"Pre-selling" is a strategy employed by property developers. It involves marketing and selling property even before they were ready for occupancy. Sometimes the developer sells its inventory as early as the planning stages of the project.
Most commonly used in condominium developments, "pre-selling" comes with incentives like cheaper costs, discounts on downpayment, flexible payment schemes, in-house financing, and better options for the buyer. However, it has its risks, too. Since the development has yet to be built, buyers can only put their trust in the developer: that they will be able to deliver the product according to the plans; that the project itself will be completed on time.
Buyers and investors, therefore, have to be extra careful when they're in the market for pre-selling properties. If you're thinking of buying a condominium unit during its pre-selling phase, take the following basic precautions:
1. Stick to developers with a good reputation and record. Do your due diligence: research on their past condominium projects to see whether they were able to turn over these developments on time.
2. Make sure that the developer, as well as the development itself, are duly registered on the Housing and Land Use Regulatory Board (HLURB), the government regulatory board for real estate in the Philippines.
3. Consult a trusted, qualified lawyer who can go through and advise you on the pre-selling contract offered by the developer.
4. Hire the services of a qualified broker who can assist you in the transaction process. Ideally, your broker should have proof of a good success rate in the neighborhood along with extensive experience in pre-selling properties.
5. As with any major purchase, make sure that you can afford it. Don’t forget to factor in interest rates and amortizations over the span of several years. Consult your broker or an accountant to determine your financial capabilities.