PH Real Estate: An Overview of Condominium Buying
The Philippine’s real estate sector, which has enjoyed tremendous growth in the recent years, will continue to do so this 2018 as the country’s GDP strengthens. The momentum could be attributed to the country’s aggressive economy, consumption-driven market, and young demographic.
Rappler’s Aya Lowe’s report on the market’s boom as early as2012 stated that real estate revenue growth reached 18.8 percent in the third quarter, making it the country’s fastest-growing industry sector. She added that it contributed in part to the country’s 7.1 percent growth in the same year.
With all the success the real estate industry has experienced, it’s no surprise that many Filipinos are interested in property investment ventures, particularly in condominium buying.
Rising Condo Demand in Key Areas
The steady growth of the real estate in the Philippines has encouraged the condo buying trend. This, combined with the proliferation of BPO companies harnessing the PH workforce’s potential in highly concentrated areas, resulted in a huge demand for both residential and commercial properties.
A residential quarterly report from Colliers International Philippines reported that the take-up of pre- selling condo units throughout Metro Manila reached an all-time high in 2017. The fourth quarter of the year witnessed a 24 percent increase from 2016’s rates. This rapid increase still occurred despite the declining yields of each unit and ballooning prices.
Many of today’s tenants seek units located close to or in business districts. This is especially true for Greenfield District, McKinley Hill, San Lorenzo Village, and Loyola Heights.
All-in-One: Home and Financial Investment
The boom of the country’s real estate industry offers countless opportunities to make your money work for you. With a condominium, you don’t just own a home; you also own a worthwhile investment.
For example, Overseas Filipino Workers (OFWs) use their income to purchase units either as homes for their families or investments for the future. In fact, some migrant workers purchase condominiums even while abroad.
The growing interest is due to various reasons, which include:
Lower Down Payments
Condominiums are more affordable compared to conventional homes, which often require higher down payments. The various condo types available won’t limit the housing options of buyers who are on a budget. Moreover, today’s developers offer fully-furnished and affordable condo units, saving the condo owner from having to purchase or transport furniture.
Higher Resale Value
According to the 2014 Global Property Guide, the country boasts the fifth highest price increase in real estate properties. The increasing home prices, however, are not enough to deter interested investors from making money with their condominiums.
Properties located in key cities in the Metro offer higher resale values. Homebuyers who do not intend to stay for a long time can rent out or sell their unit for a higher price.
The Philippines’ real estate industry is more dynamic than ever. The drastic yet positive changes have encouraged Filipinos to dive into this investment. So, while all investments carry some type of risk, property experts agree that the country’s growing economy and demand for rental housing, as well asa large supply of condominium properties, makes investing in condominiums an attractive option.
Are you ready to invest in a condominium? If your answer is yes, it’s best to be prepared and do research.
Taking Advantage of Tech to Hasten Research
Advances in technology opened several avenues for buying or selling real estate. In particular, the newly streamlined search and purchase processes of individual condo units became possible.
The Internet has hundreds of real estate websites dedicated to helping first-time and seasoned condo buyers. Meanwhile, mobile phone apps and other real estate tech-based tools have significantly contributed to the booming growth of the industry.
Real Estate Portals: Helpful Online Tools
Almost every task is manageable using a mobile phone or laptop. With the power of PH real estate portals right at your fingertips, gathering details about multiple properties and doing background checks on potential communities in an instant is possible. For example, online maps offer information about its accessibility and institutions and establishments nearby. Other sites even detail population growth and crime rates.
The new approach to researching property listings has expedited the decision-making process. Portals present thousands of listings in a single search; some allow buyers to filter and sort results according to size, availability, location, and price.
Additionally, these listings have photos, which are helpful for meticulous condo buyers. Some listings go beyond photos and take visitors through a 3-D virtual tour of a potential property. Such tours make visitors feel as if they were walking through the space in person.
Connect with the Right Broker Faster
Homebuyers once relied on referrals from loved ones and friends to find a property and broker. Now they can add online reviews to their pool of resources when looking for real estate professionals. Since real estate brokers provide listings online, getting in touch with them is also effortless. You can click on a listing and view the broker’s information, so you can start a conversation.
To ensure a broker’s credibility, buyers can browse through online resources (e.g., social media profiles) to learn more. Some property portals also upload broker profiles to give buyers an overview of the agent’s professional history.
Today, all it takes is a tap or a click to hasten your search for your ideal condominium in the Philippines. The Internet alone offers a wellspring of information, websites, and applications to refine your search. Trust these digital tools to lead you to your next new home.
Are You Financially Ready to Buy a Condo?
Investing in real estate is a big decision that requires serious consideration — particularly in terms of finances. Fortunately, the abundance of budget-friendly opportunities is enough to entice investors: more real estate developers are asking for smaller down payments and flexible terms to accommodate “Investors on a Budget.”
How do you know if you are financially ready to buy a condominium?
Financial Stability and Confidence
Buying a unit is a long-term financial commitment. Unlike renting one, you can’t leave your condo once you’ve reached the end of the contract. It requires at least three to five years of active financing.
It is important to have a steady source of income when you want to purchase a unit. Apart from paying the unit itself, you’ll have to mind the additional expenses (e.g., utility bills and home furnishings). All of these can be overwhelming, especially to someone who is struggling with their budget.
Before you invest in a unit, know where you stand financially. If you have enough funds for the condo and other expenses, then you are good to go.
Good Credit History
A decent credit history serves as a good indication of your financial status. It also proves your money management skills to loan providers and real estate developers. If you have a good credit status and have your debts in check, you are financially ready for a new investment.
Readiness to Pay the Bills, Repairs, and Other Expenses
Condo ownership doesn’t end with possessing the title to the unit. The property will need upkeep and maintenance — which cost money. Consider the utility bills and repairs (e.g., leaky faucets and busted pipes) you’ll have to include on top of your monthly unit payments. Other expenses include regular home checkups, as well as furniture, accessories, and association dues to the list of expenses.
It’s important to set a budget for bills and other things you need to pay monthly well before you buy a condo to avoid dipping too much into your savings.
Enough Money for a Down Payment
Before you buy a condominium unit, you will need to be able to pay a 20 percent down payment. Most developers offer stretched terms for down payments, but it’s better to have the full sum ready.
For example, if your potential unit requires a Php 200,000 down payment, start saving P16,600 monthly for a year. Structure a budget plan that accommodates a little wiggle room for unexpected events (e.g., hospitalizations and tuition fee payments).
Talk to a trusted realtor first and do your research, as well. If you and your professional are positive that you can comply with the items mentioned above, then you are ready to buy. Take advantage of the booming real estate industry by being very meticulous with your condo search.
|Loan Amount||Indicative Rates Repricing Period|
|3 Years||5 Years||10 Years||15 Years||20 Years||25 Years||30 Years|
|Up to 6M PhP||6.985 (%)||7.825 (%)||8.775 (%)||9.385 (%)||9.675 (%)||10.000 (%)||11.375 (%)|
This calculator computes the approximate Principal and Interest and the Required Gross Monthly Income only. MRI and other fees and/or charges are NOT included in the computation.
Narrowing Down Your Search
You’ll never run out of condo unit options in the Philippines. The various choices, however, may lead you to consider alternatives that offer extra features that you don’t necessarily need. It could also cause you to go over your budget. You can find the right one by keeping your priorities straight and narrowing down your choices.
Location: Accessibility and Prices
Access to important institutions like hospitals and schools, as well as conveniences, shapes a condo buyer’s subsequent lifestyle. It also greatly affects the unit’s potential price of appreciation.Because of these, developers price condos in the Philippines according to their location. Properties near the central business districts and newer developments will be more expensive compared to inaccessible properties on the outskirts.
Makati, for example, sells condominium units at an average of Php 139,012 per square meter while Taguig offers units at Php 126,129 per square meter. On the opposite side of the spectrum is Las Piñas, which boasts the lowest average prices in Metro Manila. At Php 49,849 per square meter, a unit in this Metro South city is cheaper than anywhere else.
BIf you value convenience, search for a unit that has easy access to schools, banks, and hospitals. Properties in the CBD often sit at the heart of it all. Be prepared to spend a pretty penny for the advantage. If you cannot stretch your budget, however, considering locations outside of the business district will be much wiser.
Which Unit Suits You Best?
The perfect condo unit depends on your budget, lifestyle, and other needs. Consider the following types of condo units in the Philippines:
Studio units are the common choices of condo buyers on a budget. Its limited floor area makes the unit the most affordable option in any development. There are studio units that measure 18 sqm in total floor area. Some come with an integrated kitchen and bathroom area, as well as a balcony that doubles as a living area.
Studio units are perfect for single young professionals and couples.
1-, 2-,or 3-bedroom Unit
Units with one or more bedroom cater to small families or couples. Most two- to three-bedroom units have more than one bathroom, a utility room, and a hallway leading to the bedrooms. The price of the unit depends on the floor area and location.
Condominium buildings with high ceilings often offer studio units with a loft, which are elevated bedrooms homeowners can access by stairs. Lofts are perfect for many types of condo buyers but not couples with toddlers, senior citizens, and people who have difficulty climbing stairs.
Loft bedrooms are open spaces that look over onto the main area. If privacy tops your home requirements, this unit might not be for you. But if you enjoy open and spacious areas, a loft could very well be your new home.
Penthouses, usually located on the top floor of the development, are the most expensive units. They guarantee exclusivity and privacy, however. These stand-alone units are either split-level or multi-level and have exclusive elevators. Some units also come with private lanais and swimming pools.
Don’t just settle for any unit because it’s affordable or comes with amenities. Before you say yes to a property, take your needs into account. This narrows down your search and will lead you to the perfect unit.
Check out Condo for Sale listings here
Working with a Real Estate Broker
Condo buyers and sellers use a broker’s services to increase their chances of finding or selling their unit on their terms. Since brokers have access to a wealth of knowledge in the real estate industry, they can guide you through the buying or selling process.
What Your Broker Can Do
With a PH real estate broker, you have peace of mind knowing that you are buying at a fair price. Brokers’ resources go beyond a client’s typical reach, and they will walk you through the clauses of your contract and take care of filing necessary documents. Their experience in the field assures you of the best possible outcome.
Real estate brokers also offer protection during your entire transaction. When you work with one, you are partnering with an expert governed by the ethics of their trade. They follow strict collaboration laws and rules designed to protect the buyer or the seller.
Working with Your Broker
Real estate brokers in the Philippines enjoy working with clients. You still need to do your part in maintaining a good relationship with your real estate professional, though.
Know Your Broker’s Responsibilities
Real estate brokers in the Philippines are passers of the PRC-administered Real Estate Brokers Licensure Exam. They are licensed to conduct real estate transactions between sellers and buyers. Also, they must be present in every transaction that involves real estate agents.
Brokers handle all legal responsibilities for each transaction. Within the brokerage, they also deal with administrative and financial transactions.
Manage Your Expectations
Be open with your broker. Let them know how you want them to communicate with you and how often. Should they reach you through text, email, or phone? Establish your expectations of your broker early.
Do not hesitate to make your expectations known. If you are not comfortable with their suggestion, say so. Discuss your goals with them but be realistic.
Never Sign Forms You Do Not Understand
As mentioned above, it’s best to ask your broker when you do not understand something about the process. This is especially important when they ask you to sign forms. Many forms are second nature to brokers but not to you. Instead of signing despite the fine print you don’t understand, ask for explanations.
Inspection Process Need-to-Knows
In today’s real estate market, developers showcase their properties’ features by bringing you to model units, which are dressed up and deemed suitable for showing. Ask your contact to take you to the actual turnover unit, however, and check it for construction flaws like squeaky windows, uneven flooring, and cracks on the wall. A thorough condominium unit inspection spares you from regrets down the line.
What should you do during the inspection process?
Floor Plan Practicality. Does your unit have enough bedrooms and bathrooms? Does it matchyour interest?
Homebuyers prioritize parts of the condo unit differently. Some people put importance on entertainment spaces while others focus on the kitchen and the dining room. Determine your home feature priorities first then see if the unit can cater to these.
Also, measure the spaces to make sure your furniture, appliances, and other home furnishings will fit. This can be difficult to visualize, so compare the dressed-up unit with the actual turnover unit.
Deliverables. Refrain from depending too much on the dressed-up unit’s visual appearance. Instead, ask the developer’s agent about included features in the unit. Will it have the same flooring as the dressed-up unit? Will the wall already be painted?
Quality of Materials Used. Scrutinize the doorknobs, windows, bathroom and kitchen fixtures, ceiling, and partitions. Are these of high quality? Don’t hesitate to knock, tap, test, and open and close them.
Bring a Family Member or Friend
Even when you are keen and observant, there are a few aspects of the unit that you might overlook. It’s best to have an extra pair of eyes with you during the property inspection. Bring a family member or a close friend along, so you have someone to discuss it with later.
List down All the Details
It’s natural for first-time homebuyers to check out a few units before making a decision. It is, however, near impossible to keep track of all the details from memory alone.
Always bring a pen and paper to take note of a property’s positive and negative characteristics. Take photos or videos for good measure. You can also gather more details by asking for brochures and information sheets. The information will help you review your choices and make an informed decision.
As a future homeowner, it is your responsibility to check the quality of your unit. Make your investment worth it by ensuring it is free from major flaws and has everything you need.
Negotiating for a High-Quality Condo
Developers want to earn the highest price possible on a property. On the other hand, you want a nice unit at the most advantageous price. Negotiation is your chance to get great payment terms for a property you’re eyeing. You can arguably do the negotiating by yourself, but finding the middle ground requires some skill. The input of a professional will certainly help with attaining your goals.
Enlist the Help of a Broker
Real estate brokers serve as the middlemen who smooth the way between you and the developer. Their industry knowledge of properties and extensive experience with PH property price negotiation can help you buy your ideal property while still on a budget.
When purchasing pre-selling units, your broker can lead you to a developer with the best track record in property development turnovers. They will also inform you about possible discounts.
The Art of Negotiation
With the help of your broker, you can secure a good unit while sticking to your budget. They will help you:
Research the Sale Price of Other Condos
Since condo units are attached to other condominiums, the neighboring condos are excellent sources of information about your potential unit’s value. Learn about the asking and selling price of condos similar to yours, particularly those in a nearby location or the same complex.
Use this information to negotiate a better price, particularly if the developer’s price is higher than the price of other similar units.
Ask the Right Questions
Ask your broker about the offered price: is it reasonable given the property type and condition? Is it possible to still lower the price or get a discount? Information is power and crucial to your peace of mind. Don’t hesitate to ask your broker or the developer about the property’s value and the finances involved.
Also, feel free to compare prices with other clients or friends investing in real estate. This equips you with more information and talking points during the negotiation process.
Offer a Bigger Down Payment in Cash
Most developers require 10 to 20 percent down payments for pre-selling properties. Your broker, however, can work out a discount from the developer if you can pay a higher down payment in cash. Doing so can also persuade the developer to lower your monthly amortization and installment.
Let the Seller Know That You Have Other Options
Before you negotiate, make sure you have a Plan B waiting in the wings. This will give you leverage over the seller, and you can renegotiate a better transaction. If it’s not possible for them to sell the unit within your budget, politely refuse the deal and pursue another lead.
Make the Timing Matter
The timing of your offer can make all the difference in the price negotiation process. Some real estate experts believe that the best time to get a discount is close to the turnover date. During this period, the developer will be more inclined to sell properties rather than leave it unoccupied for long.
Your ideal condominium need not come at the cost of an arm and a leg. With the help of your broker, you can negotiate for the best unit that your budget allows. If the first seller you approach refuses, don’t lose hope. Always know that there are better options available. You can still get a good deal on a good condominium unit by checking your financial options.
What Are Your Financing Options?
Owning a condominium unit is a great investment option for working-class Filipinos who wish to make the most of their hard-earned money. The flexibility in payment terms and availability of financing options has made owning a condo more advantageous, moreover.
Many developers, in fact, offer special discounts during open houses. Your real estate broker may help you create a payment plan that suits your financial capabilities. They can also provide adjusted down payment schemes to reduce your monthly payments.
To get started on your condominium purchase, here is a list of available financing options in the Philippines:
Interest rate: 14 to 18 percent
This type of financing requires less paperwork and guarantees faster processing compared to bank loans. In-house financing, however, comes with a higher interest rate.
Developers assist buyers financially by offering payment schemes that match their financial capabilities. In return, buyers must pay their monthly amortizations to the developers. If the unit pre-sells at 20 percent, buyers can pay 10 percent of the down payment. The rule of thumb with in-house financing is simple: the higher your down payment, the lower your monthly amortization and balance.
One advantage of in-house financing is that if you pay the down payment in cash, you receive a discount.
Certificate of Employment and Compensation
Source of income
Interest rate: 5.75 to 12 percent in a year; subject to annual re-pricing. Buyers can ask for a fixed-rate interest period spanning one to five years.
Banks differ in terms offers, loan terms, and interest rates. They also require borrowers to have collateral to secure their loans. In most cases, your property will serve as the collateral.
Most banks lend up to 80 percent of the property’s actual value. The amount of the loan will depend on your paying capacity.
Requirements for this type of financing will vary depending on the bank, the purpose of the loan, the type of property, and your employment status. Get in touch with your local bank to learn more about their requirements.
Must be aged between 21 and 65 years old
Must be a regular employee for two years
Must have a monthly gross income of at least Php 30,000
Certificate of Employment
Income Tax Return and financial statements
Condominium Certificate of Transfer/Title Certificate of Transfer
Pay slips and valid IDs
Certificate of Business Registration (if applicable)
Marriage certificate (if applicable)
Interest rates: 8 to 11.5 percent
Last July 2012, Pag-IBIG increased their loan amounts and lowered their interest ratesxvxyafsurwycxddevsdfzfwczausxefqdzweuvbfxbbcwytuuszq to accommodate more minimum wage earners. The move also offered a budget-friendly option for OFWs interested in purchasing residential property in the Philippines.
Pag-IBIG’s loans are ideal for buying new or pre-owned homes, condominiums, and for home constructions or repairs.
Applicants must not be older than 60 years old upon application
Must be a Pag-IBIG member for at least two years
Must have no foreclosed property or existing house loans
Monthly amortization must not exceed 35 percent
Marriage contract (if applicable)
Income Tax Return (ITR)
Condominium Certificate of Transfer/Title Certificate of Transfer
Tax Identification Number (TIN)
VISA and passport for OFWs
Business permit for business owners
The lack of immediate funds need not hinder your investment plans or home dreams. With these PH financial options, there are more ways to purchase property without hurting your wallet.
|For a comprehensive guide on the rules, regulations, and functions of the Home Development Mutual Fund, as well as additional articles related to the HDMF, visit the Lamudi Pag-IBIG Fund page.|
Legal Documents for Purchasing Property
As a condominium purchase is a big transaction, securing the right paperwork is crucial. You’ll need it for legal purposes or future reference. Of all the paperwork related with property purchase, there are six legal documents you should keep your eye on:
Intent to Purchase Real Estate (Letter of Intent/Offer to Purchase)
The Letter of Intent is a document that you, the buyer, submit to express interest or intent to buy the offered property. This non-binding letter documents your tentative conditions and terms regarding price. The letter also contains detailed information about the sale, such as the
Description of the property;
Date of offer;
Buyer’s suggested price, and
Spot cash down payment.
The Offer to Purchase also includes financial clauses and special requests from both the buyer and the seller.
When drafting your Letter of Intent, make sure that you are clear with the terms (payment schemes, schedule of payment, etc.). An attorney or a professional real estate broker can help you draft a letter that addresses the best interest of both parties (namely, you and the seller).
Reservation Application (Reservation Agreement)
This document ensures the seller will take out your chosen property from the market. The Reservation Application discusses the condo unit’s basic specifications, which include the property type, floor area, terms of payment, and financing options.
Present the Reservation Agreement before you pay your reservation fee. Also, find out for how long you can reserve the condo unit. If you can’t pay the reservation fee on the agreed date, inform your broker, and submit a promissory note asking for an extension to avoid the agreement’s cancellation.
Contract to Sell
This is the written agreement between you and the seller regarding your property purchase. This document contains the sales provisions both sellers and buyers must comply with before the latter pays in full. Sellers will only issue the Contract to Sell to homebuyers who have paid their down payments.
All Contracts to Sell must be attested by a Notary Public.
Letter of Guarantee
Banks and financial institutions write a Letter of Guarantee to inform developers of your approved loans. This letter guarantees the seller that the loan will cover the payment of the property’s remaining balance. It also contains information about the amount covered by the bank or the financial institution, as well as the date of its release.
Deed of Absolute Sale
The document confirms the transfer of ownership from the seller to the buyer. This deed, which you file with the Registry of Deeds, serves as the basis for the issuance of a Condominium Certificate Title. The seller can issue this deed once you’ve paid for your property in full.
As the property’s new owner, you must request a Tax Declaration form from the Assessor’s office. This document puts all tax obligations under your name. During the processing, the office will require you to present the new title and a photo of your condo unit.
As a smart homebuyer, it is your responsibility to practice due diligence. Make sure to keep copies of all legal documents needed in buying a condo. Doing so protects your investment and offers peace of mind.
Final Step: Turnover and Moving In
Finally, after weeks or months of negotiating, searching, and seeking financial assistance, you’ve settled on a unit. Your new home is within your reach; all you must do now is to finalize the two remaining steps: the turnover and moving in.
The Turnover Process
How does the condo turnover process in the Philippines work?
During the turnover, the developer will physically deliver the unit to you. Once the developer forwards the unit’s clearance, their coordinator will email or call you to confirm the tentative turnover schedule. The turnover date can still change, depending on a few factors: completion of the unit, the buyer’s payment, and the buyer’s satisfaction with the unit.
Your developer will also ask you to confirm the dressing-up of your unit. This involves the standard unit furnishings and any requests you may have. For example, some buyers request for conjoined rooms while others want a divider to separate different parts of their unit.
Careful Inspection: A Must Before Accepting the Unit
On the date of the unit’s turnover, the developer will ask you to inspect your unit first. This is your opportunity to check for areas that require changes and for furnishings that were installed according to the agreement. Have a friend or family member do the inspection with you to make sure you don’t overlook any details.
If your unit is already acceptable, sign the Acceptance Document (Certificate of Acceptance). Otherwise, talk to the developer about your requests. They will note your rectification requests in the punch list form, which they will endorse to the construction team. Your developer will then reschedule the turnover date, depending on the rectification job of the unit.
After signing the Certificate of Acceptance, you must settle all turnover fees, which cover
After signing the Certificate of Acceptance, you must settle all turnover fees, which cover
Meralco service deposit;
Water bill deposit;
Monthly association dues, and
Other special assessments.
Once you have settled everything, you will receive a briefing on the condominium’s policies and house rules. The developer will also hand you a complete set of keys for your unit along witha Homeowner’s Manual.
What If I’m Not Available for the Scheduled Turnover?
If you will be absent on your turnover date, send an authorized representative. They must have the following:
Special Power of Attorney (SPA)
Photocopy of a valid ID from the Principal Buyer
Two valid IDs of the authorized representative
After the condo turnover process, start preparing for the final step: moving into your new condominium.
Making Moving In a Seamless Transition
Moving in marks your first day in your new home. After months or years of saving, negotiating, and searching, you’re finally here. While you might like to celebrate right then, hold off for a bit; you’re not done just yet.
Before you throw a condo warming party for your new home, refer to this checklist to make your move as smooth as possible.
List Everything Down
Make a list of everything you need for each room. Categorize your belongings by room and break down each category into “What I need right now” and “What goes into storage.”
Under “kitchen,” for example, you’ll need pots and pans, plates, eating utensils, and glasses. Separate items you’d want to access to right away from the non-essential items (e.g., baking tools, mixers, and rolling pins).
Your list will reveal items you need for your home and those you can do without.
Plan Your Logistics
Clear your schedule for moving day. You’ll need more time to pack and unpack so it’s wise to take a leave from work. Also, don’t forget to get a permit from the condominium’s association.
Get Your Utilities in Order
Call local utility companies to make sure your unit has the basic services: water, electricity, telephone, and an Internet connection. Also, confirm with them that these utilities are now under your name.
Don’t forget to check the location of the main circuit breaker and water shut-offs, as well as the installed wires. Ask your condo manager or landlord for assistance.
Improve the Unit’s Security
Give yourself some peace of mind by reinforcing your home’s security. Change the locks to ensure you’re the only one with the keys. Inform your landlord of your plans and give them a duplicate in case you get locked out.
If your new unit does not come with additional security features, add deadbolts and smoke detectors as soon as possible.
The turnover and moving process can be overwhelming. At the end of the day, however, the effort will be worth it. Once you’ve received the keys and moved everything in, you can take a break and celebrate the success of your condo buying efforts.