenced. This worry continues, although on a reducing basis, until the project is finally delivered and keys handed over to the buyers. This worry is not necessarily unfounded and is magnified by previous bad experiences or stories from other buyers who may have had a bad experience with property developers. This is one reason why, if they can afford it, some buyers prefer to pay the outright full market price for a project rather than purchase it off-plan.
While not undermining the validity of the fear of uncertainty by buyers, the percentage of developers who do not deliver on an off-plan project are a minuscule compared to the large majority of developers who actually deliver on their projects. It is the exception rather than the rule that developers do not deliver on off-plan projects.
Another reason why buyers hesitate to purchase an off-plan project is delay. Buyers often worry that the developer may not meet its project delivery timeline and as such, they want to see that the developer is executing the project at the right speed before they will subscribe to it. What is the best approach to managing these disadvantages?
How to Mitigate the Disadvantages of Off-Plan Purchases: Pay According to Project Milestones
When the benefits of off-plan purchases are compared to the drawbacks, the benefits far outweigh the drawbacks especially if the drawbacks can be effectively and efficiently managed. How does a buyer manage the risks of certainty and delay? The answer is found in that very popular quote from Flip Wilson, namely “What you see is what you get”. How does this apply to off-plan purchase of a new-build by a buyer?
A buyer seeking to mitigate the risk of certainty and delay needs to take the following two steps:
1. Only pay the initial deposit required by the developer to LOCK IN THE FANTASTIC DEAL:
Payment of the initial deposit is what actually locks in the fantastic deal for an off-plan buyer. It is not the payment of the entire purchase price. This is the first key. Once the initial deposit is paid, an off-plan buyer locks in the deal and gets the full benefits of an off-plan purchase deal provided he has the capacity to pay due instalments as due and when due. The point here is that, even if the off-plan buyer has the full off-plan price, to mitigate the risk of uncertainty and delay, it may be advisable to hold on to the outstanding balance. The only reason a buyer may want to pay the outstanding balance ahead, even before the project achieves the next milestone, is if the buyer is uncertain that they have the capacity to keep the next instalment safe from any “seemingly unavoidable” tampering by the buyer themselves and thus it may be safer to pay it to the developer rather than squander it on unwarranted and avoidable expense. Otherwise, an off-plan buyer of a new-build should keep the balance and take the next step below.
2. PAY THE BALANCE IN INSTALMENTS ACCORDING TO PROJECT MILESTONES: “What you see is what you get”.
Insist that all subsequent payments should be tied by the developer to physical milestones already achieved in the project. This should be clearly stated in the contract of sale signed by both the developer and the buyer. The developer is only entitled to the next instalment after the agreed milestone for that particular instalment has been reached. The balance should thus be stretched out in milestone instalments covering the entire stretch of the development from foundation to completion and delivery of keys.
What the above steps ensure is that the developer is unavoidably alert to his responsibilities and the buyer is assured that the project will be delivered as due and when due. Both steps will extensively mitigate the risk associated with uncertainty and delay and will make off-plan purchase of a new-build the next best thing ever invented since chocolate. This is definitely better than buying a fully completed new-build.
Off-Plan Advantages: The Best Time to Buy Olagbaju’s Court
Olagbaju’s Court is a block of SOLID, STRUCTURALLY SOUND, and BEAUTIFULLY DESIGNED, LUXURIOUS and fully finished urbane 3 bedroom flats plus maids’ rooms located at No 3 Akin Lakanu Close, within the serene, peaceful, gated and fully secure AFRA Estate, Adeniyi Jones, Ikeja.
This luxurious project features the following OFF-PLAN ADVANTAGES, namely:
Olagbaju’s Court is currently priced at N64.999m. For a project of its class and status, especially located in a place as premium as the location of the project, the starting price should ordinarily be N79.999m. View the location here and notice the inescapable ambience, peace and unrivaled calm! At its current price, it is discounted by a whopping sum of N15m. This is a major advantage. As the project progresses, its final selling price will reach and exceed N79.999m. You can get a FANTASTIC DEAL when you seize the opportunity to buy one unit of Olagbaju’s Court at the off-plan price of N64.999m right NOW. SAVE a minimum of N15M when you lock it in NOW!
Olagbaju’s Court is very affordable. A buyer does not need the entirety of the N64.999m to subscribe to a unit. A buyer only needs the sum of N15m as initial deposit to get instant off-plan allocation. The balance is spread out according to project milestones for the entire duration of the project.
It is very convenient and easy to buy Olagbaju’s Court. In four simple steps you will get instant off-plan allocation, namely:
- Indicate interest. Chat with me here.
- Schedule a visit to the location of the project.
- Get an offer letter and a contract of sale from us.
- Make the N15m deposit and get instant off-plan allocation.
It is actually that easy to get a unit. Also you get to pay the balance in CONVENIENT INSTALMENTS over a period of up to 12 MONTHS according to project milestones with a lot of breathing space to catch your breath between one payment and another! Fantastic!
The architectural floor plan design of Olagbaju’s Court is such that it can allow for minor customization in the finished product. A buyer can opt, at no extra cost, for the American styled open kitchen with a Kitchen-Island and an expansive and relaxing view of the living room. This option is not available without an extra cost when Olagbaju’s Court is completed and delivered.
You may have already noticed that factors such as certainty and delay have been effectively excluded as after the initial deposit and the locking down of a unit, all other instalments are paid according to project milestones.
Other Fantastic Features of Olagbaju’s Court:
Each luxurious and VERY SPACIOUS unit is fully finished with the following well thought out details:
- Extra-large living room and a wide terrace for a view of the surrounding peaceful neighborhood
- Spacious bedrooms with premium quality multipurpose closets and wardrobes
- Spacious Master’s bedroom and private terrace with a premium view from the terrace.
- All rooms are ensuite with cubicle shower, water heater, top quality sanitary wares.
- Self-Contained Maids Quarter/BQ for each flat!
- Guest Toilet with top quality sanitary wares.
- Extra Large Fitted Kitchen with spacious and well delineated cabinets, heat extractor, gas cooker, microwave oven, and water heater.
- Elevator to all flats
- Escape stairwell
- 2 Car parking spaces per flat
- Fitted Gym
- Facility Management Office
- Security Office
- Fully serviced (24/7 Power; Water; Security; Waste Disposal)
- Intercom telecommunication from all flats to the Maid’s Quarter and to the security post
- CCTV coverage
- Automated Entrance and Exit Gate!
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