Buying a property for the first time? Considering the costs and risks involved, such task can feel overwhelming to most people. Be brave anyway, as the fulfillment and happiness that finding the right home can bring to you and your family will be hard to match. Be prepared. Do your homework and seek assistance of experts.
It is to your benefit to find a licensed real estate broker or sales person who is an expert on the type of property and location you are looking for. It will cost you nothing as prices of properties – especially if you are buying from a developer – are the same regardless if you go through an accredited seller or not. But the gains will be enormous if you are able to give the right inputs before and during the site visit.
Here are 5 things you should know before calling a broker/agent to help you find a property:
- Budget: How much are you willing to spend?
- Purpose: Why are you looking for a new property? For personal use or investment?
- Schedule: When do you need the property? Preselling or RFO?
- Location: Where would you like to live for the next 5 to 10 years?
- Decision Maker: Who makes the final decision?
When you go out for lunch, and found out you only have 50 pesos in your wallet, where do you eat? You’ll probably end up in a local turo-turo like JollyJeep or AristoCart . However if you have a 100 pesos instead, then lunch at Jollibee, Mcdo or KFC becomes an option. Now if Php1000 is the budget, you can actually full buffet at Vikings or Dad’s and eat to your heart’s content…but still eat at a turo-turo if that is really what you like for today.
The same concept can apply to buying properties. Your options are determined by your budget and type of house your prefer. For example, if you want a 3 bedroom townhouse in Metro Manila with complete finishes, then your budget should be at least Php3M . Anything lower means you have to consider projects located outside of Metro Manila like Rizal and Cavite. Now if for the same budget, you prefer a single-attached house and lot, then you need to consider locations outside of Metro Manila like as well.
Budget simply means the amount you plan to spend on a property you plan to acquire. Budget can either be in terms of Total Contract Price (TCP) or monthly payments. The easiest way to determine your budget is to base it your monthly salary. Your target monthly payments should be less than or equal 1/3 of your monthly salary. Banks will also assess you based on that same principle if you go for a housing loan.
There is no such thing as an open budget. Regardless of how wealthy a buyer is, there will always be an upper and lower limit on the amount they are willing to spend based on the type of property they want to buy. If you cant specify a budget, then most likely you are not yet ready to buy a property.
Why are you looking for a new property? Is it for personal use or as an investment?
For Personal Use
If you are buying a property for you and your family, then find something that will fit your “needs” within your specified budget. For example, if you only one kid or is a new couple, then a 2-bedroom unit may suffice. However if you have at least 3 kids then you need a 3 bedroom house at the minimum. You may also need a bedroom on the ground floor if you are living with an elderly and a maids room if you need a place to stay for a helper or yaya. The needs vary for each buyer.
It is really difficult to find the perfect house especially if you have budget constraints. Sometimes you will have to prioritize which specifications are more important to you. Sometimes also, you just have to consider a property that doesn’t fully satisfy the needs but has room for future modifications or extra lot for expansion.
If the property is an investment, then you should focus on how you plan to earn from it. Some possibilities are as follows:
- Resell the property – better to buy a preselling property while prices are cheaper then sell it when prices significantly appreciates. Normally, developers gives up to 24 month Downpayment period with zero (0)% interest. Take advantage of this if you cannot pay the whole downpayment right away.
- Rent the property – need to consider a good location – accessible to public transportation and within 5 to 10 kilometers from a commercial business district. Property doesn’t need to be big or have luxury finishes. Remember, you will not be the one to use it.
Remember that if you are buying a property as an investment, your priority is financial reward.
- Keep the costs low so that it will be faster to recuperate in the future
- Buy a property with the biggest upside for bigger income in the future
If you need to move-in within 6 months, then you are looking for an RFO unit.
When do you really need to use the property? Are you looking for a pre-selling project or a Ready for Occupancy (RFO) unit?
Ready for Occupancy
If you need to move-in within 6 months, then you are looking for to look for an RFO unit. An RFO unit refers to a property that has already been fully constructed and finished with the agreed turnover finishes . In real estate however, a property that is 2 to 3 months away from completion is also referred to as RFO. The reason is that bak loan processing takes 2-3 months anyway, so there’s time to complete the house before loan take-out.
Please take note that RFO has nothing to do with the turnover finishes. A unit with cement floor finish and without partition is RFO if that is that is the agreed turnover with the developer.
Please take note also that it usually takes 1 to 3 months to be able to move-in even when unit is already fully constructed. For actual turnover to happen, the following are the requisites:
- house construction has been completed and unit has been inspected and formally accepted by the buyer
- minimum downpayment/equity paid in full
- additional fees (if there’s any) is paid in full
- loan proceeds has been released to the developer
If you are willing to wait a little longer, then you can go for preselling projects. A preselling project can take anywhere from 12 months to 24 months before houses are turned over. Preselling projects presents the following advantages:
- Lower Price – houses sold during preselling phase are significantly cheaper. Prices are then increased depending on the number of units sold or development phase of the project
- Better slots available – the better slots such the ones near the gate, along the main road, facing the morning-sun, and corner or end-units are usually the first ones to get sold. If you are very particular with the location of your unit, then you should check preselling projects while the better slots are available
- Longer DP period – means smaller monthly DP payments at 0% and a longer opportunity to pay additional DP to reduce loanable amount
Where would you like to live for the next 5 to 10 years? When you buy a house, you also buy the privilege of being part of that community. Some things that you have to consider when choosing a location:
- Decide where you really want to live and focus on that location. If you prefer to live in a particular location – for example Pasig – then focus on projects in Pasig first and areas nearby before even considering further areas such as Cavite or Bulacan. Having too many options will result to a more difficult decision making.
- Consider your needs and budget. Be realistic. Nowadays, a Php3M budget will most likely afford you a 3 bedroom townhouse unit if you want a property within Metro Manila. Go a little further however, such as Rizal, Cavite, or Bulacan and the same amount will become a bigger house on a bigger lot or even a single-attached unit. Since budget is limited, then prioritize your needs as you will need a compromise between size of the property and where it is located.
- Consider your daily routine. If you are an OFW and your partner does not go to the office everyday, then do you really need a property near Ortigas and Makati? Does it really matter If property is more than an hour from away from your favorite mall, but you go there once or twice a month only anyway?
- Check for schools, hospitals, church and other establishments important to you. Just go to Google Maps , and checkout what establishments are nearby. If you are in buying a property in Metro Manila areas just outside of the city, then do not worry about this too much as everything you need – schools, hospitals, commercial areas, and places of worship – will most likely be just a few kilometers away.
- Distance from your work. You are not assured that you’ll be in the same company or even the same line of work in the future. As long as daily commute – probably 1 to 1.5 hours – is doable then you can consider properties that are a little further.
- Flooding. We all prefer a safe and floodfree community. But if you have to make a comprise with regards to flooding, the minimum requirement is that the property itself is elevated and has very low probability of being flooded even if another Ondoy happens. Access roads to he property should not get flooded easily unless there are heavy prolonged rainfall. Lastly, if ever access roads gets flooded, water should subside in a couple of hours, not days.
- Distance from Fault Line. “Phivolcs now recommends avoiding construction within 5 meters on each side of a fault trace, or a total width of 10 meters“. So if a house, is around 15 meters or 10km from the fault line, it makes no difference.
5. Decision Maker
Who makes the final decision?
Usually for singles, the one who will be paying more is the one who decides which house to buy. However, if the property is a gift, then it’s best to ask the one who will use the property.
On the other hand, for couples, based on experience, it is usually the husband who sets the budget, but the wife is the one to decide which house to get. After all, the one who decorates the house is usually the wife. And for cases, where the husband is an OFW, the kids and the wife are the ones who stays and enjoy the house most of the time.
During site visits, it is better if the decision maker is also present. At a minimum, the decision maker should be personally on doing research and making the short list before doing the actual site visit.
Once you have these 5 items figured out, then you are ready to contact an agent or broker. Look for a reputable reputable licensed sales person, discuss your requirements, ask for a short list of possible projects, then schedule a site visit.
Remember, there is no such thing as a perfect house. There will always be compromises either in location, price, or quality of house. Just do your homework, give your self a timeline, and make an informed decision.
The next time you find the perfect house, Make It Your New Home!