When it comes to house and land packages, opinions can be polarising. Some so-called "experts" advise against them, claiming house and land packages are to be avoided while you might have also heard how buyers who had bought one had NEVER regretted their decisions. Same product, two very different opinions. Is there any truth to any of these 2 very different buyer experience? What are the facts and myths that buyers need to know?
As independent Buyers Advocates in Melbourne, we frequently encounter clients coming to us with misconceptions about new house and land packages. While there are some truths, under specific circumstances, most beliefs are just misinformed or facts which had been manipulated to serve a sales agenda. Some of these stories can even be considered malicious. More often than not, it is just a classic case of monkey-see-monkey-do. Someone heard a bad experience and repeated the story to someone else, hiding some essential facts, sensationalised it and repeated it, without further disclosures.
Let's spend the next 5 minutes to sift through the noise together and uncover the reality.
House and Land Package vs Established House with Land
The first crucial distinction every buyer must understand, is the difference between a new House and Land package and an established house with land. These two are same, but different. While both ultimately provide you with a house with a land, the buying process is different. Each option also has their own "ideal buyer" with varying needs. It is essential that property buyers buy these properties with their open eyes and arm themselves with the right information.
At Concierge Buyers Advocates, our buyer focused real estate buyers agents specialise in helping property buying clients buy the property they want quickly and confidently, ensuring their interests are protected throughout the whole buying process. This article is put together to answer home buyers questions and aims to give property buyers some fact based reasons why a new house and land home can be a viable option for them.
What is a House and Land Package?
First, let us discuss what types of properties are typically considered a house and land package.
A "House and Land Package" is simply a house with a land. It is very similar to an established house on a land. The difference is, with a House and Land Package, you typically buy a land, then you engage a builder to build a house on it. It is usually a 2-part contract. One purchase contract to buy the land, and second build contract to build the house. You will also need two different mortgages or loans. One mortgage for the land, and a second loan (usually construction loan) to build the house.
But not all house and land packages are structured the same way. There are several variations with the land portion of a House and Land Package, depending on the developers or builders involved. Some common ways a house and land package is put together includes:
Approved Builders with Curated Designs: Some developers, estates and land contracts may force you to build with one of their approved builders who have a selection of curated designs, to help keep a certain "look and feel" within the estate.
Single Builder Requirement: Some developers may mandate that you build only with a specific builder.
Flexible Builder Choice: Some developers let you decide who you want to build with. You are free to use your own builder.
These conditions are typically outlined in the contract, and it’s crucial to thoroughly read and understand what the contracts. If you’re unsure, it's advisable to consult a property lawyer who is well-versed in the real estate industry to review the contract for you.
What is a Established House with Land?
In contrast to a house and land package, an established house with land is a single purchase of a property where the house is already built on the land. This type of property is can also be referred to as a resale home or a second-hand home.
When you buy an established house with land, the process is generally more straightforward. You make one purchase transaction, and you typically only need one mortgage for the entire property. The house is ready for immediate occupancy, so you can move in right after the purchase is complete.
This option may appeal to buyers who prefer a quicker and simpler purchasing process or buyers who want to see and evaluate the home and its surroundings before making a decision. Established homes in matured housing estates also often come with mature landscaping and fully developed neighborhoods, which can be appealing for some buyers.
What is the problem with House and Land Packages?
There is nothing inherently wrong with house and land packages; they are simply designed to cater to different groups of buyers. House and land packages are often designed for first-time homebuyers or buyers with limited savings, offering an lower entry point into property ownership or investment. Like any purchases, it is crucial for buyers to fully understand what they are buying.
The issue is, many buyers have been misled by sneaky marketers and sales agents into purchasing house and land packages without proper consideration of the buyers' individual needs. Real estate sales agents and marketers are legally obligated to serve the interests of the seller and developer, not the buyer. Real estate sales agents and project marketers' primary goal is to sell what they have available, which may not necessarily align with what you need. And they have no interest to ensure the property aligns to your buying or investment goals.
This dynamics often lead to situations where buyers are pushed into agreements that don't need their requirements. Since the sales agents are paid by the developers, their priority is to fulfill the developers' interests. They do not usually have your best interests at heart because you don't pay them. The developers and builders are. Thus, they are legally required to look after their best interests.
To protect yourself, it’s essential to approach these purchases with a clear understanding of the product and it is also crucial that you assess if these new house and land packages aligns to your own needs. This article delve deeper into the legal obligations of sales agents and how you can ensure you are making informed decisions that best suit your circumstances
The Issue with House and Land Package
The primary issue with house and land packages lies in the sales process, which has unfortunately tarnished their reputation. Buyers are unfortunately exposed to this, when you buy direct from the project marketer or any sales agent. Sales agents are there to sell these house and land packages, and they prioritize the interests of the seller rather than the buyer. Their goal is to sell what they have available, often without thoroughly understanding the buyer's needs.
Sales agents are adept at convincing buyers that the product they offer is the right fit, even if it isn’t. If you're not paying for their services, they are simply selling you what they have, not what you need. As a result, buying directly from a sales agent or marketer can lead to you buying an unsuitable house and land package. Very often, there could be better property options available elsewhere, but these agents will not recommend it because they aren’t compensated to do so.
For instance, a house and land package might not suit your needs at all. Selling a new house and land package to someone looking for an established home is akin to selling an IKEA flat-pack dining set to someone who wants a ready-built set. The mismatch can lead to dissatisfaction and regret.
To avoid this, it is crucial to conduct thorough research and possibly seek advice from independent real estate professionals who understand your needs and work in your best interests. This ensures you are making an informed decision and selecting a property that truly suits your requirements.
Advantages of a House and Land Package
Why should buyers consider a house and land package in Melbourne? As mentioned earlier, House and Land packages are meant for a buyers with different needs. Here are some key advantages:
Lower entry cost. House and land packages are typically situated in new estates where land costs are generally lower. This makes it an affordable option for first-time buyers or those with limited savings.
Lower stamp duties. In Victoria, stamp duty is calculated based on the value of the land. Since you are purchasing vacant land, the stamp duty is significantly lower compared to buying an established house, resulting in considerable savings. If you are a first home buyer, you could be paying zero stamp duties.
Brand New House. One of the most appealing aspects of a house and land package is the opportunity to live in a brand new home. These homes often come with modern features, including the latest 7 Star Energy efficiency rating. Additionally, buyers can often customize the layout and design to suit their personal preferences, creating a home that truly reflects their style and needs.
Considerations Before Buying a House and Land Package
Like anything, you should always know and understand what you are buying. And a house and land package is no exception. Here are a few things you need to consider.
Comparatively longer lead time. Unlike an established house, where you can take ownership of the house and move in within a couple of months, it could take up to a year (or two) before you move into your new home. You will usually need to wait a few months, to a year or 2 before the land is titled. Then, it is another about 6 to 9 months for the build and a further 3 to 6 months for the admin and permits. There are some builders who can build in shorter time frame, and we have tested and confirmed 4 months is consistently achievable, by good scheduling of work. Ask us for me info.
Committing to a house you cannot see and feel. With a house and land package, you are committing to a property that you cannot see or feel until it is completed. Unlike an established house, you cannot walk through the space to get a sense of the layout and quality. This means that the final fit, finish, and quality might not meet your expectations. To mitigate this risk, choose your builder carefully and do thorough research. Online reviews and testimonials can provide valuable insights, though keep in mind that people are more likely to share negative experiences. Or if you are unable to do the due diligence on the builder, we might be able to recommend packages from our tried and tested builders. We scrutinise the builder's build quality, fit and finish, and we only recommend builders whom are up to our standards.
Most House and Land Packages are in new estates. And most of these new estates are in locations where amenities, shops, schools, transport might not be matured yet. They will be coming, just not now. It may also mean the traffic and public transport will be immature initially, and you will encounter frequent traffic jams, road works, unpredictable public transport (if any) for a while. But, as the estate matures over the years, the inconvenience will disappear and services will improve. Have a look at matured estates around Melbourne. We've yet to see one with bad traffic and transport. The best thing with a maturing estate? Price Growth! Your equity in the property will grow significantly, much more than other estates, because it is coming from a lower base and the price has a lot more room to grow. Read the phenomenal growth of newer estates such as Clyde and Tarneit.
You don't know the developer and builder. One of the biggest challenges for buyers is not knowing the developers and builders behind their new home. It’s crucial to research the companies you are dealing with. Ask around and look for feedback from other buyers. However, remember that big-name retail builders often outsource construction tasks to the lowest bidder for the job. This usually affect the quality, while making it difficult to coordinate tasks, thus leading to long build time. Smaller builders, on the other hand, might offer more personalized service and closer supervision of their contractors, often resulting in better quality. If you are unable to do the due diligence on the builder, we might be able to recommend packages from our tried and tested builders. We scrutinise the builder's build quality, fit and finish, and we only recommend builders whom are up to our standards.
Myths about House and Land Packages
Now, let's look at the facts and debunking the myths of house and land packages.
Myth 1: "You are Paying the Agent's Commission When You Buy a House and Land Package."
The Facts:
Sales agents or marketers for house and land packages are usually paid around $20,000 when they sell a house and land package. While some premium house and land packages or hard-to-sell old stocks may offer a higher commissions of around between $40,000-$60,000, these are the minority. The majority fall into the $20,000 range, and selling agents generally cover marketing costs of these house and land properties, not the developer.
Despite ome "experts" claiming that buyers are footing the agents' commission, here is how the numbers compare across different property types:
House and Land Package: In Melbourne, an average house and land package might cost about $700,000. The $20,000 commission represents approximately 2.8% of the total price, an amount that the seller isn’t receiving.
Established House with Land of Similar Size and Condition: A comparable house in an established Melbourne suburb could cost around $1.5 million. With a typical 2% agent commission, this equates to about $30,000. Additionally, sellers often incur marketing, advertising, and staging expenses that can add another $10,000–$20,000, totaling $40,000–$50,000 in selling costs. And these $40,000-$50,000 is what the seller isn't receiving.
Established House with Similar Price: Now, if we compare a similarly priced $700,000 established property, the selling price would include a commission of around $14,000, plus marketing, advertisement, staging of $10,000-20,000, totalling $24,000-$34,000 going into the ads and agent commission. Strangely, this is very similar, if not more than the commission for a new House and Land package...
Looking at these comparisons, it becomes clear that the commission on a house and land package is on par with or even lower than that for established properties. While you may hear otherwise, the facts is clear. The agent's commissions aren’t necessarily higher for house and land packages.
Myth 2: House and Land Packages have poor value.
The Facts:
As I've mentioned earlier, house and land packages caters to different buyers. The ideal House and Land buyers are owner occupiers who do not want to lock in too much cash in a home, and they do not mind staying a bit further away from the CBD. Homeowners have never and should not be worried with yield or capital growth in the short term.
Most of these house and land packages are in locations which typically offers less yield and growth in the first few years of ownership, thus making them more suitable for owner occupiers than investments.
Unfortunately, sales agents, being sales agents, do not consider if the property suits the buyer's needs. Many sales agents are promoting these packages as investment products, when they are not. Many agents also use tricks such promotions such as "Guaranteed rental returns" or "Guaranteed rental yields" to promote these house and land packages as investment products.
Once these rental guarantees expire, some buyers may be disappointed if their expected returns don’t materialize, often blaming the product itself rather than the agent who sold it under misleading pretenses. Unfortunately, the resulting negative experiences can then be sensationalized, especially in the media, which favors headlines that attract attention.
What to Consider If You Already Own a House and Land Package
If you purchased one of these packages, know that property value can still grow over time. Newer suburbs like Tarneit and Clyde, where house and land packages were once affordable, are now seeing established properties selling for $1 million or more—double their price just five years ago.
If your priority is immediate positive cash flow, a house and land package may not be the best fit. However, if you’re looking for long-term growth or are an owner-occupier, these packages can offer excellent value. Recently, many of our clients’ house and land packages have seen increases of $20,000–$50,000 by the time construction is complete.
If you’re specifically looking for an investment-grade house and land package, we’ve identified a few that meet investment criteria—feel free to reach out to discuss them further.
Four Things You Should Do When You Buy a House and Land Package
With the considerations raised above, you should always take your time to do your research. These 4 pieces of homework will help ensure you know what you are buying:
Know the developer: Research the developer’s track record, reputation, and previous projects.
Know the builder: Investigate the builder’s experience, reliability, and quality of work.
Inspect finished products: Look at other properties built by the developer and builder to gauge the quality and craftsmanship. However, do remember that large retail builders sub-contract the constructions on a project basis. Thus, their quality can vary widely from build to build.
Ask tough questions: Don’t hesitate to ask detailed questions about timelines, costs, quality guarantees, and any potential issues.
Help with buying a House and Land Package
Navigating the process of purchasing a house and land package can be daunting, but you don’t have to do it alone. Our experienced buyers advocates and agents are here to assist you every step of the way. We have carefully curated a selection of high-quality house and land packages, as well as off-the-plan properties, tailored for both home buyers and investors.
Why Choose Our Buyers Advocates and Agents?
Our team consists of seasoned professionals who are not only experienced in real estate but also knowledgeable in construction. When selecting house and land packages or off-the-plan properties, we go the extra mile to ensure quality and reliability. Here’s what sets us apart:
Thorough Vetting Process: We conduct comprehensive site visits to inspect the properties firsthand. This allows us to evaluate the build quality and ensure it meets our high standards.
Direct Communication: We engage directly with management teams and key site supervisors of the builders. This helps us understand their construction processes and ensure they are capable of delivering top-notch homes.
Quality Assurance: Our selection process includes a thorough assessment of the builders' past projects, ensuring they have a proven track record of delivering high-quality homes.
Examples of Our Selected Packages and Sites
We have a range of selected house and land packages, many of which sell quickly due to high demand. Our website provides a glimpse of these options, showcasing the variety and quality we offer. However, this is just a snapshot, and there are many more properties that we have not yet listed.
Some examples of these selected packages and sites are here. There are many more which we have yet to list, as they sell fast. But the site should give you an idea of what's available. Get in touch with us via Whatsapp or email to find out what's available and suitable for you.
Conclusion - House and Land Packages
In conclusion, the decision to purchase a house and land package depends on your individual circumstances and objectives. It may or may not be the right choice for you. At our agency, we understand the importance of ensuring that any property investment aligns with your goals.
Through detailed workshops and brainstorming sessions, we work closely with our clients to determine whether a house and land package is suitable for their needs. However, in general, here's what you should consider:
Yes, if:
Limited Funds: If you have limited financial resources, a house and land package can offer an affordable entry point into property ownership.
Desire for Homeownership: If you aspire to own your own home, a house and land package can provide the opportunity to customize a new property to your liking.
Comfort with New Estates: If you don't mind living in a new estate for a few years and are willing to wait for amenities to develop, a house and land package could be a viable option.
Long-Term Investment: If you're not concerned with short-term yield or growth and are looking for long-term capital appreciation, a house and land package may suit your objectives.
No, if:
Urgency to Move In: If you are unable to wait for the house to be built, a completed new home or established home would be a better option.
Investment Purposes: If you intend to use the property as an investment, particularly if you expect instant growth or positive cash flow, a house and land package may not be the best choice unless it's in a mature location.
Immediate Cash Flow: If you're seeking immediate positive cash flow or intend to manufacture growth through renovations or development, a house and land package may not meet your requirements.
Plan to Manufacture Growth: Obviously with new houses being brand new, and often built to maximise the usage of the land, there are not much allowance to value add and flip for a quick profit.
If you are still unsure if a house and land is right for you, we encourage you to reach out for a free consultation with one of our buyers advocates. We'll provide expert advice, explain the nuances of house and land packages, and help you determine the best property type for your needs and goals.
Get in Touch
To find out more about available properties and find the one that suits your needs, get in touch with us via WhatsApp or email. Our team is ready to provide personalized advice and guide you through the buying process, ensuring you make an informed and confident decision.
Contact Information
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