THE investment benefits of buying a “pre-selling” condominium unit outweigh the risks, online property listing experts MyProperty.ph said.
MyProperty.ph explained that a “pre-selling” unit is any unit offered for sale before it is actually ready for the owner to take physical possession of it – or in other words, during the planning or construction phase. The property listing service estimated that as much as 70 percent of condominiums currently offered for sale are pre-selling units.
The biggest advantage of investing in a pre-selling unit is a lower sale price. “With a pre-selling unit, not only do you get to pay about 30 percent less than you would for an RFO [ready for occupancy unit], some developers even offer lower down-payments and flexible payment terms, making things financially easier for you,” MyProperty.ph explained.
Philippine property developers typically finance the second and subsequent buildings of multi-building projects with the sales of units of the first building, making pre-selling a necessity for most developments.
In addition to lower prices and more flexible payment terms, buying a pre-selling condo gives the buyer better options in terms of picking the location and style of the unit, MyProperty.ph said.
“Once the project’s been completed and most of the units have been picked up by early buyers, what you’ll have left are units that might not bring in as much in terms of return as, say, units located on a higher floor, or those facing a better view,” it added.
MyProperty.ph also pointed out that improved design, additional amenities, and other features not available in existing units are being built into new developments, so an investor can ask for higher resale or lease prices for a pre-selling unit once it becomes available compared with an older unit.
Besides the obvious drawback that an investor has to wait, sometimes for several years, for a pre-selling unit to be available for use, MyProperty.ph warned that there are some risks to buying a unit that is either incomplete or may not even exist yet.
“There are some cases where the project’s completion gets delayed, or it doesn’t get finished at all due to funding shortage or bankruptcy. Also, there are instances where the delivered unit is not exactly what the buyer pictured. If the contract stipulates that things are bound to ‘change without prior notice,’ you might get a unit with a different floor plan, finishing, or amenities,” MyProperty.ph said.
The property listing site recommended choosing a property from a reputable developer with a record of completed projects, and consult with an attorney to review the sales contract and clarify any questionable provisions before making the final purchase.