Questions to ask a property developer, marketing any new project
Category Advice
Buying homes off-plan in future developments, can result in the purchaser getting a really good bargain in the current market, says Rowan Alexander, Director of Alexander Swart Property, the Northern Suburbs estate agency (now expanding from its original territory in Brackenfell and Kraaifontein, into Durbanville, Kuils River and elsewhere).
The developer of a new project will often need to sell a fairly high proportion of the proposed homes, to kick-start the project and to qualify for development finance. To achieve these sales he will in all probability cut the prices to really competitive levels, especially in the initial sales months. The chances are therefore that the buyer will get real value for money on his purchase, a price that is unlikely ever to be repeated.
Erik Joubert, Managing Director of Trinity Projects for whom Alexander Swart Property has successfully marketed several Northern Suburbs developments, corroborated this but commented that because at the time of most launches, no homes will have been built (except in some cases a show house) buyers often understandably feel that in buying off-plan they are being exposed to higher risk.
"Marketing material and attractive artist impressions," says Joubert, "are easy to produce, but as we all know, they can be misleading. How then does the buyer judge the quality of new development, it's landscaping, architectural merit, and its financial viability?"
Joubert says that the buyer should start by checking the track record and 'credibility' of the developer if possible visit already completed projects delivered by the company and ask questions such as: "Has the developer ever been bankrupt? Did he stick to delivery schedules and dates and did he try to introduce 'extras' down the line? Did he deal quickly and efficiently with any post-sale snags?"
"Those organizations which have produced successful projects over the years, in which it is clear that great attention was paid to design details, quality workmanship and landscaping will probably continue to perform well and stick to their principles," says Joubert. "These are the developers with which one should be associated."
"Next," says Joubert, "the buyer should carefully examine the sales agreement, if possible with the help of a building professional and/or an attorney. Is it professional put and free from grammatical errors and contradictions? Is it clear and comprehensive, with full lists of specifications for all materials and fittings to be installed? Are the floor plans properly dimensioned? Do the plans indicate the north orientation of the home? Are the parking bays conveniently sited to the homes? Will the homes have enough cupboards and has space been allowed for appliances? Is the balcony included in the total floor plan? Will the occupants be allowed to have pets? These and similar matters should be settled up front, in such a way that no disagreements can arise later."
Equally important, adds Alexander, should be questions about the tricky subject of development rights. Have these already been obtained? Have the zoning, sub-division, consolidation (where applicable), environmental authorization, water licenses, and other approvals been granted?
"The buyer has to appreciate that it is not illegal to sell the property subject to these and other approvals still being obtained but if they are not in place, delays could follow. Objections from the public or interested parties can hold up developments for months or years, even when such objections are specious - and, when rights are finally granted, in many cases the approval conditions and process may alter the whole development quite radically. Ensuring that the necessary approvals are in place, therefore, makes a great deal of sense."
Then, too, buyers should check the new development's standing with the major financial institutions. Has it received pre-approval for end-user finance from the major lending institutions? If it has, the bond application process will be easier, the banks will be more willing to advance finance to individuals and will probably do so at a better interest rate and may include other advantages.
"The banks' evaluators," says Joubert, "have a comprehensive checklist for each pre-approved development. This includes pre-valuations, checking land ownership and whether the developer is registered with the NHBRC (obligatory for all building contractors and developers). They will also check the status and reputation of the professional team on the project. Inquiries into these matters can only benefit the buyer."
Alexander and Joubert are always available to advise prospective investors on the big decision of whether they should invest in a new development or not. They do this, he says as a public service, not necessarily in anticipation of gaining a client, even though it is possible that down the line, Trinity Developments and Alexander Swart will have projects which will suit the enquirer.
For further information contact Rowan Alexander on cell phone number 082 581 3116 or email rowan@asproperty.co.za. or Erik Joubert on erik@trinityprojects.co.za.
Author: Independent Author
