FFE Magazine

What is the growing trend in real estate investment in the Philippines?

In the Philippines, most property selling or leasing is done via personal search, agents and third-party property buy-and-sell websites. What most of us aren’t aware of is that there are property developers in the country that offer reselling or leasing services.

 

Property reselling and lease is a type of service offered by only a handful of developers in the country. In this process, the property developer takes care of looking for a buyer or a lessee for the owner of a unit. Leaving the management of a unit or property reselling and leasing to the developers means we can avoid experiencing the gruelling search for a trustworthy agent and the more exhausting work of getting a buyer ourselves.

 

           

This is a great advantage for individuals who live abroad and who would like to take the easiest way to buy and sell or lease properties for a profit.

 

What procedures are involved when reselling or leasing a property through a property developer?

 

Reselling or leasing via property developers

 

Most property developers pass on this procedure to a specific department in their company. The department of leasing and resale management would then ask the property owner to sign a few forms and approve the price and terms of payment. The documentation, search for a buyer or lease and the turnover process will be taken care of by the department.

 

Companies have unique procedures for their own transactions, but here is a sample guideline:

 

Buying real estate for resale:

 

The owner of the unit signs an Authority to Sell form that can be secured from the department’s office. The department catalogues the unit in their inventory.

 

The unit is marketed for prospective buyers.

 

When a buyer is found a Letter of Intent is sent to the owner containing price and terms. The owner has the option to reject or give a counter-offer to the terms of the letter. Negotiations will continue until all terms are settled.

 

The owner accepts the terms and signs the Letter of Intent. The department prepares a documentation of the transaction.

 

Payments are made. The department may get a percentage of the sale or rental fee for commission payable to the property developer.

 

The new unit owner is endorsed to the building management.

 

Owners who have sold their properties will have their capital gain tax processed by the department.

 

Buying real estate for leasing:

 

The owner of the unit signs an Authority to Lease form that can be secured from the department’s office. The unit owner should additionally state his requirements of the lessee or choose from a number of leasing services offered by the developer. The unit owner is also required to give 1 set of keys to the department so that the prospective lessee may view the room.

 

The unit is marketed for prospective lessees. The owners are updated regarding prospects, accepting or rejecting any lessee profiles submitted by the department. All negotiations are subject to the owner’s approval.

 

When a buyer is found a Letter of Intent, Contract of Lease and Move-in Form are sent to the owner containing price and terms.

 

The owner accepts the terms and signs the forms sent earlier. The department prepares a documentation of the transaction.

 

Payments are made. The department may get a percentage of the sale or rental fee for commission payable to the property developer.

 

The unit is inspected for inventory before the lessee moves in. Metre readings for bills payable to the lessee shall also be attended to by the department.

 

The new unit owner is endorsed to the building management.

 

Owners who have leased their apartments will receive regular updates and payments through the department.

 

Factors to consider before signing any contract

 

 

Before proceeding to contact a property developer offering these services, it’s important to know how to protect personal interest. Developers may promise to find a buyer or lessee for an owner’s unit, but the most essential things of the agreement may be left out.

 

Here are a few things people must be aware of before buying property for lease or resale:

 

Clarify how long a developer will look for a buyer. The return of investment will be a long and slow process if the developers cannot find buyers or lessees. To prevent this inconvenience, secure a guarantee that the developer will find a buyer or lessee in a certain period of time. Developers may often guarantee that they will find a buyer or lessee, but when is a crucial question they must clarify but often left. Get a clear duration down to the number of months or days. Set down penalties if the developer fails to deliver on its guarantee with the help of a lawyer who knows how to deal with corporate entities.

 

Research if the property construction is underway. Property developers usually sell units way before the house or the condominium itself is built. A percent for down payment is also paid years before the project ends. But anything can happen between the first payments until the last coat of paint dries. Often, the problem lies with the fast turnover of staff, customer service representatives who handle multiple accounts and new protocols. The result is that company policies change, payment plans confused and other irregularities happen. Often, the construction itself becomes delayed because of a number of factors, including technical and natural disasters (force majeure). To do away with these issues, do business only with developers with a good track record and who are known to finish their deliverables on time. Reading forums and reviews by clients also reveal a few irregularities they experienced with the companies, helping narrow down options.

 

Get a lawyer. Having a lawyer will get rid of confusion brought about by terms and words that are difficult to understand. If a buyer doesn’t know what questions to ask when buying a property, a lawyer experienced in real estate can more than help fill up that grey area. Lawyers also have the skill to talk and are knowledgeable of technical loopholes that will help grant the buyer better and more inclusive contracts.

 

All procedures are subject to changes or amendments depending on the property developer. If you have apprehensions or questions, never hesitate to ask the property developer before signing any contract. It is within your right to take care of your interests when negotiating for your properties.

 

Have you thought about investing in real estate in the Philippines but do not know how to earn from it? Have you had any experience with buying a property for resale or lease? Share your thoughts and experiences by leaving a comment below.

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