A preselling condo unit is a unit that is being sold before it is actually built and completed. At first glance the first-time homebuyers would at once shun the concept and avoid even considering investing their money into this. However, with the many advantages and benefits that come with this type of property investment it, it may be worth taking a second look and considering it.
First let’s take a look at the advantages preselling projects have to offer:
At preselling periods, prices are generally cheaper and payment schemes are more flexible. Discounts of up to 30% off the price of a completed units is usually offered by developers to entice investors to get in and buy. Easy payment terms are also being offered for preselling units, with the required downpayments going as low as 10% payable for several months and sometimes even for a couple of years and the balance payable through Pagibig, bank financing and even through in-house financing facilities of the developers themselves. Add to this, since the market value of pre-sold units have a great chance of increasing when the units are finished, it becomes a good investment vehicle for buyers. Another advantage to buying preselling units, is you get to choose the unit according to your specifications e.g. the kind of view, unit location and accessibility.
Now as to the risks, one of the major risks you face in buying preselling units, is that there is a chance that the developer may renege on his promise and not deliver your unit on time or your unit does not get delivered at all as in cases where the developer goes bankrupt or is unable to continue the project. And your investments go down the drain.
However, you can avoid these risks if you do your due diligence before deciding to invest on preselling units. What it all boils down to when making the decision on whether or not to buy a preselling condo unit is this – make sure you are aware of the benefits and risks and weigh these down against each other carefully. If, after a careful analysis, you find that the benefits far outweigh the risks, then by all means, go for it. To help you in your decision analysis, following are some tips when considering buying preselling condo units:
- Check out the developer. Does the developer possess a proven track record of building and actually turning over pre-sold condo units as promised? I suggest that you consider buying only from reputable developers who have had a long history of developing quality projects and delivering on time.
- You can always verify of the project development is legit by checking if the developer has a License to Sell (LTS) for that particular condominium project. You can ask the developer to show you his LTS or verify with the Housing and Land Use Regulatory Board (HLURB) if indeed the project development is registered with this governing body. The HLURB website is at www.hlurb.gov.ph
- Get the services of a reliable, trustworthy and licensed Philippines real estate broker who can properly guide and advice you about investing in a preselling condo unit.
- Ask questions. Before deciding to buy, get all the information you can about the condo project itself. Is it located in a good neighbourhood? Are there any security risks around the property, e.g. squatters, crime incidences, etc.? Has the project been selling fast or have there been just a few takers?
- If there is anything that you do not understand about the contracts and the legal jargons contained in it, ask questions and do not hesitate to consult a lawyer. Always make sure you understand everything you are agreeing to.
Remember that when buying on preselling terms you are actually banking on the promise of the developer that he will deliver the property that you bought as promised – both in terms of quality and timing of delivery. You will be shelling out a considerable amount of your hard earned money even before you see the actual unit that you bought so I advise that you do your own due diligence.
Buying preselling properties is a good investment move as it offers several advantages specially in the areas of considerable price discounts and manageable terms. In fact it has become more and more affordable to own property today as almost all developers now allow down payments on instalment basis. If, after your due diligence, you find that the investment is a sound one, then you should take the plunge and buy that preselling condo unit.
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