Everyday our newspapers and magazine advertise all sorts of new property development. The pictures are colourful and glossy, the details perfect. If your attention was captured, you may care enough to go for the open day and visit the showroom. Refreshments and perhaps a barbecue await you. Friendly sales staff are there to attend to all your queries. The show unit is lovely, the furniture and décor just to your taste. Free legal fees are provided for your Sales and Purchase Agreement and mortgage officers eagerly await to give you a loan, if you qualify of course. What more can you ask for?
I hate to be the party pooper but really there is plenty to ask.
Here are some questions you may wish to ask when buying from the developer?
1) What are the actual dimensions of the show unit? Is it the same as the actual dimensions of the property on sale?
2) In the event that the property is not completed as scheduled, what is the compensation that you the purchaser is entitled to?
3) What is the value of the property according to a professional valuer? In this instance, you may wish to check the value of the property with an independent valuer, not one engaged by the developer. If the property has yet to be built, the valuer may use similar neighbouring properties for comparison before providing a value. Banks today ask for at least two valuers who should concur on the value of the property. It is better to be prudent then sorry as neither the bank nor the buyer should be dealing with loans on overvalued properties.
4) If free items such as kitchen cabinets, air conditioning units and zero moving cost have been provided by the developer, has the cost of these offer items been added to the price of the property?
5) If the price of the property is already higher than the provided by the value provided by the independent valuers , what are the chances of property price appreciation? Should the you decide to sell the property, will you make a profit after taking into account your payment for legal fees, stamp duties on both the S&P Agreement and the loan agreement, balance of mortgage payable to the bank and Real Estate Property Gain Tax(RPGT)?
6) If the you intend to rent out the property, will the rental be sufficient to cover mortgage payment, quit rent and assessment fees, maintenance and repair fees if any? If not how do you intend to meet your property expenses in addition to other financial obligations you might have?
7) If you intend to stay in the property, does the location, size and surroundings suit the needs of your family and your extended family if they intend to stay with you? Don’t by a property just because it is cheap of free gifts are given. You are better off renting until you find a property that meets your needs and budget.
Property developers are in the business of building to provide housing that meets the needs of the clients they serve. Good developers seek to provide quality buildings that are safe in a suitable pleasant environment. Unscrupulous property developers give you poor quality building in a location with poor access while promising you an access road and school in the future. However, both good developers or unscrupulous ones have something in common in that they seek a healthy profit margin. That is among the reasons why developers build three storey houses with special offers because they are able to charge the client a higher price for a larger built up space. A discerning buyer would ask himself if he would be able to climb up to the top floor of the house in his old age. He would also ask if the room on the ground floor is large enough for him or his aged parents. Is the maid ‘s room provided large enough for the live in maid to fit in a bed and a closet. Most of the maids’ rooms built in houses today are fit for brooms and mops and perhaps an ironing board. Maids are people too who deserve decent living quarters too.
In recent times there have suggestions by the developers to bring back the Developer Interest Bearing Scheme (DIBS) to make houses more affordable to first time house buyer. In reality the DIBS only serves to delay the time in which the purchaser starts making his first mortgage payment ,while the price of the property remains unaffordable. It is obvious to me just bring back the DIBS is not going to solve the question of affordability. Isn’t it obvious to you?