Not sure on next move.

Hey guys,

Looking for a little guidance on a situation a friend has come to me with.

ok,
Friend is a FHB looking to purchase a villa 'off the plan'. Completion of the villas isnt occurring for around another 3 months.

Conveyancer has been appointed.
Finance is currently getting sought and has been given conditional approval.
Dealings with real estate have been inconsistent.

Here is the situatiion
The villa is a set price requiring 5% deposit.
No contracts have been signed, although offer was made(and accepted) for purchase 2 months ago.
Conveyancer wasnt even aware that sale was still going through due to a lack of momentum from the Real estate.
Finance is at conditional with the bank(around 92%LVR), pending a valuation. Valuation cannot be done until the property is completed early in the new year. As a result, finance cannot be guaranteed until its too late and my friend is concerned about losing the 5% deposit.

In the interests of securing this property and maintaining my friends' sanity, I was going to recommend getting a contract for sale immediately, try negotiating a reduction in the deposit amount given that a valuation cannot be done until development is completed(reducing my friends risk). Pass on all information to Conveyancer.

Firstly, is the above situation normal for an off the plan purchase? I have only ever purchased/sold existing properties so I am unsure…..
secondly, is the course of action detailed, the way to go? or is there a better way?
Finally, any further information that you think may help would be vastly appreciated.

Oh, and one more. When my friend finally does sign a contract, does she take out insurance(as one does with an existing property) or is that still in the realm of the developer until completion?