What does buying off-plan mean?

Owning your own property is most people’s dream and, fortunately, there are different options that make it easier to make the best investment. One of them is buying off-plan, a solution that has become widespread in recent years as, fundamentally, the objective is to reduce construction-related risks. Specifically, buying off-plan entails choosing a house or apartment before it is built, in other words, separating the project from the construction itself. This option has recently been highlighted as an easier way to invest, as well as offering other long-term advantages.

When buying off-plan, the builder is generally going through the legal or administrative procedures necessary to get the construction underway, and waiting, of course, to attract a minimum number of buyers to guarantee the financial resources to start building. What attracts investors the most to this real estate solution is that the value of the property is set in advance, making the down payment in instalments and, often, making some adjustments to the blueprints according to tastes or building requirements. If the market value of the property goes up, profits would be guaranteed.

What does the process of buying an off-plan apartment entail?

A range of factors and resources come into play when buying an off-plan property to ensure a low-risk and trustworthy investment. In principle, the potential buyer signs a document known as a fiduciary assignment, setting out a range of clauses related to the value, construction process and conditions for signing a subsequent promissory contract. It is not a definitive purchase process, nevertheless, it is a step prior to actually buying the property, with the guarantee that the resources would be returned in the event that the agreed clauses are not fulfilled.

The steps to be followed for an effective off-plan purchase are as follows:

• Contact with the fiduciary: once the potential buyer is interested in making the investment, he/she must contact a fiduciary entity with which he/she will enter into the contract known as the fiduciary assignment. With this document, the entity undertakes to manage the resources and deliver them to the builder after certain conditions have been met.
• Waiting for the break-even point: after the fiduciary assignment has been concluded, the potential buyer must wait for the so-called break-even point, the stage in the process in which both the administrative and financial resources for construction have been met. If the break-even point is not reached, investors will be refunded their money, as agreed.
• Signing of the purchase and sale agreement: if the break-even point has been reached, the builder signs the promissory contract with the potential clients. In this way, the fiduciary entity is responsible for paying out the investment money to the builder to get construction underway.

What recommendations should I follow when buying an off-plan house?

Choosing a new-build house or apartment is a tempting option for buyers and investors alike. The important thing to bear in mind in this alternative, or even opportunity, is to take into account some recommendations to ensure that the process is as safe and transparent as possible, while also providing the expected results.

Some tips to follow are:

• Look into the builder’s track record: before buying off-plan it is always a good idea to research the positioning, reputation and track record of the company or developer. In this regard, verify that it is registered with the corresponding bodies, as well as its references and results from previous developments.
• Verify the property characteristics and qualities: although it may seem obvious, when buying off-plan, you really need to study, preferably together with an architect, the blueprints and general details of the house or apartment to be built. This will give you the chance to make changes or add finishing touches according to taste.
• Get legal support: just like with any investment, the entities authorised by law will act as mediators between the parties to reach definitive agreements. To carry out the fiduciary assignment, the presence of a fiduciary entity is required, while the signing of the promissory contract will need to be dealt with by a notary.
• Review all clauses: although the legal institutions set out certain guarantees to conclude balanced and comprehensive agreements, you should thoroughly go through all the terms and conditions of the contracts before buying off-plan. They must contain express indications on the type of contract to be signed, requirements and deadlines for starting the work, penalty amounts or deductions for non-compliance, description of the goods and warnings on possible changes in the conditions.

The benefits of buying off-plan while minimising risks are the possibility of obtaining good prices and payment plans, making decisions on the design and making profits once construction is completed. It is definitely an option that everyone should look into.