Why Is Developer Reputation So Important?

Choosing the right Phuket property developer is certainly one of the most critical variables that affect how satisfied you are with the end product when purchasing real estate on the island. Phuket is home to a variety of respected developers, both Thai and international, each with their particular market experience. However, no company is perfect.

Any firm, even a huge corporation, might go into difficulties if there is even a little quake in the market. Unfortunately, if this occurs and something goes wrong with a developer, every consumer has a similar personal risk.

How Many Things Can Go Wrong With A Property Developer In Phuket?

It is fairly uncommon to hear of a Phuket property developer that’s experiencing financial difficulties. Some must borrow extensively, while others eke out a living from one sale to the next. Even before a construction is completed, some developers fall behind on their commission payments to agents.

Potential investors are understandably concerned about any type of financial problems. However, the more the financial difficulties and the severity of the errors made, the greater the risk of financial loss for buyers. It is advisable to prevent any difficulties entirely by avoiding risky developers if at all feasible.

Small Local Developers Or Multinational Companies?

Developers in Phuket will vary from small international or small local companies to huge foreign companies and well-known large Thai companies. Between these local developers, a few are even listed on Thailand’s stock exchange. Some worldwide development companies are again listed on the stock exchange in their home country.

The balance sheet of a publicly traded corporation may be easy to access. However, just because a firm has a strong financial sheet at home does not mean it will continue to support a project in Thailand that is in trouble. Private company finances are somewhat more transparent, but that does not rule them out of contention. If a private company has its finances fully audited, it is unlikely that it is hiding anything. If the numbers add up, the firm is most certainly well-run.

Size does, however, important to local Thai shoppers. Because of the developer’s repute, major Thai corporations saw their projects sell every unit extremely rapidly. Due to the strong demand for such projects, these firms are unlikely to negotiate a price with you.

Because all condominiums need 51% Thai ownership, this is important for any foreign buyer. Because these projects from known Thai developers are in great demand, and because they are unlikely to lower their prices, they provide foreign investors with a sense of security and stability.

One Man Band or Publically Listed?

Buyers who deal with established firms face less danger than those who engage with a small company. This is especially true if the project is the first one launched by the developer. When bringing new developments to market, a developer’s reputation can typically be depended on to bring in new purchasers. A developer that has built a solid reputation deserves to be recognized for their ongoing success.

Even the finest coders may make blunders. They may be thoughtless or prone to self-inflicted errors; they could be the outcome of an unanticipated occurrence; or they could just be unfortunate. The corporation may have bungled a development, been overly indebted, or the founders may be subsidizing expensive personal habits. However, they may be a good developer whose location decision was unlucky, and they were confronted with regulatory or zoning changes that halted the building of their project.

The Best Way To Avoid Risky Developers?

An competent lawyer would be able to unearth earlier wrongdoings, identify current flaws or problems in the property or legal structure, and may even be aware of any financial troubles the developer is experiencing. In fact, having competent legal counsel is one of your best defenses against a potentially dishonest developer.

Am I Guaranteed To Get My Money Back?

Buyers who have paid deposits or a major amount of the purchase price sometimes believe they will be the first to be refunded if the developer runs into financial difficulties. However, there is a good likelihood that many parties are waiting to be reimbursed if something goes wrong. Obviously, the ideal method is to avoid developers that are very risky.

What Happens With The Investment If The Developer Passes Away?

Another danger that purchasers may encounter when engaging with a smaller firm is “Key Man Risk.” People seldom inquire about the plans for the death of an owner, a senior partner, or a managing director.

Unfortunately, such critical individuals seldom make the required preparations to ensure that the firm or investors are safeguarded in the case of their death. When dealing with a private corporation, be certain that they have taken out insurance to cover against the death of someone important to the organization (i.e. a “Key Man”).

Summary

In conclusion, historical developments and reputation should not be utilized as the sole criterion for selecting a property. Private developers may put purchasers at higher risk, but it does not imply they should be avoided. The danger of something going wrong is considerably reduced if adequate due diligence is performed on a developer. If a study of the developer leaves you unconvinced, an old financial proverb applies: “If in doubt, stay out.”