Pros and Cons of Pre-Selling Condos and Developments:

 

Buying a pre-selling condominium means purchasing a unit before the project is completed—sometimes even before construction begins. It can be an attractive option, especially for buyers who want lower entry prices or flexible payment terms, but it also comes with important risks.

 

Pros of Buying Pre-Selling Condos: 

 

1. Lower Introductory Prices

   Developers often offer pre-selling units at prices below those of completed or ready-for-occupancy units. If the project and surrounding area appreciate over time, the unit’s value may rise before turnover.

 

2. Flexible Payment Schemes

   Down payments are commonly spread across several months or years during construction. This can make ownership more manageable compared with paying a large amount upfront.

 

3. More Unit Choices 

   Early buyers usually get first access to preferred floors, views, layouts, parking slots, and unit orientations.

 

4. Potential Capital Appreciation  

   A well-located project near business districts, transport links, schools, or commercial hubs may increase in value by completion. Buyers may potentially resell at a higher price, subject to market demand and contract restrictions.

 

5. Newer Design and Amenities  

   Pre-selling developments may offer newer building technology, modern layouts, energy-efficient features, and updated amenities compared with older condominium projects.

 

6. Less Immediate Maintenance Concern  

   As a new property, the unit and building facilities should initially have fewer age-related repairs than older developments—though this depends on construction quality and management.

 

Cons of Buying Pre-Selling Condos

 

1. Long Waiting Period 

   Turnover can take years. Buyers who need a home or rental income immediately may be better served by a ready-for-occupancy unit.

 

2. Construction and Turnover Delays 

   Projects can be delayed because of permits, financing, supply issues, weather, or construction challenges. A delayed turnover can affect your move-in plans, rental strategy, or financing timeline.

 

3. The Final Product May Differ from Expectations 

   Showrooms, scale models, brochures, and renderings are marketing materials. Actual views, finishes, room sizes, common areas, and surroundings may not fully match what you imagined.

 

4. Market Value is Not Guaranteed 

   Property prices can rise, but they can also stagnate or decline. Oversupply in a location, changes in interest rates, or weaker rental demand may affect resale value and rental income.

 

5. Financing Risk at Turnover  

   Buyers often pay only the down payment during construction, then face a much larger balance at turnover through bank financing, in-house financing, or cash payment. If loan approval is denied or interest rates are higher than expected, this can create financial pressure.

 

6. Additional Ownership Costs 

   Beyond the contract price, buyers may need to budget for taxes, registration fees, association dues, parking, insurance, utility deposits, fit-out work, furnishing, and possible move-in charges.

 

7. Developer Risk  

   The developer’s reputation, financial strength, project history, and delivery record matter greatly. A weak or inexperienced developer may increase the risk of delays, quality concerns, or unresolved issues after turnover.

 

8. Contract Restrictions and Cancellation Costs  

   Reservation agreements and contracts to sell can include penalties, forfeiture provisions, resale limitations, and deadlines. Read these carefully before signing.

 

Before You Buy

 

1. Focus on What You Need, instead of the Low Monthly Payments that Developers are Selling. Unfortunately, many has fallen to this trap where (FOMO) fear of missing out was the focus of selling, instead on what you can afford and actually need. I actually consider this type of marketing, "Predatory Selling". Study the contract, payment schedule, turnover date, cancellation terms, potential extra charges, and reimbursement policy in the event of cancellation

 

2. Estimate whether you can afford the balance due at turnover—not only the monthly pre-selling payments. Know the actual monthly cost, before committing to a contract.

 

3. Compare the pre-selling price with ready-for-occupancy units in the same area.

 

4. If purchasing for investment, use conservative assumptions for rental income, vacancy periods, and expenses.

 

5. Check the developer’s track record, completed projects, and customer feedback.

 

6. Verify that the development has the required licenses and approvals from the appropriate Philippine authorities.

 

7. Finally, life circumstances changes. Most of these pre-selling developments will be 4-5 years away from completion, and your circumstances will most likely change. What is important to you today may not be as important to you five years from now. 

 

A pre-selling condo can be a good choice for patient buyers with stable finances and a long-term outlook. However, it is usually less suitable for someone who needs immediate occupancy, guaranteed rental income, or certainty about the final unit and delivery date. 

Supreme Court Says Land Developer Must Refund Buyer if Promise is Broken

 

The Supreme Court has ruled that the sales agent's promise to issue a 'Contract to Sell' after a buyer pays a reservation fee is not an "advertisement" under Presidential Decree No. (PD) 957, or the Subdivision and Condominium Buyers' Protective Decree, that would form part of the developer's warranties. However, the developer may still be required to refund a buyer if it fails to honor that promise. A possible penalty is also available to the buyer in addition to submitted payments.

 

MACEDA LAW

Under the Maceda Law (Republic Act No. 6552) in the Philippines, a real estate buyer who has paid at least two years of installments is entitled to a cash surrender value refund if their installment contract is canceled. The refund equals 50% of total payments, plus 5% per year after five years, capped at 90%.

 

COMMENTARY

Unfortunately, the Maceda Law is very arbitrary and favors developers heavily. The requirement of at least two years installments prohibits all buyer who has a change of circumstance, plus you are obligated to pay for 24 months. In addition, the refund amount is simply 50%, with a provision of 5% only after five years and capped at 90%. 

 

A reasonable life changing events like, health deterioration (cancer diagnosis, etc), job loss, or death in the family, should be afforded with 100% refund. These life changing events can happen to any buyer and it is simply morally right to give back all payments (down payment, reservation, and installments) they have made.