(From Lamudi Philippines. Article by the Lamudi Editorial Team.)
They say that Christmas is the season of giving. But for many overseas Filipino workers (OFW) returning home for the holidays, it is also the season for some serious home shopping.
In fact, according to Enrique Soriano III, Program Director for Real Estate at the Ateneo de Manila University–School of Business, many OFWs spend all year saving enough down-payment cash for their first home, and they usually remit this cash by December when their purchase decisions are finally made. This observation is shared by Claro dG. Cordero, Head of Research, Consulting, and Valuation at JLL Philippines: “More property transactions occur at the end of the year when many of these OFWs have performed oculars of the properties they’re looking into buying.”
Since a home is perhaps the most important purchase any person can make, it only make sense that due diligence should be paid. Lamudi Philippines has compiled the following questions to make the decision easier for every OFW.
1. What do I intend to do with the property?
Will the property be used as a primary residence for the OFW family or an income-generating asset? From the financial perspective, a home purchase makes a lot sense if the property will be used as a primary residence. Hence, the property should meet the requirements of the OFW’s family (size, location, type, etc.). Buying a home will give the OFW and family a sense of financial security. However, buying property strictly as an income-generating asset (i.e. convert it into a rental property) presents a different challenge, which will be tackled in the next answer.
2. Who will manage the property?
If the OFW is buying a property to eventually rent it out, then this is a different matter. A crucial question to ask should be, “Who will manage the property while the OFW is out of the country?” If the property is in Metro Manila and the OFW’s family lives in the province, then it will make sense to hire an agent that will double as a property manager. They will take care of finding and screening prospective tenants, scheduling viewings, collecting rent, and overseeing the property’s upkeep, among other tasks.
3. Which developer should I choose?
The importance of choosing the property developer cannot be emphasized enough. An OFW buyer can count on an established, publicly listed developer to deliver on its promise, because it has a reputation to protect. In addition, established developers are generally well funded, so they are highly unlikely to default.
4. Should I inspect the property?
Whether it is a condominium in Makati or a house in Cavite, make sure that you have physically inspected the property before buying it. Although this may mean making a trip or two back home, the cost and peace of mind would be worth it. A homebuyer who does not inspect the property runs the risk of discovering major defects at a point when the deed of sale has already been signed—and the property can no longer be returned.
However, some OFWs will have to make do with asking someone they trust (a close relative, for instance) to do the inspection for them. If possible, make a to-do list for the appointed inspector, and ask the person to send pictures or even videos of the property.
5. Should I prepare extra cash for the closing costs?
When buying a piece of real estate, the seller takes care of the capital gains tax and the broker’s commission, while the home-buyer takes care of the documentary stamps tax (1.5 percent of the property’s selling price), transfer tax (0.5–0.75 percent of selling price), registration fee (Php8,796 for properties whose selling price is Php1.7 million or lower, plus an additional Php90 for every Php20,000 in excess of Php1.7 million), and notarial fee (1–1.5 percent of the property’s selling price). For example, an OFW buying a Php1.7 million property needs to ready approximately Php59,800 for the closing costs.
You may find the original article here.