How to get the most out of the developer when buying off the plan

Off-the-plan buyers at Gannet Developments’ Osprey, a 123-apartment building under construction in Dee Why on Sydney’s northern beaches, were recently invited to spin a Wheel of Fortune-style wheel that would deliver between $20,000 and $100,000 off their purchase price.

Director at Raine & Horne Dee Why Collaroy Peter Mosedale, who worked on the project sales, says it was a clever way to generate interest and drum up business.

Mosedale says in the current market there are an increasing number of offers being put forward by developers in a bid to entice buyers and potentially create a spike in sales.  

“There are plenty of opportunities to take advantage of free stamp duty offers, rebates on furniture packages, rental guarantees, upgrades in finishes and payment of outgoing bills,” says Mosedale.

In the past 18 months, Domain has also spotted deals for a free Vespa at Mirvac’s The Finery in Sydney’s Waterloo, a free Toyota Yaris at Force One Development’s The One Apartments in Brisbane’s West End, and an all-expenses-paid New Year’s Eve celebration at Gannet Developments Carlyle in Dee Why.

Which incentives are best value?

“Some offers may look good and sound good but may not mean the apartment represents great value,” says David Milton, managing director of CBRE Residential.

Milton says developers are aware that prices have “come back”, so if a property has been “priced right” it should offer fundamental good value without any additional incentive.

That said, Milton explains that a developer who is close to a pre-sales target and keen to get construction started might look to achieve more sales more quickly with a special offer.

“Five per cent deposits are great for first-home buyers where they don’t have the usual 10 per cent,” he says. “It might be staged with 5 per cent paid now and 5 per cent later.”

Mirvac is among the developers operating this kind of payment plan with a program called The Right Start, which kicked off at Olympic Park’s Pavilions last year. First-home buyers were able to secure their apartment with a 5 per cent deposit on exchange, paying an additional 2.5 per cent after the first year and another 2.5 per cent after the second year.

The company says the program allowed buyers to buy their apartment at current prices, using the two-year construction period to raise the remaining deposit.

Colliers International’s sales director for residential project marketing Peter Kerras says stamp duty concessions are another common incentive.

“I think the best incentive is around stamp duty,” says Kerras. “I get first-home buyers ringing me up and saying I’m only buying up to $650,000 because I can get $10,000 from the government and I don’t pay stamp duty. But if a developer can offer you a stamp duty rebate over $800,000 that means buyers have a broader pool of properties to look at.”

Meanwhile, the payment of outgoing bills has proven a popular incentive at EG Developments’ The Flour Mill in Sydney’s Summer Hill.

“What works in one area won’t necessarily work in another, but the no bills at the Flour Mill has been a big hit,” says Kerras.

The developer is offering to pay all outgoing bills for the first 24 months, with anticipated costs to be rebated off the contract price at the time of settlement. Costs covered would include council rates, strata and community levies, water rates, gas and electricity usage. The rebate has been capped at $13,500 for a one-bedder, $18,500 for a two-bedder and $24,000 for a three-bedder.

Mosedale and Kerras agree straight discounts off the price of an off-the-plan apartment are more difficult to negotiate, as a lower sale price may compromise the integrity of the development or devalue the block for future residents and valuations.

How to find the best deals

If you’re wondering how to seek out apartments with buyer incentives, Mosedale says most offers are promoted through the local press, major web portals and strong database email lists.

“It’s about remaining vigilant,” he says. “Inquire with any strong project marketing agency and get yourself on the list to be notified about new offers. Keep in mind that many offers come on with a 100 per cent rebate and then they chisel the amount back as they get uptake from buyers.”

Both Kerras and Mosedale encourage off-the-plan buyers to ask developers for a better deal, pointing out that “if you don’t ask, you don’t get”.

“I would encourage buyers to tell a developer they’re looking around and noticing everyone is offering something,” Kerras says. “Ask ‘What are you offering to entice me to buy into your project?’ It doesn’t take long to work out what things are good value and what’s not.”