What to Choose: Off-plan or Secondary Market

When it comes to buying a property, two common options are Off-plan and the secondary market. It’s a bit like choosing between a cake that is still in the oven and one that’s already on the shelf at the bakery. Each option has its own flavor, with off-plan offering the excitement of something new, and the secondary market providing the comfort of knowing exactly what you’re getting.

This may be a problem if you’re not quite sure what the difference is or why it matters. That is where this article comes in! In this blog, we will break down all these terms and highlight the advantages and disadvantages of primary and secondary properties so that you can make a more informed decision.

What is Off-Plan Property?

Purchasing Home off-plan entails acquiring a property from a developer before it is constructed or while still in progress. Essentially, you’re making the purchase based on the proposed building designs and plans, rather than the finished structure, as the name implies. Off-plan property buying has gained popularity in recent years and many investors and homeowners see it as a good way to buy a brand new property.

Advantages of Buying Off-Plan:

Strong capital growth can be attained

Those who purchase property off-plan benefit mostly from house price growth. Meaning if a property is purchased in 2015, but isn’t due for completion until 2017, when the property has finally been built, they will have seen their property grow in value each year.

Ability to re-sell at a profit before completion

As it’s more than likely that your property will go up in value before completion, investors can choose to put their property up for sale and sell at a higher market value. Although this can be a good strategy for investors looking to make a profit quickly, you would see much more of a capital growth benefit by tenanting the property and also gaining the benefit of a regular rental income, in addition to capital growth.

Cost Saving

If a property is being sold off-plan and you get in early enough, that is before construction begins, you may be offered a discounted price. This is not the case for a completed property when so much work has already gone into the development of the property. When you purchase off the plan, you will have to pay an initial deposit, the balance of which is paid when construction is finished. This gives you the opportunity to save more money from the point of contract signing until settlement, helping you to reduce the amount you may need to borrow from the mortgage institutions if any.

Flexible payment plans

An Off-plan property offers a flexible payment module for buyers compared to buying an already completed property. Usually, with a completed house, developers will charge 50% to 90% down payment, however, with an off-plan property, you can be charged 20% to 40% down payment.

Brand New Home

When you buy off-plan properties, you are guaranteed 100% of a brand new home that no one has lived in before. It’s ready to live in when you move in and that’s it. There is hardly any maintenance required and no need to redecorate unless you want to.

Disadvantages of Buying Off-Plan:

Possible delays

Estimated completion dates are always subject to change and may have significant delays due to construction progress, authority approvals, shortage of construction materials, weather, public health orders including restrictions on workers to name a few.

Quality may not meet your expectations

As you have not actually inspected the property and you are buying based on the plans and specifications provided by the developer, the final build may not meet your expectations or suit your lifestyle.

Location Risk

If a new project or construction site is developed next to the off-plan property, it can result in various disruptions during the construction phase. Noise, dust, and construction activities might be ongoing for an extended period, affecting the quality of living or rental experience.

Market Fluctuations

The real estate market is dynamic, and property values can fluctuate during the construction period. Economic changes, shifts in demand, or unexpected events can impact the property’s value, potentially affecting the return on investment that buyers initially anticipated.

What is Secondary Market?

Secondary market in real estate refers to the resale of existing properties and established residential areas. The secondary market functions as a way to open the door for a change in ownership at the suitable rate of an existing property. Simply put, it involves buying property that is already owned or possibly used before.

Advantages of buying secondary property:

You don’t lose time

Time is our most valuable resource. Buying a ready-made apartment, you don’t need to wait for the completion of the building and receipt of the documentation. You can immediately begin to renovate, rent or move straight into the apartment.

Low risk

Utilizing the secondary market, you protect yourself from new construction non-completion.  In other words, you’re not in danger of a builder walking away from a new apartment before it’s complete. Secondary properties are 100% ready. This eliminates headaches and streamlines just about everything.

Opportunity to see neighborhood before investing

Investors can always find out who surrounds them and based on this make a decision on the transaction. Investor will get to know of the possibilities in the neighborhood before investing.

Ability to negotiate

Secondary market gives room for investors to negotiate on prices. This gives the opportunity for an investor to beat down cost of acquisition of property. Good negotiations leads to good deals.

Disadvantages of buying secondary property:

More maintenance responsibilities

Resale properties are less energy efficient compared to primary properties. It is worth recalling that the owners of such housing are responsible for the repair of common areas and, as a result, additional costs for contributions to the savings fund or payment of estimates.

Higher Initial Costs

While the immediacy of ownership is a significant advantage, secondary market properties typically come with a higher upfront cost compared to their off-plan counterparts.

Hidden Defects

Unlike off-plan properties, which are typically built to modern standards, secondary market properties may harbor hidden defects that become apparent only after purchase.

Limited Customization

Unlike the blank canvas offered by off-plan investments, secondary market properties have limited room for personalization. Buyers must accept the property in its existing state.

FAQs

1. What is meant by off-plan?

   Purchasing home off-plan entails acquiring a property from a developer before it is constructed or while still in progress.

2. What is the best off-plan project in Ghana?

   The Equator offers a unique opportunity to own a future in one of Accra’s most sought-after neighborhoods Read more here…

3. How do you market off-plan properties?

   Off-plan projects are best marketed by real estate agencies because of their experience in the industry. See some top real estate agencies in Ghana Here…

Conclusion

You now have a good understanding of the critical differences between off-plan vs. secondary market in real estate. While off-plan can offer significant discounts, secondary properties provide the security of a finished product. It’s not just about weighing the pros and cons but understanding how each option aligns with your unique investment goals and risk appetite.

Looking for the best off plan deals in Accra, Ghana, The Equator project is highly recommended. Selling off plan now, The Equator gives investors the opportunity to own an apartment in the heart of Accra’s luxurious estate, East Legon. The Equator is currently selling off plan starting from $66,000. Visit The Equator website for more details.

For real estate ideas and investment opportunity on off plans or secondary markets visit BOT Properties