How to Buy Pre-Selling Property

Buying a pre-selling property can be trickier than a regular purchase, but thousands of Filipinos do it every year. Buying off the plan — that is, pre-selling — is when you sign a contract to buy a property before it is finished being built. Done correctly, it can offer great rewards, primarily on price. But as you'd imagine from a process that involves buying something that doesn't exist yet, it isn't without its problems. That's why it's so important to do your homework before signing the contract. Here is the Nook step-by-step guide to buying pre-selling.

1. Is it right for you?

Before deciding to buy a pre-selling property, make sure it's the right option for you and your family. It can often take 12 months or more before you actually move into the property, especially if there are construction delays — so you need to decide whether you can wait that long. For example, if you might be starting a family in the future, a pre-selling condo may not be the best idea, as you may want a little more room for your child to play in.

You also need to consider some important risks:

• Falling market. This is when property prices drop and your unit is no longer worth as much as you agreed to in the contract.
• Poor-quality construction. The end product might not meet your expectations.
• Interest-rate increases. Bank loan rates can rise before you settle, so plan for a buffer of at least two percent when you do your budget.

2. Talk to your bank

Every bank has different policies on pre-selling properties, so it's important to find out what these policies are early. Typically, lenders want a 20% deposit, which can be cash or rent-to-own. But with the potential oversupply of properties in some markets, certain banks consider pre-selling developments higher-risk investments and may require larger deposits in some situations — or they may not finance specific developers at all. Get to know their policies, and remember to stay up to date on any changes in the lead-up to your settlement.

3. Research the developer

The risks of buying pre-selling properties are significantly reduced if you choose a company with a proven track record of delivering pre-selling developments to a high standard. Be sure to visit previous constructions to see their work. Wherever possible, always speak with previous buyers to find out about their experience and satisfaction.

4. Do the work

If you're pushing forward with a pre-selling property, you'll need to put your laptop down and get off the sofa. Display suites give you an idea of what you can get from a developer, but they don't really give you the full picture. For that, you need to visit the site where your property is being built and go on a tour, if possible. Also check the local area — find out what amenities already exist, and work out whether any new developments might affect your new property. For example, people sometimes purchase a condo without knowing that another building is planned next door, eliminating the great view they thought they were getting.

5. Get what you paid for

Before you sign a pre-selling contract, it's important to know that all the features you want are included in your contract, because the developer is not obliged to include them if they haven't been confirmed in writing. This extends to floor-plan changes, colours, material specifications and extras such as air conditioning and appliances. Be aware that inclusions are not always factored into the price and may actually cost more.

6. Legal advice

Before signing a pre-selling contract, it's advisable to have your contract reviewed by a lawyer. Hire an expert with proven experience in real estate. They'll be able to guide you through the clauses and offer advice on what would happen in the event your developer went into liquidation.

7. Sign the contract

Review the contract carefully so you know exactly what you're buying before locking it in. Once you sign, you'll be required to pay a deposit. The balance will be due at a future date, with buyers advised to organise the remaining balance well before that date arrives.

Financing your pre-selling purchase

Because banks treat pre-selling differently — and each has its own deposit rules, accredited-developer lists and timelines — financing is often the part that catches buyers out. That's exactly where a mortgage broker helps. Nook is the Philippines' original and award-winning mortgage broker. Get pre-qualified online in about 3 minutes, and a dedicated Nook loan consultant compares 20+ banks, matches you to the lender most likely to approve your pre-selling purchase at the sharpest rate, and runs the entire application for you — paperwork, follow-ups and all the back-and-forth with the bank. You never deal with a bank directly, and it's 100% free, because the bank pays Nook once your loan is released. While you're planning, Nook's loan calculators are a quick way to check your financial capacity before you commit.