Almost half of the apartments in new buildings are sold before the final stage of construction. This is due to significant cost savings, which can be up to 25% or more. But in addition to the noticeable benefits, this method of acquiring real estate carries with it significant risks. What needs to be considered in order to make a profitable purchase, not to lose your funds and get an apartment on time?
# 1. The advantages of buying a home at the excavation stage
Many people buy apartments at the excavation stage for profit. The lower cost of housing is the main selection criterion. The price is reduced to attract additional funds. Almost every developer is interested in this, because he receives an obvious benefit and will be able to use the money of co-investors to build a house, and not credit funds, which will have to be given with a large percentage. It is clear that the less credit funds are used, the lower and more attractive the cost per square meter of housing will be for the buyer.
The advantage is the ability to get an installment plan from the developer. Its term is negotiated by the parties, but, as a rule, it is limited by the term of the construction of the house. Some companies offer it without interest.
Many are attracted by the choice. If a person has shown a desire to buy housing at the initial stage of construction, then he is given the opportunity to choose the layout of the apartment, area and floor. The most attractive options are sold out at this stage. After the completion of the construction of the house, about 20-25% of the apartments remain unsold. Many of them are on the top floors or with inconvenient layouts. Multi-room apartments are not in demand either.
# 2. Cons of buying a home at the excavation stage
Buying an apartment at the excavation stage is associated with a certain risk. It may lie in the possibility of being deceived. There are cases when, after paying for housing, people did not wait for the completion of the construction. There are not always honest and reliable companies among the developers. Fraudulent firms often start building a house, but when selling apartments, they use a double sale scheme. With her, several people can become the owners of one apartment at once. The conclusion of an agreement on equity participation in construction protects from such risks.
Another disadvantage is the need to wait for the completion of construction. This period can be extended several times. Even if the contract says 3 years, the work can be completed after 5 or more years.
In order not to become a victim of fraud and not to contact an unscrupulous developer, before signing documents and giving money, you need to inquire about this company and understand how reliable it is.
No. 3. Where can I find information about developers?
A potential buyer should inquire about the construction company. If she has a bad reputation, then it is better to refuse to conclude a contract. It will be useful to find out something about the objects already handed over, the history of their construction. In the first stages, the Internet will help you significantly.
You can find official data about the developer on his website, where the history of the company is indicated, information about investors and creditors, about commissioned objects, about objects under construction and the timing of their delivery. If the company cooperates with large banks, then this is an additional guarantee of reliability for the buyer. The developer’s lack of a website suggests that this is an undignified company, which is strictly not recommended to trust with your money. It is also necessary to analyze the prices for apartments: too low a cost should be alarming, because a successful company will not sell apartments below their real value.
An important source of information is the forums of equity holders and their feedback on a particular company. There you can find the information that is not indicated on the official website. If there were any problem situations, there was a delay in the deadlines, then on the forums this will definitely be indicated, there you can also find information about how the developer resolved conflict situations. It is also a good idea to visit the construction site itself at this stage to make sure that construction work is actually underway.
No. 4. What documents should a developer have?
If the developer has passed the first stage of verification, then when you visit a company representative or apartment sales manager, you need to make sure that everything is in order with the documents, otherwise, after the construction of the house, big problems may arise. It is necessary to check the constituent documents, which include the company’s charter, a certificate of entry into the unified state register of legal entities, a certificate of TIN assignment.
It is important to make sure that the company owns the land where the house is being built, as indicated by the land title deed. Moreover, the purpose of the land is of great importance. The documents must indicate that this territory is intended for the construction of a residential building at the specified address. If the site is, for example, for agricultural purposes, then it will take a long time to settle in a built house. It does not hurt to make sure of the legality of the acquisition of a plot of land: if an auction was held, then this should be indicated.
Houses that are being built with the participation of the authorities and are a public investment project deserve special attention. In this case, as a rule, the state gives the developer a place to build a house, and the company undertakes to provide the property of state bodies with certain areas, which are indicated in the preliminary protocol for the distribution of areas. It is important to make sure that your apartment does not become the property of the authorities after the construction of the house, which may entail the sale of this apartment without your knowledge.
The developer must have a license that gives him the right to engage in construction activities. The license must have a validity period that covers the construction time of the house, and it must indicate the height of the buildings that the company can build – check this parameter with the height of the house that will be built. The building permit should also be checked, in particular the timing and compliance of this permit with a specific house.
Also, the developer must provide all the necessary project documentation, as well as have a state examination of the project documentation. Anyone who will sell an apartment in a future building must have documents from an authorized representative of the company, unless, of course, the developer himself is engaged in sales.
You can ask the company which banks it is accredited by. This, of course, is not the most accurate indicator, but it can still indicate the reliability of the developer, because the bank also checks it before accrediting it. It is better to pay by non-cash method.
It is better to familiarize yourself with the terms of the contract that the developer offers you in a calm home environment in order to study all the details and conditions. At this stage, it is better to consult with a lawyer experienced in these matters, because an unprepared person may not notice important aspects that determine the rights and obligations of each of the parties. A lawyer can suggest the main risks and warn you if the developer tries to deceive you.
According to the legislation, the construction of residential buildings must be insured. The buyer needs to inquire about the insurer, preferably if it is a well-known company.
No. 5. Contract with the developer
To make the purchase of housing at the zero stage of construction safe, experts recommend concluding an equity participation agreement between the parties. It records all the data about the object, the time of completion of construction, the cost per square meter. To resolve this issue, Federal Law No. 214 was adopted. If the company sells on other principles, then the possible risks increase.
According to the aforementioned federal law, the constructed object is transferred to a participant in shared construction after receiving a permit for commissioning. The equity participation agreement in the construction is registered with Roseestra, and this is a guarantee that there will be no double sales. The buyer, thanks to such an agreement, receives the maximum level of protection, and in case of failure to meet the deadlines or provide him with inappropriate real estate, he can terminate the cooperation unilaterally. A developer who sells apartments under such an agreement undergoes strict control in government agencies, so information about him is as transparent as possible. The document must indicate the construction time of the house, the cost of the apartment, the address of the object and the warranty.
Not every developer works under an equity participation agreement and follows all the rules for its preparation. According to statistics, there are only about 20% of such proposals in Moscow. Buying an apartment in a new building at the excavation stage under other types of contract is a more dangerous and risky business.
Some companies offer to conclude a preliminary sales contract. The risk is that such a transaction is not registered anywhere. Another option for fraud is the provision of a bill by the developer. The client purchases this document, but he does not have any guarantees for the apartment, and the bill does not indicate what kind of living space you are getting.
Another risky type of cooperation is an agreement for participation in housing and cooperative construction. In this case, you make a share to join the cooperative, which acquires an apartment for you. All conditions are prescribed in the charter of the cooperative, so a lawyer must carefully study it. The purchase of an apartment through housing construction cooperatives also contains risks: in this case, you need to carefully study the permits and licenses of the developer.
If the home delivery deadline is delayed, the company may offer to sign an extension agreement. It is better not to sign such documents, otherwise it will be impossible to collect a penalty from the company in connection with failure to fulfill their obligations.
Most of the apartments are purchased with a mortgage. It is very important to competently approach the study of the bank’s mortgage program. It may also depend on the stage of construction, since at the initial stage there is the greatest risk, which means that the cost of the loan is higher.
No. 6. District infrastructure
At the pit stage, it is impossible to assess the quality of the building materials used and the evenness of the walls, but the area can be easily assessed. First of all, it is worth finding out how well the infrastructure and transport interchanges are developed in a particular area. The latter is especially true for those who use public transport. For the owners of their own car, other factors are important: are there congestions on the road leading from the future home to work, what is the quality of the road surface, is there parking spaces in the yard and is there an underground parking space.
No. 7. What should be considered when accepting an apartment?
When the construction of the house is completed, the developer invites you to accept the purchased apartment, and upon the inspection, an acceptance certificate is drawn up. At this stage, you need to look at both and indicate to the developer for each discrepancy with the previously agreed conditions. Pay attention to the evenness of surfaces, the quality of the finish, communications, as well as the area of the apartment, because it may turn out that it is a couple of square meters less than indicated in the documents. All deficiencies must be eliminated and the missing area compensated. If the developer is not ready to peacefully settle the conflict, then it will be necessary to resolve the issue through the courts.