Preselling 101


Preselling 101 


Metro Manila has been bustling left and right with real estate projects. Different condominiums, townhouses and even subdivisions are sprouting in every corner. The property boom has resulted in overwhelming options for buyers. But before you grab that great-looking offer, take some time to read our guide to everything preselling:

 
What is Preselling?

In real estate, preselling properties, such as condominium units, townhouses, houses in subdivision projects, are being offered for sale even before they are completed, usually during the planning or construction stages. 

What Should You Consider When Buying Preselling Properties?

The difference between making huge money on your real estate investment or losing everything you got on an unfinished project depends on these factors:

The Developer. Who’s financing the project is as important as what’s being built. How do you know if the developer is reliable, trustworthy and can deliver quality projects on time? Do your research. Determine whether the developer has the financial capacity to complete the entire project. You can make a quick check with the HLURB to verify records of condominium and subdivision developers. In the case of townhouse developers, a visit to their previous finished projects is imperative before making decisions. Speak with previous buyers of these developers for insights on the quality of their work. If you encounter first-time developers, get to know them by setting an appointment to discuss the project. Ask questions about their company, their plans, their finances, and their contractors, architects and engineers who are involved in the project.

The Location. Location is the single most important factor in real estate. It can make or break everything. Understand that most people prefer locations that are easily accessible to public transportation and important institutions like schools, hospitals and even malls. In the Philippines, a peaceful and flood-free neighborhood has become non-negotiable for most buyers as well. For investment purposes, check whether the development meets your needs now or in the future, Will its value increase over the long term? Or will it eventually become part of a crowded, deteriorating area?

The Law of Supply and Demand. If there are too many properties being sold in a certain area, naturally, the prices should be competitive. Take advantage of this. However, if developments in one area are few and far between, sellers can mark up their prices as much as they want. Nowadays, the number of condominiums being constructed and sold at preselling rate is dangerously high. The competition for selling these condominiums can be really stiff, which makes it a buyer’s market right now.


What are the benefits of buying preselling units? 

Lower Introductory Price. Almost always, the preselling price of a property is around 10 percent lower than when the property is completed. For investors, this means that they will get a chance to offer the same property for sale to prospective buyers for a higher price. For those who invested for personal use, they get an immediate added value to their property upon turnover. Based on our experience, the price of a preselling project increases by 5-10 percent upon turnover.

Flexible Payment Schemes. Because the project is still under construction, sellers—especially first-time developers—can be lenient when it comes to payment schemes, and may offer buyers more flexible payment terms.   

You get to choose the best unit. Investing on preselling projects gives you first dibs on the best units in the project. The better unit you have, the higher its market value goes over time.
 

What are the risks usually involved in buying/investing on preselling projects?

Delayed turnover or failure of completion. This is the most common pitfall of preselling projects. There are instances when developers are not able to complete the project on time, or worse, not able to complete it at all for insufficient resources. This is why it is very important to know the developers before committing to buy from them.

Changes with building plans without prior notice. Sometimes, developers deviate from their proposed building plans. Some investors or buyers may or may not like the idea depending on how big the changes are compared to the original plan. If you are the buyer/investor, always check the progress of the project from time to time.

Difference between the perspective and the actual unit. An architectural perspective of what or how a project would look like can be very different from the actual project once it is completed. Sometimes, it is better. Other times, the result is not what you imagined it to be. This is why it’s important to see previous projects completed by the developer.
​