A Step-by-Step Guide to Buying Pre-Selling Properties

Pre-selling properties offer a unique opportunity for homebuyers and investors to secure real estate at a lower cost, often before construction is even complete. This type of property is sold during the development phase, which means that buyers have the advantage of locking in a purchase price before the property’s value appreciates once it’s fully built. For those looking to maximize their investment potential, pre-selling properties in the Philippines can provide a strategic way to build equity over time.

Whether you’re a first-time homebuyer or an experienced investor, this guide will help you navigate the process, ensuring that you make informed decisions that align with your financial goals.

What Are Pre-Selling Properties?

Pre-selling properties refer to real estate units that are sold during the development phase, often before construction is completed. Buyers are essentially purchasing a property based on plans, models, or visual representations provided by the developer. This contrasts with ready-for-occupancy (RFO) units, which are fully built and available for immediate possession.

Key Differences Between Pre-Selling and RFO Units:

• Price: One of the most attractive benefits of pre-selling properties is the lower price point. Typically, pre-selling units are sold at a discount, ranging from 30% to 50% less than RFO properties, making them appealing to buyers looking for great deals.
• Customization: Pre-selling properties often provide buyers with more flexibility in customizing certain aspects of their unit, such as choosing finishes or minor layout adjustments.
• Timeline: While RFO units are immediately available, pre-selling units require a waiting period before the buyer can move in. This can range from several months to a few years, depending on the project’s timeline.

Why Are Pre-Selling Properties Popular?

• Affordability: Many buyers are drawn to pre-selling properties because they are offered at a much lower price than completed units.
• Capital Appreciation: As construction progresses and the development nears completion, property values tend to rise, allowing buyers to build equity early on.
• Flexible Payment Plans: Developers often offer flexible payment schemes that are spread out over the construction period, making it easier for buyers to manage their finances.

Pre-selling properties are especially appealing to buyers who are willing to wait for their investment to mature while still benefiting from lower prices and potential property appreciation over time.

Why Invest in Pre-Selling Properties?

Investing in a pre-selling condo can offer significant advantages, both financially and in terms of lifestyle flexibility. Below are some of the main reasons why pre-selling properties are a wise investment option for many buyers in the Philippines:

Affordability

One of the primary benefits of investing in pre-selling properties is the reduced price. Pre-selling units are typically priced 30% to 50% lower than their ready-for-occupancy counterparts. This allows buyers to enter the market at a more affordable rate while securing a property that will likely appreciate over time.

Higher Return on Investment (ROI)

Since pre-selling properties are sold at a discount, buyers can expect significant value appreciation as construction progresses. Once the project is completed, the property value generally increases, often yielding a high return on investment for early buyers. This is particularly appealing to real estate investors looking for long-term gains.

Flexible Payment Terms

Many developers offer flexible payment terms to buyers of pre-selling properties. Payment schemes may be spread out over the construction period, allowing buyers to make smaller, more manageable monthly payments. This is beneficial for those who may not have a large upfront budget but still want to invest in real estate.

Customizable Units

Another advantage of buying pre-selling properties is the ability to customize certain features of the unit, such as finishes, fixtures, and layouts. Since construction is still in progress, developers are often more flexible with changes, allowing buyers to personalize their space according to their preferences.

Income Stream After Completion

For those investing in pre-selling properties as rental investments, there is a potential to generate a steady stream of income once the construction is completed. Properties located in high-demand areas, such as business districts or tourist destinations, often have strong rental demand, allowing investors to earn regular rental income.

Future-Ready Developments

Many pre-selling developments are part of master-planned communities that include amenities such as parks, recreational facilities, shopping centers, and schools. These future-ready developments offer a higher quality of life and provide a sense of community for future residents, making them attractive to families and professionals alike.

Step-by-Step Guide to Buying Pre-Selling Properties

Investing in pre-selling properties requires careful planning and informed decision-making. Below is a detailed step-by-step guide to help you navigate the process and avoid common mistakes.

1. Think Twice Before Committing

Before making a decision and buying a property for sale, take the time to consider the pros and cons of buying a pre-selling property. While the price and customization options are appealing, you need to be prepared for potential delays in construction or changes in market conditions. Assess your current financial situation and ensure you are comfortable with the long-term timeline involved.

2. Manage Your Financing Plan

Financial readiness is crucial when buying pre-selling properties. Evaluate your budget and calculate how much you can comfortably afford for the down payment (usually 10% to 20%) and the monthly amortization payments. Make sure you account for additional costs, such as taxes, maintenance fees, and interest rates.

• Financing Options:
  • In-House Financing: Offered by developers, this option allows you to make payments directly to the developer over a specified period.
  • Bank Loans: You can also choose to apply for a loan from a bank, which may offer lower interest rates but stricter application processes.

3. Research a Reputable Developer

Before you invest in any pre-selling property, it’s essential to research the real estate developer. Look into their past projects to evaluate their quality and punctuality in delivering completed units. A developer with a strong track record can give you confidence that the project will be completed on time and to a high standard.

• Check Developer Credentials: Make sure the developer is licensed with the Housing and Land Use Regulatory Board (HLURB) to ensure they are compliant with government regulations.
• Past Project Reviews: Look at reviews from previous buyers of the developer’s projects, and if possible, visit existing developments they have completed.

4. Inspect the Model Unit and Visit the Property Site

Seeing is believing. Visit the property site and inspect the model unit to visualize the outcome. Take note of the property developers, the project’s location, surrounding amenities, infrastructure developments, and accessibility. Are there schools, hospitals, malls, or public transport systems nearby? These factors can significantly affect the property’s value in the future.

• Assess Location for Future Growth: Infrastructure projects like new roads or transport hubs can boost the property’s value, making it a more attractive investment.

5. Consult Legal Advice

Contracts can be complicated, with clauses that may affect your purchase later on. Before signing any agreements, consult a lawyer who specializes in real estate. They can help you navigate complex legal terms and ensure that all conditions related to payment schedules, construction timelines, and unit specifications are clear and reasonable.

• Key Contract Clauses to Review: Look out for clauses regarding delays in construction, penalties for missed payments, and terms regarding changes in the design or layout of the property.

6. Sign the Contract and Finalize the Purchase

Once you’re satisfied with your research and legal review, it’s time to sign the contract and finalize the purchase. Ensure that all necessary documents, including the sales contract and payment schedules, are clear and signed by all parties. Make sure the contract is notarized, and request a copy for your records.

• Prepare for a Down Payment: After signing the contract, be prepared to make the initial down payment, usually around 10% to 20% of the total property cost.

Pre-Selling Condos of PHINMA Properties

PHINMA Properties offers several pre-selling developments that provide great opportunities for homebuyers and investors. Below are two prominent projects to consider:

Metrotowne