Everyone’s familiar with the saying ‘what you see is what you get’. The truth in this adage means that it’s often uncomfortable to purchase something pre-construction without being able to see what it is you are buying, especially if what you’re buying is as significant as a new property.
That said, buying pre-construction property is a common and often popular option in many parts of the world including Panama City. There are many benefits to purchasing a home in a building that hasn’t even broken ground yet.
For example, when your property is ready, you’ll move into an entirely brand new property. In addition, if you’ve purchased a unit pre-construction, some developers will allow you to make special requests or decisions when it comes time to put the finishing touches on your unit.
Sounds good, right? Beware, though. Along with the perks of buying pre-construction, there are also plenty of pitfalls. Hidden fees, unpredictable timelines, and scheming developers can all make buying pre-construction feel like a gamble. Luckily, there are some ways to prevent disaster and come out of the process unscathed.
Read on for four things that buyers wish they’d known before their pre-construction purchase.
Know Thy Developer
The biggest learning point here is don’t fall for glitzy and glamorous renderings. It’s easy to look at the gorgeous mockups of what a building is going to look like and envision yourself relaxing next to the rooftop pool or entertaining in your modern kitchen. Just because those things look real in the renderings, doesn’t mean they will necessarily become a reality.
A rendering’s truthfulness is only as good as the reputation of the developer behind it. Find out what other projects the developer has done. Look them up online and search for photos of completed projects as well as reviews from clients who have bought pre-construction units with this developer in the past.
If possible, get in touch with a former buyer to ask some pointed questions. Did the developer finish the building on time? Was what they delivered ultimately what they were supposed to deliver? Were there any unexpected expenses or changes to the plans?
Knowing precisely who you are working with is critical to success. At Panama Equity, we only work with trustworthy developers who have a track record of honest and reliable projects.
Determine The Stage Of Construction
Figure out what stage the developer is REALLY at in terms of construction. There are plenty of reasons a developer might be deceitful about their current progress and plenty of reasons you should want to know the truth.
The general rule of thumb in Panama is that a developer won’t start construction until they have at least 40 percent of the project sold. If a developer has been marketing and selling a project for months and only has a handful of sold units to show for it, you might want to think twice about whether or not the development will ever make it off the ground. Try to get a copy of the actual availability list to get a sense of how much has been sold.
Another reason why knowing the exact stage a developer is in is for timing purposes. Developers are always going to be inclined to tell you that a project will be done sooner rather than later because prospective buyers are eager to move into their new homes.
Getting as much information as possible about the development timeline will help you be able to anticipate if things are going behind schedule. There’s nothing worse than making plans to sell or vacate your current home by a certain date only to find out that your new home isn’t going to be ready for another two months.
Most savvy buyers know that regardless of what the developer tells you in terms of a finish date, plan on the project taking an extra six months. That way, you’ll be surprised and delighted if they end up finishing ahead of schedule.
Get Ready For Surprises
While the crisp white walls and pristine kitchen of a new development are often beautiful and alluring, there are also downsides to living in a building that no one has lived in before. Plan on deficiencies such as leaky windows, wobbly floor tiles, poorly installed fixtures and light sockets that don’t work.
Ideally, you wouldn’t encounter any of these issues, but the fact of the matter is, if you’re the very first person to live in a unit, not everything is going to be perfect. The good news is, all of these things are covered in the guarantee, so you are protected. Report issues as they come up because the developer is responsible to deal with them.
The bad news is, you will need plenty of minutes on your cell phone plan (or a great property manager) to follow up with the developer’s on-site building manager to make sure all of your issues are addressed to your complete satisfaction. And don’t assume that one visit from the plumber or the electrician will always fix the problem. It usually takes at least two to three visits to get things right.
Spend Time Snooping
Doing a little detective work about the location of your new home could go a long way and save you a major headache later. Get a sense of traffic and noise patterns, band practices at 7 am on Saturday, party buses driving by all hours of the night, and general neighborhood-specific issues that you may not have thought of when you drove by the project for the first (and in some cases only) time. After all, it isn’t the developer’s responsibility to disclose any of this information to you, so it’s best to do some investigative research about the area on your own.
On the investment side, there are also perks to doing your research. It is always great to get in early on initiatives such as neighborhood restorations, mass-transit development, and other infrastructure projects, which could drive up your value before you even receive the keys. Keep up with the local news, city redevelopment plans, and other construction projects that could affect the value of a prospective pre-construction building.
So there you have it. While any pre-construction purchase will always come with some degree of uncertainty, that doesn’t mean that it has to be a disaster. With a little bit of planning and flexible expectations on the front end, you can help ensure you feel nothing but joy when you finally get the keys to your new home.
Thank you Kent for all these good tips.
You are welcome, Carlos!
Your truthful insights to property markets in general and Panama City’s in particular, are a refreshing within your profession and always much appreciated.
Hopefully we will have a little more time to visit during our next visit to PC (the beginning of July).
Thanks Trevor! Looks us up a few weeks prior and we can steer you in the right direction.
Thank You. Once again you are very helpful.
Excellent article Kent!