Buying a property? Get real, experts say

Buying real estate is no joke.

 

The property market is in a boom state, with developments mushrooming in Metro Manila and other major cities across the country to feed a seemingly voracious Filipino consumer spending millions of pesos for their first, second or third home.

 

Enter the consultants: hammering the point for the benefit of potential buyers to get their hard-earned money's worth in every transaction.

 

The potential buyer may be a family that simply wants to say goodbye to those days when they work hard simply to eke out the monthly rent—and getting actually nothing in the end. It can be a potential investor in search for an affordable buy with a view to selling for a profit, or the business-minded one who intends to rent or lease the property.  Track record

 

No matter who you are, dear buyer, experts say that the the best way to start your quest is by doing some research about a developer's reputation and track record in the industry—in particular her ability to turn over a property to satisfied clients as well as its inclusive fixtures and amenities. 

 

“The investor has to determine the risk exposure, such as developer’s track record of project completion, timely delivery of the unit and documents of ownership,” Ieyo de Guzman, executive director for investment services at Colliers International, said in an e-mail. 

 

In a separate message, Jones Lang LaSalle's (JLL) head of research, consulting and valuation Claro Cordero Jr. said: “Real property buyers can ensure 'value for money' for their investments by examining the capability of the developer to deliver the products and supporting amenities/facilities, as well as provide 'after-sales' service to the buyers.”

 

Home buyers should look into a developer's track record on turning over the property “to the specifications” as well as the authentic title to the buyers “within the agreed time frame,” Cordero noted.

 

Know what you're getting Buyers must also be aware of the condition of the property that they're getting—down to the materials—and not rely simply on sellers' descriptions, said the experts. “It is critical for the investor to have a full understanding of the actual hand-over condition of the condo unit or house,” said De Guzman. 

 

Beware of general descriptions of houses and condo units. More often than not, there is a catch.

 

“There are developers that state a very general description of material specifications allowing them the flexibility to change the materials during the construction,” said De Guzman. “Thus, it is important for the investor [to know] what the alternative or replacement materials will be to ensure he gets nothing of lower standard,” she added. 

 

For condominiums as well as row and town houses, potential buyers should take into consideration the thickness of walls, type of cement and metal used by contractors. The amenities Buyers should also weigh the costs and benefits of facilities offered by developers.   

“As a unit owner in the project, the investor becomes part owner of the amenities and facilities and correspondingly participates in the maintenance of these,” De Guzman said. “Though full or excessive amenities may enhance the project's saleability, the downside is that the condo unit owner will have to bear the high, monthly common area dues,” she added.

 

Cordero pointed out the importance of support facilities and services in the community where a property is situated. “Aside from the amenities that the development are offering—parks, playground, paved roads, the buyer should also take into consideration the availability and distance from reputable schools, hospitals, groceries and small retail developments and places of worship and cultural activities or enhancement,” he said.   

 

Crunching numbers

 

A potential buy may have all the right goods a buyer wants, but the buyer must understand how many digits will be written on the cheque. A buyer should focus “... on a financial analysis of the investment” before signing any contract, De Guzman said. 

 

Consider the amount of equity you, as a buyer, intends to put into the property, the financing structure—affordability of the monthly amortization and competitive interest rates—and other costs, like taxes, monthly dues, other assessments fees. 

 

JLL's Cordero said “buyers should also consider the possible upside in property values where the development is located so that the values/interest/holding are maximized at a time when they need to re-sell, rent-out, divest or redevelop the property.”

 

Developments should not sit within disaster-risk zones like fault lines and flood-prone areas, he said, adding that essential to security is the peaceful and orderly environment where the property is located.

 

Arresting depreciation

 

Other than location, there are other ways one can ensure one's property against depreciation. 

 

“Developments that are well-managed and well-maintained can withstand pressures due to market movements and property cycles,” said Cordero. 

 

To enhance and protect property values, real estate owners will need to look at the efficiency of the property management and the effectiveness of the homeowners’ association in introducing innovations that enhance the over-all maintenance and functionality of the development. 

 

“But even when the real estate owners are scouting for investments, they should look for developments which are constructed using high-grade—and ideally, using sustainable technologies and materials—to prevent fast rate of obsolescence, depreciation and high cost of operational maintenance,” said Cordero. 

 

Maintenance is a key factor in protecting the value of their buy, may it be a condo unit, house or lot in a village. 

 

“With proper and regular maintenance, property deterioration is slow, repair expense is minimized, well-kept/good running conditions of amenities and facilities enhance the values,” said Colliers' De Guzman. 

 

“In the case of stand-alone lot, ensure that there will be no illegal settlers on the property,” she added. — VS/BM, GMA News