Basalt Ridge Developments Ltd, a buyer's chair: What do you do about the townhouse?

// DRILLS / ISSUE 08 / BASALT RIDGE · BUYER

ISSUE 08 · 2026-09-14 · 5 MIN READ

// ONE FILE, THREE CHAIRS

// THE LENDING CHAIR · ISSUE 08

Basalt Ridge Developments

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// THE DEVELOPER'S CHAIR

The Other Two Banks

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// A BUYER'S CHAIR

Off the Plan

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Off the Plan

BASALT RIDGE, FROM A BUYER'S CHAIR

PROPERTY · A BUYER'S CHAIR · DIFFICULTY 3/5

// THE SETUP

You have signed for one of the 24 townhouses in Basalt Ridge's new Christchurch project, off the plan, and paid the deposit. You chose it the way most buyers do. The developer has finished six projects in eight years, the brochure has photographs of them and quotes from the people who bought, and the price looked like the price of a new home in a suburb you wanted.

Since then, three things have reached you, none of them from the developer. The suburb's median price is down 4% over six months. The sales agent, asked when building starts, said construction begins once presales reach the 60% that lenders ask for, and the project is at 40%. And someone you know in property mentioned that the developer is talking to new banks, because his usual lender charges more than he wants to pay.

Nobody has asked you anything, and the brochure has not changed.

You are not the bank. You cannot set a presales condition or ask for a guarantee. You have a signed contract, a deposit, and the right to ask questions. What do you do about the townhouse?

Basalt Ridge is a composite and these townhouses do not exist. This page teaches how a lender reads a presale; it is not legal or financial advice about any real purchase, and a real contract is a question for your own lawyer.

// FY25 SNAPSHOT

SOURCE: THE BROCHURE · THE SALES AGENT · SUBURB PRICES · COMPOSITE CASE — FICTIONAL

PRESALES

40%

▼ build waits for 60%

TOWNHOUSES

one of them yours

SUBURB MEDIAN

−4%

▼ over six months

TRACK RECORD

▲ projects in eight years

BUILD FINANCE

Pending

▼ not yet in place

Lenders to mid-scale residential projects typically want presales covering 60% or more of the debt before construction begins. A presale is a signed contract to buy a home that is not yet built: the deposit is paid at signing, the balance at settlement, once the home is finished.

// YOUR JUDGMENT

What do you do about the townhouse?

[A]Sit tight and say nothing — six finished projects, buyers' testimonials in the brochure, and a developer that busy always finds his construction finance in the end[B]Stay in, and ask what a lender asks: where your deposit is held, when you can walk away, and what your own bank lends at completion[C]Look for a way out of the contract — with the suburb down 4% in six months, the townhouse may be worth less at completion than your price[D]Push for a discount — a developer at 40% presales needs buyers to reach the bank's 60% line, and right now that makes you the leverage

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// THE READING

Start where the lender starts, because it is reading your contract too. A loan to build homes is repaid one of two ways: the buyers who signed early settle, or the finished homes nobody presold sell at the prices in the developer's feasibility. Your signature is part of the first way. That is why the agent can quote presales to the percentage point, and why construction waits for 60%: the project's finance is being assembled partly out of buyers like you. Every lender that looks at Basalt Ridge will ask one question about your contract that nobody has asked you. Will this buyer settle?

Why not A. Six finished projects say the developer can build, and nothing in the brochure is wrong. But the brochure answers a buyer's question, and the risks sitting on your contract are a lender's questions: whether construction finance arrives at 40% presales, and what this townhouse is worth on the day you settle, in a suburb whose median has fallen 4% in six months. Your own bank will value it again before it lends you the balance. Sitting tight is a good answer to the first question and no answer to the other two.

Why not C or D. C reads one soft half-year as a verdict. Prices move both ways over a build, and looking for a way out before you have read what the contract says about leaving is how buyers find that the exit costs more than the stay. D is the sharper mistake. A discount from a developer who needs presales is a presale his lender will count at the discounted price, and it leaves the one question you have not yet answered exactly where it was: whether you can settle at a lower valuation.

Which is why the senior banker's advice, in a buyer's chair, is B. Ask what a lender asks, in writing, before anyone needs you to: where your deposit is held until settlement, what the contract says happens if construction has not started by a given date, and what your own bank would lend on the townhouse at today's prices rather than the brochure's. The first two tell you what you stand to lose if the finance never arrives. The third tells you whether you are a presale that settles, which is the only kind a developer's lender is really counting, and the only kind that ends with keys.

Your contract is part of someone else's loan. Ask the lender's questions before the lender does.

// THE SAME FILE, FROM THE OTHER CHAIRS

Three people read this file in the same week. The lender's reading is the one the other two are reacting to.

// THE LENDING CHAIR · ISSUE 08

Basalt Ridge Developments

A new-to-bank developer, a claimed 28% ROE and two other banks circling. Your bank has a growth target.

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// THE DEVELOPER'S CHAIR

The Other Two Banks

The bank wants your next six projects, and not this one as asked. Two other banks have your deck. The site is waiting.

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// HOW READERS ANSWER

The senior banker's read is [B].

[A] · 44%

[B] · 23%

[C] · 21%

[D] · 12%

The tempting answer is A. The senior banker chose B. The reading explains why a lender is reading your contract too, and which of its questions a buyer can ask before anyone else does.

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