What are the pros and cons of purchasing an established home versus an off-the-plan home?
Although there are great things to be said about buying an off-the-plan home, for example a new borey home in the suburbs or a condo unit in a down town new development, that option generally works better for people with more means than your typical first time home buyer.
For most first time buyers, the following advantages of an established home will make more sense:
- Because it has already been built, you can move in far more quickly than with an off-the-plan home. It can take a year or more for a house to built when buying a new development or borey off-the-plan.
- Established housing has had time for upgrades to be added, so it tends to have a lot more character. Off-the-plan homes tend to be more generic.
- Established homes are more of a known quantity in terms of financial details. Thus, they are far less risky and more of a sure bet in terms of resale value and appreciation.
- Since the most prime locations of any city tend to get developed first, established homes also tend to have a better location.
There are some potential upsides to buying off plan and you should be aware of them before you make any decision:
- It can give you more time to save for the deposit while the house is under construction.
- You lock in the price now, but pay later. If it appreciates in value, this can result in substantial equity gains in even the short term.
- New homes typically have lower maintenance costs than older homes. This can help offset the typically higher purchase price.
But I have really fallen in love with an off-the-plan new development. What now?
Know the Risks:
First, realize that there is more inherent risks in buying a new development home off-the-plan. For example, the finished home may not match what they showed you in the brochure. Or, worst case scenario, something may go very wrong and it may not even get built. Of course, that doesn't mean it is a bad idea, but it does mean you need to do your due diligence on the company behind the project. If you are considering buying a new development off-the-plan, buyer beware. Accepting "free" perks, such as cars or holidays, are not actually free. It will be added on to the price one way or another. Check out the ultimate guide to buying off plan!
If the developer has completed other work, such as a pre-existing borey homes or a condo block, try to see it. Make sure you read through everything very carefully. If anything sounds too good to be true, make sure to ask questions and request reasonable supporting evidence for the claims. You will generally be better off if there is a sample unit already built. It allows you to get a better idea of what the place is likely to actually be like. If you aren't extremely experienced with real estate, brochures can be very deceptive without at all intending to be. It is all too easy to just imagine what you want to imagine, without fully understanding what the description means. Make sure to compare the cost per square meter to that of other existing properties in the neighborhood. It will help you figure out if the price is reasonable. Check out the Borey buyers guide!
Get a Lawyer:
But, also, make sure you get a good property lawyer who knows the local laws in Cambodian and also the local market practice. This is your single best protection. This will be the one person who is working directly for you and will have no conflict of interest. Everyone else involved in the process will have self interest influencing their statements. They may not even realize that they are saying things that are not as useful and accurate as you need them to be.
Inspect the Final Product:
After the new development home is built, but before settlement, have it inspected. Hire a building inspector to do this for you. If anything is amiss, this is the time to catch it and try to get it remedied. Do not wait until after you have paid and moved in to make this final important check.