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5 Things You didn’t Know About Pre-selling Real Estate

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The real estate business in the Philippine is booming with relatively low risks. You can invest in landed or pre-selling real estate. However, for home buyers or people who want to live near their workplace or for investment through price appreciation, pre-selling real estate is the right option.

Buying pre-selling properties are not uncommon in the real estate industry. It is more affordable for a potential homeowner, and for an investor, it is an excellent investment to make. By investing in pre-selling properties, you spend less, increase your assets, and generate more revenue.  

What are Pre-selling Properties?

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Pre-selling properties in real estate are properties that are sold when they are at their early stage or under construction.

Some are sold during the planning stages when it is just the blueprint of the property the buyer would see. Pre-selling properties are also called off-plan properties.  They can be condominiums or townhouses.

What you didn’t know about Pre-selling Real Estates in Philippine

Purchasing a building property is an expensive investment, especially if it is a finished unit. However, you can cut down your expenses towards owning a building property by purchasing a pre-selling property.

So, if you are searching for a property to buy either for personal use or business in Philippine, it might be better you consider pre-selling properties.

Pre-selling Properties are More Affordable than RFO

Price is a major factor in real estate. Lots of buyers do not know they can purchase property that is at the planning stage or still under construction. Many potential homebuyers have been put off by the high price of finished units.  If you are on a low budget, ready-for-occupancy (RFO) may not be for you. However, pre-selling properties can also give you good value for your money at a reduced price.

Once developers ground-break a project, they start selling from the lowest price possible. Since the property does not exist as at the time of purchase, pre-selling properties are more affordable than RFO properties. Also, to attract buyers, developers usually offer prices that are most times 30% lesser than the price of a finished unit. Pre-selling properties within Metro Manila are ranging from 3 million to 10 million pesos. Of course, the price is influenced by different factors like location, size, amenities, and, sometimes, the reputation of the developer.

Buyers get the Best Unit Option

You may not be able to get a property in your chosen location if you want to buy ready-for-occupancy (RFO) units. Pre-selling property allows buyers to evaluate various options and select their preferred unit or location. At the pre-selling stage, you can choose the unit that has easy access to basic amenities, suit your taste and lifestyle.

Also, in some situations, homebuyers may be able to select the finishing that is ideal for them. For an investor that wants to attract buyers or tenants, you can integrate the designs you want.

Flexible Payment Options

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Apart from their low prices, developers of pre-selling properties offer various flexible payment options, thus making it easy for you to meet your monthly payments, most times at no interest. Depending on the mode of payment, many developers provide discounts on down-payment. They also offer in-house financing.

This is true, when I acquired my condo in 2019, I locked the contract price 20% cheaper than the ready-for-occupancy price. Since I bought at pre-selling, most of the developers offer a minimal reservation fee from P10,000 to P20,000 which will be deducted to your downpayment. In addition, the downpayment is stretched to equal monthly payments before you proceed to bank financing of the remaining balance.

Good thing, there are properties, nowadays, that will allow you to move into your property even if you haven’t paid yet the significant portion of the contract price.

Pre-selling Properties are Promising Investment

If you are into real estate business, pre-selling property is a promising investment, especially if it is in a good location.  Though you have to wait till your property is completed, once it is ready for use, it gives a higher return on investment.

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We all know property appreciates with time and when you are waiting for the developer to complete your property, its value is rising. Buying a pre-selling property means you buy at a lower price, and you can decide to sell it or rent it out to earn passive cash flow from it. This is a massive profit for investors. You might be interested in becoming a host by renting out your property. One best example is Airbnb. Many Filipinos are earning more than the monthly dues of their acquired property by leasing them out to others.

Enough time to prepare financially

Purchasing a pre-selling property gives you ample time to prepare yourself financially. After paying the initial deposit, you can use the waiting period for completion to start saving.

It is also an easy way of entering the property market for a newbie. You only have to make a 10% deposit and pay the balance at settlement when the construction is complete, which may be a year or more.

Tips and advice

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Buying or investing in pre-selling properties has its pros and cons. The lower prices and flexible payments may be very enticing. But like all businesses, there are some risks involved with purchasing a pre-selling property.

There may be a delay in the completion of the property, or you may get a property that is below your expectations. However, we hope that some of the tips from our real estate experts will help you in purchasing the right pre-selling property.

  • Buy from trusted developers: Before you pay for a property, you should consider the reputation of the developers. Make sure that this developer had already built its reputation in the industry. Know the number of projects they have completed, the quality of their properties, and if they have the license to sell pre-selling properties.

You should also check if the property is registered with the Philippines Housing and Land Use Regulatory Board.

  • Make inquiries: Do not be in a hurry to buy a pre-selling property. Ask questions and have enough details of the property and neighborhood it is situated. Visit the site of the property.
  • Check your purse: Though pre-selling properties are always cheaper, it is essential to check if you have sufficient income to finance the payment.
  • Seek legal advice: Don’t rush to sign the contract papers. Consult a reliable lawyer to guide you through the signing of the paperwork and to understand the legal jargon.
  • You need a broker: Engage the service of a registered and licensed real estate broker to negotiate and help you with the purchasing process.

Whether you are buying for your own use or business purpose, investing in the Philippines’ pre-selling properties is an excellent choice to make. However, just like every successful venture, it comes with its own pros and cons, since it may not be yet visible. But if you know how to play your game, you can maximize your profit. You can achieve this by patiently studying market conditions, exploring various options, and seeking advice before you make your choice.

Key Takeaway:
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Acquiring a real estate is quite an big decision to make. Why? It’s because it will be a significant investment that will have significant impact to your cash flow whether you will pay it in cash or in an installment basis. Thus, understanding your financial capacity is a must before buying one. Otherwise, if you don’t make good decision, there’s a higher chance to lead you to ruining your budget and, worst case, foreclosure of property.

Related Articles:
Is Buying a Condo an Investment?

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