Yesterday, I sent you the story of Jeff, the supply boat captain who bought a condo that turned into a nightmare. If you haven’t seen it, you can read it here.
Choosing a developer is like choosing a spouse, you have to do your due diligence. 🙂
You see, for most people, buying a home is their biggest investment so it just makes sense to make a careful evaluation and do a lot of investigation before making the buying decision.
Here are 5 things you should do in choosing a real estate developer:
- Ask for their government registration. They should be duly registered businesses with the appropriate government agency like DTI, SEC and BIR. Then their projects should be registered with the HLURB and they must have a License To Sell before they can start selling their projects. Majority of the problems are with small developers who sidestep a lot of these regulatory requirements. We highly discourage you from dealing with individuals or companies that do not have the proper licenses.
- Get a copy of all documents needed for the purchase
- Reservation Form or Letter of Intent or some similar form. The reservation form or Letter of Intent is just used to accept your reservation deposit and ensure the unit you like is no longer given to other buyers. The reservation is may or may not be refundable. Read the fine print. Don’t be lazy.
- Buyers Information. Most developers would have this and would be necessary for getting approval for in-house financing in case you want to avail of it.
- Contract To Sell or Purchase Agreement or Deed of Conditional Sale. The contract to sell, CTS in short, defines the terms of your purchase. Read every clause. This should describe what you are buying, who you are buying from and all the terms and conditions of the purchase. This will indicate what expenses are involved in the purchase and who will pay them.
- Get a copy of the Deed of Restrictions (things you cannot do in the property).
Get a copy of the rules of the Condominium Association to see things that you might not like.
- Again, check details of the payments. This is usually indicated in the CTS. Have a clear understanding of everything that goes into the purchase. Sometimes you can haggle some of these charges but not likely with the bigger developers. You just have to be aware of these expenses so you won’t be surprised.
- Look at their track record. If they don’t have a track record in development, look at their business history. If they don’t have any record in developing real estate or are in no way related to the real estate industry, stay away. Don’t be a guinea pig. Property development is a very complex project with lots of potential for mistakes. Remember, you will LIVE with the mistakes that these developers make. Better to delay your purchase rather than regretting it years later. Or better yet, choose a developer with a track record.
- Get feedback from people who have actually bought properties from the developer. Find people who both like and dislike their experience to get a balanced view. I don’t only rely on the internet when looking for feedback as usually you only get negative ones. Also, get feedback from agents/developers that you know. These people deal with developers all the time. Get a feel for what it’s like dealing with them by asking around.
- Finally, if they have projects already, visit them. Visit the site where the project will be built. Look at the model units. Chances are that new project they are building will look just like the others. Compare what they are promising now versus what they have delivered. Don’t be afraid to ask the developer or agent anything you notice that is not consistent.
With these 5 tips, you should be able to comfortably choose a project and a developer who will provide you with your dream home.
Feel free to email us for comments or post them below.
Founder, Cashflow Realty
P.S. Go ahead and post your comments below.