How does one research a builder/developer here

[hhfarang]

I decided to start a generic thread on this topic as suggestions may help prospective home buyers. I saw on another thread where a buyer said he had done his research before buying into a development. It made me wonder how does one go about this research when the liable laws keep anything bad about any business people here out of print.

I think the only research of any real value here, no matter what project you are considering, is to personally look at any prior homes, projects, developments, etc., that involve any of the owners or builders where you are thinking of buying to find out their past history and track record of living up to their promises.

I would also want to talk to residents/owners of builds by the same people/company to see if they are happy with their purchase and feel they got what was promised and if it was on time, on budget, and of the quality stated in pre-build advertising or contract. I would also ask them about post build support for problems (and there always are problems) that arise after turnover. Quality builders will offer and honor a guarantee of some kind to fix problems that arise in a period of time after you take possession.

I would also ask about utilities. Many homeowners here in developments find that years after construction they are still trucking in water for daily use, having frequent electrical outages, or fighting with the builder/developer for control of those utilities as well as control over cost of upkeep of common areas.

Does the builder live in the project? This could be a double edged sword. It could mean that the builder is committed to completing the project at a high level of quality and as rapidly as possible... but a builder living in the project is not necessarily a good thing. Many have found that the developer or builder will want to keep control of utilities or common areas so that homeowners can be charged a higher rate or surcharge that goes directly into the pockets of the resident developer(s) or project owner(s).

Also, what do you do if a project is the first one here by a certain company/developer so they have no track record?

[poosmate]

You could use an expert:



Or a lawyer

[TypicallyTropical]

Flipping a coin is another tried method!

[Roel]

Talk to people who live there.
I know from Pattaya developments that they offer people to live on the estate for (next to) nothing as long as they advise positively when prospective buyers are shown around.

Get advice/protection from influential Thais.
Chance is they only advise positively because of their personal interest in the whole thing.
When things go wrong who's side will they choose: the guy who just lost millions or the one who just made millions?

Proven record.
The more professional scammers tend to build much bigger balloons before they let them burst.

Chrystal ball and tossing a coin.
Although both not scientifically proven without doubt the most reliable options.

[tonymaroni]

Just asked around to people you know. I think about the same thing.
Really there is no way but word of mouth.

Someone who lives in your prospective development, has gone though
dealings with the sellers, etc.

I would not buy into a 100% off the plan development. There is no telling if it will ever be built.

But a dozen or so homes already up is a a positive sign.

I've never met anyone that has had a 100% positive experience with developers, realtors, etc.
here in Thailand.

No licensing of agents, no escrow, sure are drawbacks in this country.
Also no truth in advertising goes without saying.

Tony

[Spitfire]

Yeah, 'word of mouth' is the way, which involves you living somewhere for at least 6 moths or a year before doing/spending anything so you can get to know the area/local score and some people that probably have resided in the area much longer, or find an info portal like this one (HHAD) where decent advice etc is given.

Must admit that I'd be interested in how many housing estate developments the company in question has done successfully before, if it's on it's 10th or 15th or something and the previous ones are still being maintained with security etc with a reasonably 'sunny disposition' of occupants, not to mention high occupancy also and then it's probably 'game-on'.

If you just turn up 'out-the-blue' assuming that all will be fine then it's 'lambs-to-the-slaughter' stuff or the dice rolling/coin flipping mentioned above.

No substitute for living somewhere for a year or more and then deciding once informed from different sources as much is at risk, financially at least.

Bad news spreads fast so won't take long to get orientated properly really, at least in this field.

[cozza]

It is frustrating that so many have been ripped off...

My wife and I have some land not far from Hua Hin and would like to develop but just dont have the money up front.

We were thinking the only way we could get it off the ground was to buy off plan.

I was actually asking her if she knew any way that would guarantee the buyer to feel safer...without needing a lawyer.

Do contracts and legal documents actually mean anything in Thailand?

[beachyhead]

Follow the tips given so far and use the internet, research the developers name and previous developments, definitely knock on doors of previous developments and ask. Also check on properties being built at present.

Always use a Lawyer !! get them to check land deeds etc. ask about the length of guarantee being offed by the developer. There is an English speaking lawyer here in Hua Hin which makes life so much easier with no translation problems.

At the development where I am the sales and marketing manager "Orchid Palm Homes" we always give potential clients this advice.

Good developers have nothing to hide and although we all hear about the bad developers, there are good developers in Hua Hin working hard and providing excellent quality properties at fantastic value.

We sold out our fourth development in 10 months which will be completed by July 2011 and our fifth development has sold 75% in just over 2 months.

Sorry if that sounds like an advertisement but just trying to prove that there are good developers here doing a good job and I believe that the good thing about a recession is that only the best value and safe developments will survive.

Grahame Beecham

[brianks]

I'll second that Graham. After learning the hard way, I am now a very satisfied owner in the Orchid Palm Development. You won't find anyone but happy campers here. You have to do your research AND especially talk to the homeowners in the development your looking to purchase in.

[Whaler]

I'll second that Graham. After learning the hard way, I am now a very satisfied owner in the Orchid Palm Development. You won't find anyone but happy campers here. You have to do your research AND especially talk to the homeowners in the development your looking to purchase in.

Sorry I don't think this is the case often people are being dissapointed simply due to greed

If you are daft enought not to use a solicitor like Jane ( English lady in HH that works for C&F BK) and have proper staged payments based on completion and a contract that includes clauses for completion of services and a pre arranged service contract then more fool you

If a developer has built 1 or 21 homes is no indication of his finacial status to forfill his contract all you can do is limit your exposure

There is a certain element of risk/trust due to the limitation of protection on offer part of my decision to go with Hot Properties was they are not soley reliant on building/developement.

Talking to existing owners is a mine field of biased opionions no one is going to admit to a lemon and devalue his property or not encouge others to ensure overall site completion, it's simply not in thier intrest.

I found the whole process incredable easy with a wealth of options in building off plan and as much detaled information to build it myself with mutual agrrement on all aspects of build and conditions. Maybe I was lucky and got the right guys first time but then again I did not expect a high quality build of 200M2 under 3.5M within 5k of HH

I've nothing to doubt that Orchid Palm is a fine developement I looked there intially. Trying to find a good developer is only complicated more if you are on very tight budget IMO. There is certainly a comfort factor in buying on a already developed site how much you should rely on this is debatable.

[Lev]

At the development where I am the sales and marketing manager "Orchid Palm Homes" we always give potential clients this advice.

Grahame, you should really consider marketing your development professionally with Hua Hin Media and HHAD if you want to promote it on this forum.

[Spitfire]

I suppose it could also depend upon what situation you are buying a house under, ie are you paying for it from your savings in staged sections so that you completely own it outright in the end when you move in? If so, then you need to be very careful indeed.

Or..........

I suppose going through a Thai bank and having a mortgage is the obvious option as then you will only have to pay the developer the deposit, he then has to build the house and deliver. Bank then comes round and looks at it and checks it out along with the rest of the paperwork, approves it or not, then if approved pays the developer the outstanding balance and you are from then on dealing with the bank. So, under that senario you are less exposed...........surely?

There must be property developments which operate under this second senario as the Thais don't pay like many foreigners do.

As mentioned though, would depend on the premise under which you are buying. Or am I missing something here gentlemen?

[Whaler]

As mentioned though, would depend on the premise under which you are buying. Or am I missing something here gentlemen?

I think if you pay in staged payments be it from your own savings or via a bank mortgage if the developer defaults you still lost or owe money. I would be surprised if a developer would agree to say 10% and 90% on completion, but if they do then maybe your exposure is less.

I suppose there is some comfort in thinking that the bank cares and it could be Thai to Thai talking on a dispute, but if Thai banks are like Western I would not hold my breath on this

[Super Joe]

No buyer needs to risk more than 10% of their purchase cost if they don't want to, some choose to in order to secure discounts, some just seem to accept the developers payment terms as cast in stone, and do not negotiate. Just draw up your desired payment terms and demand that, I posted something about this a couple of years back, do a search or ask the question on a couple of forums, or ask a couple of half-competent farang/Thai lawyers and you should get a similar answer. We've had about half a dozen now who have paid either 90% or 100% upfront, and go back home to Europe with just a signed contract to hold onto until the house was handed over, there were no problems ofcourse, but they didn't know that having only met us for 15 minutes

Why some people put themselves at risk for 30%, 50%, 90% of the purchase price, only they can answer, greed is part of it, and unfortunately this provides the environment which allows unscrupulous developers/builders/lawyers to do what they do. That's not in anyway to suggest the buyer has done anything wrong, the crook is the crook, but if we all walk round with our handbags wide open we shouldn't be surprised when someone nicks our pocket-rocket. It's not as simple and clear cut as this ofcourse, and no contractual or payment arrangement will protect against the small percentage of extreme cases. But half a dozen buyers on a project unwittingly combining to wave US$1 million of temptation under someone's nose, and this will prove too easy pickings, for some.


Not on all developments may accomodate this, and certainly not pre-slump, but I would have thought most will now, with some going even further. These days you should even be able to get the developer to be at risk, or behind shall we say, of the payment structure. What I'd ask for based on a 4M Baht property...
.
1) First off get the land freehold/leasehold transferred over to you at the land office, just as you would normally do in 6 months time upon completion. If the land price is 1.5M Baht, then you pay that. Developer is happy as that's 1m cost+0.5k profit, but crucially it's welcome cash-flow of 1.5m to fund the build because he's already paid for it, you're doing them a favour. Buyer's happy because you have ownership of something at it's market value. At this point developer is at risk for his profit on the build.

2) Then you have the staged payments (commonly used in most new builds) for the 2.5M Baht construction works, which are already negotiated and part of the contract, obviously:
Buyer at risk for approx. 10% of sale price:
a) 500k deposit prior to construction works commencing
b) 400k after completion of main structural works (footings, ground beams, slab & columns)
c) 400k after completion of roof and walls
d) 400k after completion of wall rendering, floor tiling, ceiling/elec/plumbing 1st fix
e) 400k after completion of ceilings, elec & plumb 2nd fix, doors/windows 2nd fix, dec. 1st coat, drive/pathways
f) 400k after inspection after final completion

Developer at risk for approx. 10% of sale price:
a) 500k after completion of main structural works (footings, ground beams, slab & columns)
b) 500k after completion of roof and walls
c) 500k after completion of wall rendering, floor tiling, ceiling/elec/plumbing 1st fix
d) 500k after completion of ceilings, elec & plumb 2nd fix, doors/windows 2nd fix, dec. 1st coat, drive/pathways
e) 500k after inspection after final completion


If developer runs off, goes bust etc, then you're either 10% up/down and have to finish the build yourself. I honestly do not believe that any more than 2 out of every 10 developers would refuse this type of arrangement today, condo's though I know nothing of, except you appear to be living in a shoe-box suspended in the air.

The downside ofcourse is the project overall will be incomplete to whatever degree, so infrastructure will need to be finished, based on a small'ish 12 house development (without common clubhouse/communal pool etc), which was half-built when you bought into it, then each of the 12 plots would need to chip in another 5% of their sale price at the very max., to get this completed. Another problem would be if this scenario occurred early on in a development, when there are still a lot of plots not yet sold. But there's only one person that really gets to decide how far advanced it is when you decide to buy into it

Can anyone tell me what's so difficult about this, we negotiate harder than this when buying a copy Ralph Lauren down the market

SJ

[Spitfire]

Cheers for that SJ, interesting........

We've had about half a dozen now who have paid either 90% or 100% upfront, and go back home to Europe with just a signed contract to hold onto until the house was handed over, there were no problems ofcourse, but they didn't know that having only met us for 15 minutes

That's truely amazing that they do that in a country like this with so many crooks around.

Can anyone tell me what's so difficult about this, we negotiate harder than this when buying a copy Ralph Lauren down the market.

Ironically, that's probably very true.