Buying off the Plan Risks

I have this discussion regularly with clients so I’ll set out the potential problems with buying off the plan. 
Critically, the time frame almost always blows out and settlement is often one or two years into the future. This creates a set of problems such as: 
1. Valuation #1 – By the time two years comes around, your property could be worth considerably less and the bank will need you to stump up more cash to settle. 
2. Valuation #2 – It is usual that established property is valued at the purchase price but off the plan is valued at about 5-10% less than what you bought it for. 
3. Entering blind – From the time you buy and need to settle, there is no such thing as a 2 year pre-approval, so you need to hope you can still service when settlement is due. 
4. The bank environment changes – little things like Royal Commissions can pop up during the 2 year period! 
5. Your circumstances change - like clients of mine who delivered twins 2 weeks before settlement! 
6. You are financially trapped because you can’t make any investments, change your job or alter your career plans until you settle, because you need to make sure you are ready when the developers want their money. 
7. After waiting 2 years, the developers demand their money within 10 business days. Doesn’t matter if you are overseas on holiday at the time. 
It can be tempting to buy off the plan, but make sure aware of the limitations and potential pitfalls!