Land + House package - the process of buying off the plan

Hi Guys ,

Need your advice regarding the process of buying off the plan ( if my understanding of the definition is correct) .

I've spoken with a developer on Saturday .
The block is approx. 600 m2 , however there is a huge gum tree on a left hand side of the block ; the tree is covering approx. 25% of a lot and cannot be removed due to council conservation requirements .
The developer claims that he can build a 25 sqr. double storey house .
After checking the site , I have concerns that it could be an issue to
erect this size house , therefore he will have to reduce the footprint or to
minimise the back yard .

Please your brief explanation regarding the process of buying the land and building a house .

My understanding as per below :

1) Sign a contract to buy a lot.
My concern is that after I purchase the block he will tell me that I cannot fit a 25 sqr. house , so it will be 21 sqr. or the costs might be higher etc

I intend to bring a contract to my solicitor prior to sign it .

2) House construction .
I haven't seen the contractfor the house , however my concern is about the timeframe and penalities if the deadline has been postponed.
I asked him this question, he said that if they unable to meet the final deadline , they will pay a weekly compensation of $250 .
I understand that the payments are made on a progressive scale according to milestones . What would happen if they don't achieve the milestone on time ?


The inclusions list that he's specified is quite impressive , however right now my concern is about his ability to fit the house on this block . The other lots are 470-500m , however the presence of the tree diminishes the idea of a big size block.

This is a small developer , so they don't have a display house. I've asked him to provide one -two references and contact number of his previous projects , he said to me that they usually build investment properties and he can demonstrate the houses without any issue . I don't care about the apperance of his previous jobs ; what is important for me is to speak with people who's used his services . How hectic and difficult the process was etc
To be honest , I am not sure if it will be feasible ...

Please your advice and my appologies for the inconsistent and long explanation .
Finance are OK , no issue at all.
This is PPOR

Kind Regards
gprp

Firstly I would tell you that I that I am a big believer in trusting your gut instinct. If things don't feel right, check it out. If you don't get an answer you are satisfied with, move on.

Ok I am a newbie, however I have bought my PPOR OTP H&L package, and am currently going through the H&L process again to buy my first IP.

I will outline the process we have taken to get to exchange of contracts on our IP (now keep in mind each company will do things slightly differently, and we also negotiated with our deveolper to purchase in one contract, rather then land and house seperately).

Firstly we looked at a range of plans and chose the one we wanted along with the block of land (although we could have come up with something ourselves if we had wanted) - along with a price tag. The next step was putting down a 'non-refundable' deposit ($2500) to 'hold' the block of land and to pay for an artitect to look over the plans, make minor changes and ensure it would fit on the block, etc. From this we learned that we would actually require two retaining walls (which we had though we might not need) and so we went back in discussions with the devopler negotiating the cost of this. A contract was drawn up and sent to our solicitor (which DH and I promptly took home and pulled to pieces - all the time wondering why we were bothering to pay our idiot solicitor to do our conveyencing, but that's another story). After everything had been ironed out there, we signed paid our deposit and exchanged.

So from my experience I would think that your shouldn't have to actually sign any contract for the land until after you are satisfied that they house will actually fit on the block.

Talk to the developer and ask what their process is for purchasing (get them to outline it step by step and write it down if you can). If you are not happy with how they do things then try and negotiate so that you feel comfortable with it.

Thank you very much for comprehensive explanation . I think my understanding of the process is much better now. I don't like the idea to purchase the land , then the house beacuse it creates a lose-lose situation for the purchaser .
The developer sent me an email today confirming that he can erect two storey houses on the other available block . The block is 500m2 ,
however the block is suitable for 26 sqr. double storey house .

I've requested him to provide an explanation regarding the purchasing process and to confirm the size and planning for the house prior to sign the contract .

We'll see

Thanks again
gprp

run away.

something else will come up soon enough without the potential problems.

that is my take on things.

cheers,
RightValue

I think you are getting confused. I have built a 55sq house on a block in the high 600's.

What matters is the building envelope. If the gum tree is no where within this envelope, then its no big deal.
I imagine the vacant lot is in an estate. Check what their guidelines are. Some mandatory stuff may include upgrades of facade which will cost you extra.

The developer or builder or what ever he is should be able to provide you with details of people that he has built for. If it were me being the builder I would call asking for permission for you to call or pass on your phone number.

If he can give you 2 addresses that means he is new to the game and would be a bit hesitant to go there really, especially after you have said that the inclusions sound good. I don't see how after 2 builds he has buying power to reduce the costs of those great inclusions.

But hey, he may be legit also and there may be more to the story.

Are you able to purchase the block and have another builder build on it or is it pure H&L?


Edit: Can prob build, but you are looking at screw piles. Your foundations will blow out helluva lot also. Keep that in mind.

RightValue thanks for your advice .

Minx , I am affraid I am not confused.
I have the section 32 and the building envelop from the coucnil .
To make it short , the tree suppose to be on a back yard , however there is no permission to fence this section of the block , meaning you don't have any privacy .Yes , you can build 55 sqr on 600 block , but not on this block , trust me .

The guy is a RA and he claims to be a builder .
I am sure he has an agreement with some mid. size construction company .

He is able to offer 2 lots because he has purchased 4 blocks recently .
I've called the agent who used to sell these lots and he said the blocks have been sold already , therefore there is no option to purchase this block ( funny , I've had the same thoughts prior to read your post .
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If he can give you 2 addresses that means he is new to the game and would be a bit hesitant to go there really, especially after you have said that the inclusions sound good. I don't see how after 2 builds he has buying power to reduce the costs of those great inclusions .
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I am not sure about his building capacity , therefore I prefer to get the price estimation prior to sign any contract , everything must be transparent prior to sign the contract

Kind Regards
gprp

ASAP- need your advice

Guys ,

Need your advice ASAP .

I've got a reply from Builder today regarding step-by-step process :

Attached lot7 details. Yes I would like to sit down with
you again asap to finalise design, pricing, size, etc

We also need to sign up land contracts subject to finance fast as we are still getting strong enquiry and they will sell!

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I am shaking , help me please

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When you come in (all going well) you will need to pay a deposit on
house($1,000) and land($2,000 with balance of 5% in 14 days). This will all
be subject to finance. I will then arrange drafting and contract prep for
the house which we would already have a 99% correct price for. You then sign
build contract get it to your bank to process thru valuation, etc, obtain
your formal loan approval, select your colours,settle the land and then we
start building 21 days from building permit issue.

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I've checked the section 32 and there is no Land information certificate fom the council describing Capital improved value .
This is 500m2 block . Very convenient location , no trees or tricks

Please your thoughts .

Thanks in advance
gprp