Buying Pre-Selling Condo Units vs. RFO

Buying Pre-Selling Condo Units vs. RFO

Looking for an affordable property in Metro Manila leaves you with very few choices. There are not as much new developments in housing especially house and lot subdivisions. Now though, land is sparse, and most developments are expensive, at far flung locations, or if things go your way—a buyer will still have to put up an enormous downpayment before actually moving in to a house, or building on the lot. This will mean that these properties would be out of reach especially for the typical young or middle class family.

So the best option for the reluctant buyer would be to buy a condominium. In this hub I will discuss two types of condominiums:

Ready For Occupancy (RFO) units—these are the condo units that are ready to be moved into anytime, since the construction process is complete, and the units are ready for turnover.

Pre-selling units—these units are those which could be still in the construction phase, but simply not prepared for turnover to unit owners.

Advantages of ready for occupancy units

In the arena of real estate, it is a reasonable criticism when a prospective buyer or investor would want to see the unit first before committing his/her hard earned money to purchase a certain property. This is a very safe thing to do, especially because there are a few developers that sometimes overpromise and their showroom units do not give you a precise and accurate representation of the unit you are going to buy. Architect’s rendering of these projects are supposed to inspire the hopes and dreams of a buyer—and they can be very effective. Brochures, maps, and charts should be scrutinized by any buyer; to avoid this unnecessary hassle and risk, ready for occupancy units mean that you are able to see the actual unit and the surrounding areas in order to make a well informed decision.

However, these units are usually more expensive and you would not get good promotional discounts from developers if you opt to buy from their ready to occupy inventory. These will also offer very inflexible payment terms, sometimes they require full downpayment (from 5-20%) upfront for the purchase—which happens rarely but still possible. Again, these units since already completed would have already had undergone significant price increases, so be wary.


So buy pre-selling units?

I would suggest especially for starting families and investors to choose good developers to buy pre-selling units simply because they are more affordable monthly. Pre-selling units mean that there are options to defer the downpayment during the pre-selling period, which could mean that even the cash strapped buyer could put money on a studio unit. Lower prices mean your monthly amortization is much more affordable than a RFO unit.

How about the risks?

Knowing the risks when buying any pre-selling condominium project, one should always be diligent and do the required research before putting money into any investment. Obviously this includes asking A LOT of questions to your broker or agent however, to avoid getting a lot of very confusing answers, I outlined some questions you should ask which include:

  • Where is this project located? What are the growth opportunities in this area in the next 5 years? 10 years?
  • Who is the developer of this project? What is the developer’s track record, previous projects, and “what is the word on the street” (this means asking your broker their opinion based on their own and their peers) on this developer? Do they deliver as promised?
  • How is the demand for this specific project? How much of the units in this project been sold to other buyers or investors? Who are the buyers and what are their demographics?

Hopefully, with these questions you will be able to find out if the project is right for you to invest for pre-selling investment. Again, to avoid risks, ask questions, and please find an experienced and trusted agent/broker.

3 Responses to “Buying Pre-Selling Condo Units vs. RFO”

  • Luz Devendra:


    I would like to ask if you have any pre selling condominium right now?



  • carlos:

    do you consider a condominium unit RFO if the turn-over schedule is within 6 months or is it still PRE-SELLING?

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