Buying an apartment is an important and responsible step for any person. At the same time, any buyer, regardless of the available budget and the purpose of purchasing residential real estate, is interested in buying housing as cheaply as possible.
One of the ways to do this is to choose an apartment during the construction phase. Developers start selling apartments long before the building is put into operation. Moreover, they have every right to do so, because according to the law, sales can begin immediately after obtaining a construction permit.
Developers sell apartments during the construction stage for several reasons:
- Covering part of the costs. In other words, the buyers are acting as investors, literally dropping money to have the contractor build them a new home. And many developers in the early stages of construction even sell apartments on installments with a minimum down payment.
- A guarantee that all apartments or a large part of them will be sold out. When starting the construction of a new house, any company wants to get at least some guarantees that the project will bring profit. And the best way to make sure of this is to start selling apartments.
- Earning income here and now. Construction is a long process, especially if it is a large residential complex with several houses and internal infrastructure. Few companies have the budget to only invest money for several years while construction is underway. That is why developers have to sell apartments almost immediately, as soon as construction begins.
Stages of residential construction
Building a new house is a long process. Even developers with many years of experience sometimes delay construction due to circumstances beyond their control. Therefore, even before making a decision to buy an apartment at the construction stage, it is necessary to understand what stages the developer goes through before the house is ready for living:
- Search for a suitable site. After the developer finds a suitable place, he buys the land from the city or rents it.
- Geological analysis of the territory, development of architectural and engineering projects, obtaining expert opinions, coordination of the project in state bodies.
- Issuance of an official construction permit. Submission of documents to state supervision bodies.
- Site preparation for construction. To do this, it is leveled, old buildings are demolished (if any), garbage is removed, etc.
- Direct construction of a residential building, connection of all necessary engineering networks.
- Putting the house into operation.
At any of these stages, for various reasons, difficulties may arise, which will cause delays in putting the house into operation. Because of this, moving into an apartment in a building under construction is not always possible within the planned time frame.
You can often hear that apartments are being sold at the excavation stage. This means that housing is sold already at the initial stages of construction. That is, the developer, relatively speaking, has only dug a pit for pouring the foundation, but is already actively selling apartments in the future building.
If we consider the issue of building a house from the point of view of price policy, then the whole process can be divided into the following stages:
- From the pit to the first three floors. For the greatest cost savings, it is better to buy an apartment at this stage. A potential buyer can come to the object to see how the preparatory work is going and what the developer has already managed to do. Serious companies are ready to show not only documentation and planning of future apartments, but also to conduct a full-fledged presentation using 3D modeling and digital technologies.
- The house is half built. At this stage, prices for square meters begin to rise, because it is already clear that the developer plans to fulfill the obligations assumed. The percentage increase in prices may even depend on whether the company meets its deadlines.
- The new building is ready for commissioning. At this stage, the building is already erected and connected to utility networks. The developer may have small works left, which he will complete in the near future. Already at this stage, buyers will have to pay almost the full cost of housing.
- The house is put into operation. This stage is not the most profitable for the buyer, because after putting the house into operation, you will definitely have to pay the full market value for one square meter. Mostly, apartments in the last two stages are bought by people who are not particularly limited in money or who want to move into their new apartment as soon as possible.
The benefit of buying an apartment in a building under construction
According to statistics, more than half of apartments in new buildings are purchased at the excavation stage or before half of the residential complex is built. It is quite obvious that this is connected with an undoubted benefit for the buyer. After all, the earlier you buy a home, the cheaper it will cost. This is primarily explained by the risks that investors (buyers) take.
There are several reasons why many people are interested in an apartment in a building under construction. Advantages of buying residential real estate in the early stages of construction:
- Saving money. The price of an apartment at the zero stage is always lower. As already mentioned, in the early stages, housing is always sold at great discounts, and with each stage of construction of a residential complex or a new house, the prices per square meter will only increase. For this reason, if you want to buy an apartment as cheaply as possible, you should consider buying a home in a building under construction.
- The opportunity to choose an apartment of the desired area and layout. The earlier you contact the sales department, the more available options you will have. If you become one of the first buyers, you can buy an apartment with a better location. The buyer can choose not only the floor, layout and number of square meters, but also where the windows will face, in which entrance the apartment will be, and so on. In other words, for first-time buyers, the choice is always richer, and therefore, they will choose an apartment that will optimally meet their requirements and wishes. In addition, you can immediately purchase a parking space. And if you buy several parking spaces, then after the house is occupied, they can be rented out to neighbors or resold at a favorable price.
- The possibility of receiving installments from the developer on favorable terms. It is no secret that developers are interested in selling apartments in the early stages of construction, and to attract investors, they not only reduce prices per square meter, but also provide buyers with installments. This is an interest-free loan issued for an average of 1-3 years (mostly, installments are drawn up before the construction of the house is completed). Both sides remain in the win. The buyer can buy a house immediately, without having the entire amount in hand. And the developer is selling another apartment. The next advantage of buying a home on installments is that you do not need to prepare any additional documents or provide, for example, a certificate of income. Housing becomes the property of the buyer only after payment of the full price of the apartment.
Are there risks in buying an apartment at the construction stage?
It is necessary to realize that buying an apartment during the construction stage always involves certain risks. Low prices for residential space are precisely related to the fact that buyers take risks. Despite the signed contract and all the builder’s guarantees, at the excavation stage the house can only be viewed on paper. There are no physical apartments yet, so investors cannot be 100% sure that the new building will be put into operation on time and that it will be completed at all.
In Ukraine, over the past 15 years, there have been several high-profile cases when people paid money for apartments, and the developer never put the building into operation, leaving the investors without money and without housing. For this reason, experts recommend buying apartments at the construction stage only from proven and reliable developers with a good reputation, who have been engaged in the construction and sale of apartments for many years.
The cost of housing at the construction stage
The cost of living in a house under construction directly depends on the stage of construction at which the contract is concluded. Of course, the specific price for 1 m2 of living space depends on many factors, including the developer’s financial policy. However, if you look at this question from the point of view of economy, then after putting the house into operation, you will have to pay 100% of its cost.
If you buy a house when only half of the house is built, you can save about 20-30%. The biggest savings will be if the developer has not yet managed to sell a significant part of the apartments or he does not invest well in the construction period.
It is most profitable to buy an apartment at the excavation stage. In this case, savings can be up to 50%. That is, if the total cost of the apartment is 50,000 dollars, then only 25,000 will have to be paid for it at the excavation stage. The benefit is obvious.
How to buy an apartment in a building under construction?
Buying an apartment in a building under construction is no different from buying a home in a new building that has already been put into operation. You need to choose the optimal house, the location of which suits you completely. After that, contact the sales department, ask for all the necessary documents, see the layout and choose a suitable apartment. And then all that remains is to sign the documents and deposit the required amount.
Here are some tips to minimize risks and buy an apartment on really favorable terms:
- Contact only proven and reliable builders. After choosing a residential complex, inquire about the developer: read reviews, look at rented properties, check the company’s registers, etc.
- Check all permissions, see the project.
- Find out when the house is scheduled to be commissioned. For example, if the developer assures that in a month he will build three floors, but in fact the foundation has not even been poured on the site, then this is a serious reason to think.
- Visit the construction site in person. It is recommended to visit it within 2-3 weeks to follow the construction progress. Serious companies mostly do not allow long downtimes. And if there are only a few people working on the construction site during good weather on working days, then this suggests the lack of seriousness of the developer or the lack of funds.
- See what an apartment in a building under construction looks like. Thanks to modern technologies, you can now immediately see what your home will look like. Usually, developers prepare a full presentation, and the buyer can see his future home in 3D. This is the best way to evaluate the apartment in which you will live.
At what stage of construction to buy housing, everyone decides for himself. You just need to answer a few simple questions to yourself:
- How much money am I willing to spend and do I want to save?
- Am I willing to take risks?
- How urgently do I need an apartment and am I ready to wait a few years before moving in?
- Do I have all the necessary amount on hand, or is it better to buy an apartment for payments?
After answering these questions, you can already make a final decision about which stage of the construction of a new house is better to buy housing.