MARKETING AFRICA MAL 18/17 mal 18:17 online - Page 39

should ensure that the developer is a registered company in the country of operation and it has the legal mandate to operate as a real estate developer and the location of their offices. He/she should also know who the directors of the company are, how they have delivered in previous projects and if they have any court cases with regards to the services they are currently offering. This will prevent one from investing with a brief case company run by fraudsters. Development history and testimonials: The buyer should also review previous developments done by the developer to gauge their workmanship, delivery on promise, timelines and as proof that they are actually developers. Mode of operation and project financing: The buyer should then seek to understand how the developer operates, what their day to day activities are, how information is relayed to clients, and how the payments are made. In case any of the procedures, partners they deal with or operations are not above board, he or she should not work with the developer. They should also understand the nature of finance being used by the developer and hence the possibility of a project delaying due to lack of financing. Developers associations: For instance, in Kenya, credible developers are members of the Kenya Property Developers Association (KPDA), which advocates for better market conditions for both the buyer and the developer. Project Due Diligence For the project, the buyer ought to establish the following facts: Visit the site: The buyer should visit the site to know it is an actual site that exists. This should be done prior to any investment and throughout the development period to ensure the development is running smoothly and he/she is up to date with the progress of the development, so that if any issues arise, they can follow up with the developer or consider exit options before it is too late. Those who lost money in Simple Homes made deposits without visiting the sites; you should never part with even a penny before visiting the actual site or confirming it is a legitimate site for development. Confirm developer has land titles for the given site: The buyer should always insist to be given copies of the title as proof that the developer is the owner of the land and it is not a scam. He/she can also run a search on the title to ensure it has no undisclosed encumbrances and it is genuine. Project plan approvals: The buyer should also seek to know if the developer has obtained the necessary approvals for the property and hence has the legal right to develop the property to prevent delays in the delivery of the project. Project team and their delivery history and capability: The buyer should also know who is in the project team, their previous experience and hence gauge if they are able to deliver the given project. Get regular updates from the developer on the progress: This is a must to ensure that the development is ongoing and will be delivered on time and will be of good quality. A developer who doesn’t give regular updates is suspect could be hiding crucial information or is fraudulent. Comparative Analysis: Research on comparables around the area to gauge possibility of earning potential returns promised by the developer. That is rents, prices, yields, occupancy and uptake. This also helps the buyer know if the development is over- valued and can hence look for better investment opportunities. A good developer should be able to share at least a summary of their research findings with the buyer. Timelines: The buyer should understand the project timelines and milestones and hold the developer to them. Project design team: Seek to understand credibility of the project design team including the architects, engineers and the main contractors. Contracts Due Diligence The buyer should hire a conveyancing lawyer to review all contracts signed and ensure they are all above par and he or she is not defrauded in any way or exposed to unnecessary risk. Last but not least if it’s too good to be true … there is no free lunch! In the current market due to the high land and construction costs as well as interest rates, house prices are generally high. Hence if a developer offers a house at a price that is very low by market standards and not achievable under normal circumstances, and it is the only company offering such, then one should be cautious and evaluate them fully as it is probably a scam to lure unsuspecting buyers desperate to acquire a home. Purchasing off plan is a great way of acquiring real estate and hence the buyers should not be deterred by the few cases of unethical developers as they wi