Pre-selling condos mean selling units to buyers during the beginning stage of development. Also called off-the-plan condominiums, brokers sell these units before completion, during construction, or before groundbreaking. Agents will present you with a showroom of model units or brochures with layout plans to see how they will turn out.

Investing in a pre-selling condo is gaining popularity in the country because of its below-market value. It helps property developers finance the project’s construction which allows potential investors to buy property at a much lower price. 

These units are not to be mistaken for ready-for-occupancy (RFO) condos, which have been fully built and are ready for turnover. And while investing in a pre-selling condo is unconventional, it also brings advantages to buyers, especially if they are still saving up and just planning to start a new chapter in life.

Benefits of Buying a Pre-Selling Condo 

Pre-selling properties are usually cheaper

1. Without a physical unit, pre-selling properties are usually 30%-50% less than a finished unit. This affordable introductory price also includes flexible payment schemes and discounted down payments for buyers. And developers offer in-house financing if a potential buyer fails to meet bank housing loan requirements.

Despite the premium prices of any unit, pre-selling units are offered with incentives to ensure that the property gets a high occupancy rate by the turnover date. 

You have the freedom to select your desired unit

1. With RFO units, you don’t usually get to choose a preferred unit when moving to your new condo. However, pre-selling units allow you that. You can select the size, location, level, view, distance to amenities, and foot traffic you want during the early phase of construction. You can customize the floor plans and layout in whichever way’s convenient.

Pre-selling properties can provide a steady source of income

1. Once the property is complete and ready for occupancy, you may do whatever you like with the unit. You can either live in it or turn it into a source of steady cash flow by renting it out.

Many buyers do this to cater to future tenants. Alternatively, the buyer can also make more from the property by selling it to another buyer. By that time, the property’s value would have increased.

1. You can get a faster and better return on investment

For pre-selling units, down payments remain the same until the agreed-upon date. When you factor in inflation, your down payment’s value will not be the same in the coming years. 

Aside from that, property values will increase as the years go by. By that time, you could value your unit at 40% more than the price you paid before, meaning that you will get more out of your money when you grab the opportunity of buying pre-selling condos.

You don’t have to worry about moving in just yet

1. Since the property’s completion isn’t soon, you won’t have to worry about moving into the unit just yet. There’s no pressure to purchase and decorate your place with new furniture or how you will move all your stuff from one place to another. You can live your life normally and have more time to plan your move to your new unit. However, remain mindful of your monthly dues despite not living in the unit.

Drawbacks of Buying a Pre-Selling Condo

1. There could be unforeseen changes 

There are instances where the developer fails to complete the project due to a lack of resources, which could result in not getting a refund. Sometimes, projects would be mismanaged, slowing the progress and causing unwanted delays that would take years to sort out. In other instances, the actual unit looks different from the one originally proposed.

Factors like this can feel like a wasted investment for the buyer since they don’t have complete control of the outcome of the unit. 

Your plans can change

1. You may be planning to live in a condo now, but many factors could change this plan anytime soon. Once your developer completes your unit, you might have a change of heart and opt to live in a different house. 
2. Better options may arise

After signing a contract, committing to your pre-sold condo could be challenging, especially if better and cheaper condo options pop out in the future. Unless you have piles of cash, it isn’t easy to buy multiple condo units, so you have to make sure you can commit to your chosen pre-selling condo.

1. The market is unstable

Pre-selling condos are excellent investments because of better market value in the future, but there is also a risk that it will turn into the opposite. Your responsibility as a buyer is to be knowledgeable about market conditions and check out data on the capital appreciation and rental yields from real estate consulting firms, as well as interest rates from the Bangko Sentral ng Pilipinas.

1. The pre-selling condo may be illegal

Under Presidential Decree 957 or “Subdivision and Condominium Buyer’s Protective Decree,” developers, owners, and dealers are mandated to secure a license from the Housing and Land Use Regulatory Board (HLURB)–the government agency that regulates the real estate industry in the Philippines—before pre-selling any property. Any pre-selling condo that doesn’t have a license is considered a scam.

Is Buying A Pre-Selling Condo Right For You?

Real estate investment can bring numerous benefits, and buying pre-selling condos is the best option if you are just starting a new chapter in your life. It’s an affordable housing option that doesn’t pressure you to move in immediately and can give you substantial income in the future.

In the long run, a person buying a pre-selling condominium unit will receive more value for their money. A pre-sell condo unit is an incredible benefit for earning more than what you paid for because real estate rises over time.

However, any affordable offer also comes with some risks, like delaying the completion of your unit or the unstable market that could affect your condo’s value. Whether you invest in pre-selling condos or houses, always seek the expertise of a reliable real estate developer who can deliver quality properties on time, according to your requirements.