The Philippine real estate market is still on a steady incline. Different projects are being developed left and right in major cities and developers offer competitive promos and discounts to attract more investors or home buyers. As a buyer, you need to know what to consider when looking at pre-selling or ready-for-occupancy (RFO) condo or house.
Ready for Occupancy (RFO)
A "ready for occupancy" unit is already completed and turned over. Once purchased, and all the necessary requirements have been completed, the new owner can move-in immediately in the unit. It is understandable that a buyer or investor would want to see the unit first before committing to purchase since there are developers that sometimes overpromise about how their project will look like once completed. Although these units are usually brand-new, it is also considered by some as the "left overs" of the preselling phase.
Another disadvantage is the higher cost. Some may think that a property that you can already see and move in is a good choice, however, these units are usually more expensive since it has undergone significant price increases and you would not get good promotional discounts or flexible terms from the developer.
Preselling
A Pre-selling unit is a unit that is being sold while still in the planning stages or before it is ready to be turned over to the new owner. At this point, it seems that buying a preselling property is like throwing away money.
What makes the investors or buyers take this risk?
One of its advantages is the price and flexible payment schemes. Buyers choose preselling because of the lower introductory price. It can be around 30% cheaper than the RFO unit. Developers also offer payment schemes where the down payment can be as low as 10% and payable for 3 to 5 years with lumpsum payable at the end of the term. This can be paid through bank financing, developer's inhouse financing option or in full cash.
This is a good investment for other investors since they know that the market value will increase upon the completion of the project. Then they can resell it higher than it's preselling price.
Both options have their own risks, advantages, and disadvantages. It is important to study the market, explore options, and also ask current property owners about their experiences to get an idea of what what to expect. Once you've made a decision, it's time for home buying! Check out our list for preselling properties by partner developers.