Buying a new home is often the largest financial transaction in a person’s life, so it could be quite a challenge and the haste for a certain decision might be intimidating to those that are doing it for the first time. Knowing the fundamentals and building up on them with the help and support from professionals always helps. There are three approaches for first time home buyers and all of them have both advantages and risks. The options could be to buy:
- land and build a house
- an existing /and used/ place
- a newly built or currently under construction property
All these have different time-money-personal comfort ratio that may prevail in the final decision, but one thing needs special attention – what the buyer should bear in mind is to protect its own equity. We will focus on the last approach, which has been the most common in the past years: buying a property under construction. The acquisition of such home is with entirely different dynamic than the direct purchase of a property that was inhabited already. The developer‘s interest is to sell the property (at a price level and timeframe suitable to their business plan), so they could continue with the next project. The important considerations a buyer should take into account, when choosing a property under construction are:
- Investigate the location and neighborhood
Study the neighborhood in detail (social infrastructure, transportation, community), listing offers and price levels/ranges in the area. It is by far more efficient and less time consuming to research beforehand rather than starting with site visits. The budget could be optimized by adjusting the size of the property, the timing – based on the stage of construction of the building or changing the area and location. Choose an appropriate location and neighborhood first, before setting a budget.
- Lineup with a Bank or Mortgage consultant
Every time we meet with a first-time home buyer, we advise them to conduct an initial mortgage consultation or a financial profiling with a bank. The best approach is to obtain indications for potential loan parameters from different banks and compare them thoroughly. Sometimes the slightest difference over the course of 10-20 -30-year loan could save the buyer thousands of euros or levas. Therefore, it is important to have this information early on, and in addition to that it may give the buyer a broader perspective and useful insights for the actual property hunt.
- Check Online and onsite visits
Shortlist a couple of listings and view them on site. The condition of the construction site is a good indication of the quality and the control of the property construction, even on a very early stage.
- Research the track record of previous projects of the investor/developer and the construction/building company
The history of the achievements of the investor/developer is always a serious factor for the selection and the final decision. The local community and previous client feedback for the residential developers and their projects makes a big difference. The capacity of the team involved in the project development – architects, construction engineers, project managers and supervisors, marketing and sales teams, future property and facility teams, alongside the financial partner / credit institution is the backbone and condition for a successful delivery and they should be considered, as well.
- Negotiate
Be creative or hire a professional consultant – everything is for sale, but not at any cost, everything is negotiable, if you know how to do it. As mentioned above, the developer interest is to sell with the sole purpose of getting a profit – that is the reality. Negotiating upgrades of the property, favorable payment scheme, timeframe of delivery – all those may lead to a much better deal for first time home buyers than focusing mainly on the price promises.
- Write everything
Scripta manent, verba volant. Property management and facility service agreements and procedures, internal regulations, warrantees and guarantees – all should be available. In writing.
- Expect the positive effect
When buying a newly constructed property the quality of the materials and the systems of the building is according to the latest standards, in other words it is constantly improving. That leads to an optimization of the monthly utility fees and the future expenses.
