Whether you’re shopping for new or second-hand real estate in the Philippines, there are a few things you should keep in mind before committing to a purchase. Here are my top 5 tips to help guide your search:
- Bring your broker
When shopping for real estate, the most important decision you will make is whom you’re going to trust to manage all financial, legal, and administrative work on your behalf. That’s where a broker comes in. I covered this topic in-depth in the article, “How To Choose Between An In-house Broker And An Independent Broker”. But for now, the key difference to note between an in-house and an independent broker is this: an in-house broker is employed by the real estate developer, while an independent broker is employed by you. There is an “insider advantage” when you work with an in-house broker, but an independent broker is free to show you a wider range of options from multiple developers, and you can trust that they are not indebted to any one developer for their paycheck or employee benefits.
If you decide to go with an independent broker, don’t hesitate to bring them along to your viewings with developers. There’s nothing wrong, rude, or taboo with doing this, and seasoned real estate investors never shop without their broker with them. Independent brokers are your real investment advisors, and it is to your advantage that your broker can speak the same language as the developer or other in-house brokers. He or she can ask questions or make requests on your behalf, if you’re not sure how to do it yourself. They might even spot a few things about the unit that you might miss, which could make or break your purchase decision.
Whichever you decide, just make sure you choose a broker you trust.
- View the unit at least 3 times before deciding
Why 3 times, you ask?
The first time you see the unit, the seller is usually putting their best foot forward. You’re also processing a lot of information, and it’s easy to become enamored with the beautiful things about the property while not noticing some of its weaknesses.
Go a second time, and you’ll notice the little things you didn’t see before. This can be both positive and negative – it depends on what is important to you as a buyer. This is an opportunity to raise new questions and concerns with the seller. It’s also a great chance to get to know the seller a bit more, which many buyers often neglect. Getting to know the seller can give you a better understanding of why they’re selling the property, how they might have managed it, and how they might behave during the purchase process. Give your gut the information it needs through observing the seller’s body language and other non-verbal cues. You might thank yourself later.
Finally, a third viewing will reassure you of your assumptions about the property so far. Hopefully, they’re all good things. But if you’re gut has been telling you something negative about the property, this is your chance to confirm or deny. Hopefully, by this time, you’ve developed a relationship with the seller and are free to ask more questions or clarifications. Don’t hesitate. It’s not rude to ask before buying, and any seller that faults you for it should be steered clear of.
- Choose the most advantageous financing option FOR YOU
You can read more about the different ways you can finance your real estate purchase in this article, but essentially there are two ways to finance your real estate purchase: cash and a loan.
Purchasing real estate through a 100% cash payment has the simplest legal and administrative process. Usually, buyers can even get a discount from the seller if they purchase in cash, in full. Always negotiate for one if you decide to pay this way!
Some sellers can be hesitant of full-cash buyers, because most real estate scams are transacted this way. If you are a legitimate buyer with the full amount ready, this is where you broker or your bank can come in to reassure the seller.
- A loan via bank financing
Another way to purchase real estate is by getting a loan from your preferred bank. People are generally more trusting of established financial institutions than individual buyers. That’s why bank financing is considered one of the safest ways to purchase real estate. However, it is safer for the buyer than the seller. Buyers typically use the same property being bought as their collateral for the loan. Obviously the buyer should own the property first to be able to do this. So, banks require the title of the property to be transferred first to the buyer before it releases the loan proceeds to the seller. In other words, the seller will sign a deed of absolute sale and deliver the title even before he is fully paid. I explain this process in detail in another article (“How to Buy Real Estate In The Philippines: From Start to Finish”).
Depending on your current financial situation, one financing option will stand out more than the others. Consult with your broker or other financial advisers to decide on the best route for you.
- Be patient while the paperwork is being done
It can be both exciting and nerve-racking once you’ve found the right property for you. But, the legal paperwork and due diligence takes time for a good reason: it’s to ensure the safety of you, your money, the seller, and their property. While you’re sure that you can pay, how can you be so sure that the seller is even legally allowed to give you the property? To avoid nasty surprises or being scammed, give your broker the time they need to go through the legal processes. This is when it’s extremely important to have chosen a broker you can trust.
- Do one last inspection before finalizing the turnover
And there you have it! After the turnover process has been ironed out and finished, you are now the proud owner of a real estate investment in the Philippines.
Before you and the seller shake on it, make sure to do a comprehensive inspection of the property. Is everything you requested for been installed or removed? Are electrical and plumbing still in order? Do all of the keys work?
There are also a number of things to check for newly developed condos. Is there cement stuck in drains? Are the built-in cabinets perfectly aligned? Do the balcony doors close smoothly? Your trusted broker should be able to help you check for these things.
It may seem trivial, especially given how excited you must feel at this point, but you’ll save yourself the headache of trying to contact the seller after the property is completely turned over.
Disclaimer: This material, which is strictly for information purposes only. The views and opinions expressed in this article are those of Juan Patag’s and do not necessarily reflect the position of RE/MAX Capital, or any other RE/MAX franchise. Any information is subject to change without prior notice. No liability whatsoever is accepted for any loss that may arise (whether direct or consequential) from any use of the information contained herein. Information Each RE/MAX franchise is independently owned and operated.