What is a preselling property and what are its advantages?

Pre - selling, or off-the-plan properties as it is more commonly known in the West, are pieces of real estate—either condominiums, townhouses, or a house and lots - that are being sold by a real estate developer in advance before their actual completion.

What is a “Pre-Selling” condo?

In real estate, a pre-selling condo is a condo 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. At this point, it seems that opting to buy a pre-selling condo would be like throwing money into a hole yet to be dug. The question really is not whether to buy or not to buy a pre-selling condo, but what are the risks? What makes people take those risks? 

What makes pre-selling properties attractive and even seductively desirable?While it may seem unconventional to a condo home buyer to buy a property that does not yet exist (save for actual site where the property will be built and a blueprint), presold properties afford homebuyers many advantages, such as discounted prices and the first pick of the best locations and/or units. In this article, we have put together a list of benefits of buying properties while they are still in its preselling stage.

Pre - selling Properties Are Normally Cheaper

In the absence of the physical unit, pre - selling properties are normally sold at a cut-rate price of 30–50 percent off compared to the price of a finished unit. Aside from its affordable introductory price, many property developers offer flexible payment schemes and even BIG DISCOUNTS on the down-payment price for their pre - selling projects. These developers also offer in-house financing in the event that the condo home buyer fails to qualify for a bank housing loan.
They Give Buyers the Best Unit Options.

In buying pre - selling properties, buyers are granted a privilege to choose their ideal lot or unit location at an early phase, usually during the project launching stage. When buying a condominium unit during the project’s pre - selling stage, the buyer is given the opportunity to pick the best unit, such as those facing the best direction and located on the perfect floor, or even one of the best units that are normally reserved for repeat customers. Some condo units are just highly sought-after either because they offer great views or they come at the right size that are highly attractive to future renters. Once Completed, They Can Provide a Steady Source of Income

Speaking of renters, once the property is completely done and is now ready for occupancy, the buyer can opt to rent it out, and through this, the buyer earns a steady cash flow. If buying a condo property to have it rented out after completion, it makes sense to buy a pre - selling one, especially during the project’s earliest stage, as it affords buyers the first pick of units—those that will be loved by future tenants. Alternatively, the buyer can also make more from his or her property by selling it once completed, by which time the property has increased its value.
They Are an Excellent Investment Option

Advantages of buying Pre-selling condos
Cheaper prices, flexible payment schemes, promising investment

Many buyers go for the pre-selling option, largely because of its lower introductory price, which can be (more or less) 30% cheaper than a finished unit. On top of that, developers might throw in a 10%-15% discount or offer flexible payment schemes where the down payment can be as low as 10% payable for 3 years (with most real estate companies), with the lump sum to be paid either through a bank financing, government sponsored home loan, or the developer’s in-house financing options.

If you are a real estate investor, pre-selling condos are a promising investment since their market value can increase by the time they are finished. Given favorable market conditions, you can resell the finished units for q higher price than you put down when they were in the pre-selling stage.The value of real estate, especially well-located ones, appreciates over time. This is true for pre - selling properties. At the time of their completion, the value of pre - selling condos or house and lots have increased considerably, that the buyer can earn a profit by selling them in the secondary market. It is not uncommon to see condos bought five years ago, especially those in Makati or Bonifacio Global City, for just over Php3 million, that can now fetch double this amount in the secondary market.

Some Tips Before Buying

As a smart condo home buyer, you must be vigilant that any offer that comes with great advantages also carries some risks. One of the most drawbacks of buying a pre selling property is that there is a chance that the developer you signed up with might back out from the contract and may not be able to deliver the unit at all. If you are unsure of investing to pre sold properties but does not also want to miss its perks, make sure to buy only from reputable real estate developers, those who have a good track record with delivering quality properties on time all the time.

This article was research and contributed by Real Homes Team