What is the risk of buying a condo unit in the pre-construction stage?

[Alexandoy]

It is called "pre-con" by the real estate agents. They will offer you a condo unit that is still to be constructed. The price is around 20% cheaper than when the condo building is finished. The trick of the developer is to use the money of the buyer for the construction which means they would be needing less capital. The pre-con deal benefits both the buyer and the developer hence it may be the main reason for its popularity. Now this question about the risk. There are cases where the buyers file a complaint to the housing authority (government agency) that they had fully paid the unit but the building is not constructed even after 2 years. That is unfair to the buyer. One tv program that tackled the issue showed that the main resolution is for the developer to return the money of the buyer. Oh my, to think that the developer had used the money for 2 years, that is unfair. But the buyer agreed instead of pushing for interest.

A pre-con building that did not push through in the construction has many reasons. It may be lack of budget on the part of the developer or maybe the required permits are not accomplished yet. The developer of the big land near our home is having difficulty in securing the right of way from our village officials. The only thing we can say is caveat emptor... buyers, beware.

 

[kayode10]

You can only have problem with condo if it happens that you buy it at the wrong location. Location is very important when it comes to real estate. you should research about the area if there is going to be any commercial activities before you can go ahead and purchase the condo.

 

[General01]

Yes indeed it calls for caution in taking things like these.
Such risk can be detrimental to the. Financial life of the buyer.
One has to be careful in his endeavor as fraudulent acts are now on the grow .
It would be best to buy a finished property or a pure land than buying a precon building often times
The importance precautionary measure I have come to discovered is to "know where and from who you are buying"

 

[Setho]

I really do not see anything that is wrong with this and it is something that is very popular around here also. It is very possible that sometimes this construction companies will collect people's money in bulk and then they are not going to finish completing the apartments on time. This is why it is important that even if you want to buy apartments that are not yet completed you should try to buy it from companies that are recognised and they are very popular so they are always going to try to keep the integrity and their image intact .