IF YOU are planning to buy or currently looking for a property, chances are you already encountered properties that are still on pre-selling and those that are Ready For Occupancy (RFOs).
But what is the difference between the two? When should you invest with pre-selling and when is the best time to buy RFOs? Let’s get to know the advantages of these two as we talked with award-winning Dabawenyo realtor Manfred Lawas.
In real estate, a pre-selling property is being sold before its completion, during its construction, or while still in the planning stages. These mean that the property still does not exist and the developer is yet to break ground for the project.
What’s good when you buy a property that is still on pre-selling?
Lawas said investors or buyers are given an ample time to pay off the equity/down payment before it will be turned over. He also said property developers usually give flexible payment schemes for the buyers.
“That means they can still save their money,” he shared.
Properties that are still on pre-selling stage are also commonly sold with a lower introductory price, which can be approximately 30% cheaper than a finished unit.
But the disadvantage is the property or project is still non-existent.
“The disadvantage is if buyers would want to occupy their home as soon as possible, I’m afraid they can’t because they have to wait for a certain (number of) years before it will be handed over to them,” he added.
Another disadvantage or risk is the possibilities of delay in completion and turnover of the property to the buyer, worse is in cases the pre-selling project does not push through or the developer goes bankrupt.
When deciding to buy pre-sell properties, Lawas reminded investors to ensure the developer of such a project has a license to sell and if the project is registered with the Housing and Land Use Regulatory Board (HLURB).
Another thing to check is their gross income.
“They have to check if their gross income is qualified for a certain project they’re getting because this will be evaluated by the financing firm (Pag-ibig Fund and banks) after paying off the equity,” he said.
Ready for Occupancy properties or RFOs are properties that are already existing, built and turned over. This allows buyers to move in immediately to the property upon purchase.
Lawas shared that this is the most convenient and appropriate for buyers who have enough budget to pay right away for the required downpayment, which is usually 15 to 20 percent of the total cost of the property.
“The advantage of this is that once required down payment is paid, they can occupy their unit immediately. It’s a disadvantage for those who don't have enough cash for the required equity,” he said.
He added buyers should also make sure that they are certain and firm enough with their decision of buying the property.
In Davao City, homegrown developer Santos Land Development Corporation (SLDC) secures first a license to sell before introducing it to the public.
SLDC sales and marketing manager Estela Aguilos said this is to make sure prospective buyers are protected.
“We do not do pre-selling. There should be a license to sell first before we go into marketing the project,” she said.
Currently, the homegrown developer is marketing Ilumina Estates II and The Ivory Residences.
Ilumina Estates II is a mid-cost to high-end development that offers peaceful and luxurious subdivision living. The project is situated in a 25-hectare area in Communal, Buhangin, Davao City.
Meanwhile, The Ivory Residences, as described, is an 18-story tower with 330 units of various sizes and is capable of housing approximately 120 parking units spread out over three floors. It was launched in 2017.