Buying a home or investing in real estate is a major financial decision, and one of the most appealing options in the Philippines today is a pre-selling condo. But what exactly does this mean?
A pre-selling condo is a unit that is sold before the building is completed—often during the planning or construction phase. Developers offer these units at lower prices, making them an attractive choice for homebuyers and investors looking for more affordable payment terms and potential property appreciation.
But is buying a pre-selling condo the right move for you? In this guide, we’ll break down what pre-selling means, its advantages and risks, and what you need to consider before making a purchase.
Personal Insight: Many first-time homebuyers in Metro Manila have secured their dream homes through pre-selling, benefiting from lower prices and flexible terms. One buyer shared, “I bought a pre-selling condo in BGC for ₱12 million in 2020. By the time it was ready for turnover in 2024, similar units were already selling for ₱16 million. That’s a ₱4 million increase in just four years! Investing early in a prime location really paid off.”
What Is a Pre-Selling Condo?
A pre-selling condo refers to a condominium unit that is sold while it is still in the planning, development, or construction phase. Since the building is not yet completed, buyers purchase the unit based on floor plans, model units, and artist renderings provided by the developer.
Pre-Selling vs. Ready-for-Occupancy (RFO) Condos
Understanding the difference between pre-selling and ready-for-occupancy (RFO) condos can help buyers make an informed decision:
| Pre-Selling | Ready-for-Occupancy |
|---|---|
| ✔️ Sold before or during construction | ✔️ Already built and availaable for immediate move-in |
| ✔️ Offered at a lower price with flexible payment terms | ✔️ Higher price but allows for instant use or rental |
| ✔️ Buyers wait for several years before moving in | ✔️ Buyers can physically inspect the unit before purchase |
| ✔️ Higher potential for property value appreciation |
How Does Pre-Selling Work?
1. Developers Launch the Project – Real estate developers announce new condo projects and start selling units at introductory prices, often at a discount.
2. Buyers Reserve a Unit – Interested buyers choose a unit based on the floor plan, pay a reservation fee, and review the contract.
3. Payment of Down Payment & Installments – The buyer pays a down payment (typically 10-30%) over a period of months or years while the condo is being built.
4. Turnover of the Unit – Once construction is complete, the developer turns over the unit, and the buyer settles the remaining balance through bank financing, in-house financing, or a lump sum payment.
Key Takeaways:
✔️ Pre-selling condos are more affordable than RFO units.
✔️ Buyers must wait for completion before moving in.
✔️ Researching the developer’s credibility is crucial.
Advantages of Buying a Pre-Selling Condo
Buying a pre-selling condo comes with several advantages, making it an attractive option for both homebuyers and investors. Here’s why many buyers prefer pre-selling units over ready-for-occupancy (RFO) condos:
1. Lower Price & Flexible Payment Terms
☑️ Save up to 40% compared to RFO prices. Developers offer pre-selling units at introductory prices, which are significantly lower than their market value upon completion.
☑️ Spread out payments. Buyers can enjoy zero-interest payment schemes, making it easier to afford a unit without an immediate large loan.
2. Higher Potential for Value Appreciation
☑️ Capital appreciation. By the time the unit is ready for turnover, its market value may have increased significantly, allowing early buyers to earn from resale or rental.
☑️ High-demand locations. Pre-selling condos in CBDs and transport hubs tend to appreciate the most.
3. Customization Options
☑️ Choose your preferred unit. Buyers get first pick on unit location, layout, and even finishes (depending on the developer).
☑️ More flexibility compared to RFO units. You can select a unit with the best view, proximity to amenities, or specific floor level.
4. Brand-New Amenities
☑️ Modern facilities. Expect state-of-the-art gyms, pools, co-working spaces, and smart home features that older condos might lack.
☑️ Lower maintenance costs. Newly built condos require less upkeep compared to older buildings.
Key Takeaways:
✔️ Pre-selling condos are cheaper than RFO units.
✔️ They offer high potential for appreciation.
✔️ Buyers get modern amenities and customization options.
Risks of Buying a Pre-Selling Condo
While pre-selling condos offer great benefits, they also come with risks that buyers should be aware of. Understanding these risks—and how to mitigate them—can help you make a more informed decision.
1. Project Delays
| One of the most common concerns with pre-selling condos is construction delays. Developers may face issues such as permits, financing problems, labor shortages, or unforeseen circumstances like economic downturns. These delays can push back the turnover date by months or even years. | ✅ How to Mitigate This Risk: • Research the developer’s track record – Choose developers with a history of completing projects on time. • Check the contract – Ensure that the turnover date and penalties for delays are clearly stated. • Have a backup plan – If you’re buying a pre-selling condo as a future home, make sure you have alternative living arrangements in case of delays. |
2. Changes in Unit Size or Layout
| Buyers of pre-selling condos base their decisions on floor plans and artist renderings, but the final unit may differ in size, layout, or design. Developers sometimes revise the plansdue to construction constraints or changes in building regulations. | ✅ How to Mitigate This Risk: • Review the contract carefully – Look for clauses about possible changes in the unit’s size or layout. • Ask for the maximum variance – Some developers allow minor adjustments (e.g., ±2% in floor area). Make sure you’re aware of these limits. • Document all agreements – If the developer commits to specific finishes or layouts, ensure it is written in your contract. |
3. Developer Credibility Risks
| Not all developers are financially stable, and some projects get delayed indefinitely or canceled altogether due to mismanagement or lack of funding. Buyers who invest in unreliable developers risk losing their money or dealing with unfinished projects. | ✅ How to Mitigate This Risk: • Choose a reputable developer – Research the developer’s past projects, financial stability, and customer reviews. • Check if the project is HLURB/DHSUD-registered – The Department of Human Settlements and Urban Development (DHSUD) regulates real estate projects in the Philippines. Make sure the project has all the necessary permits. • Ask about project financing – Developers with strong funding sources are more likely to complete construction on time. |
4. Unexpected Fees
| Aside from the unit price, buyers may encounter additional costs such as closing fees, transfer taxes, move-in fees, and association dues. Some of these expenses are not always disclosed upfront, leading to surprise charges upon turnover. | ✅ How to Mitigate This Risk: • Request a breakdown of all fees – Before signing a contract, ask for a detailed list of expenses beyond the unit price. • Set aside extra funds – Be prepared for additional costs by saving at least 5% to 10% of the property price for miscellaneous expenses. • Clarify association dues and maintenance costs – Ask the developer about monthly dues and how they are calculated |
Key Takeaways:
✔️ Researching the developer’s credibility is crucial.
✔️ Always read the contract to avoid unexpected surprises.
✔️ Have a financial buffer for additional costs.
Steps to Buying a Pre-Selling Condo
Buying a pre-selling condo can be a great investment, but it requires careful planning and research to avoid potential risks. Follow these steps to ensure a smooth and secure transaction:
1. Research the Developer’s Track Record
Not all developers are created equal. Some have a solid history of completing projects on time, while others may struggle with delays or financial issues.
✅ What to Do:
- Check the developer’s past projects—Are they completed as promised?
- Look for customer reviews and complaints from previous buyers.
- Verify if the project is registered with the Department of Human Settlements and Urban Development (DHSUD).
2. Compare Payment Terms
Pre-selling condos come with various financing options, and choosing the right one can make a big difference in affordability.
✅ What to Do:
- Ask about the reservation fee, down payment percentage, and installment terms.
- Compare bank financing vs. in-house financing—Bank loans often have lower interest rates.
- Check if there are hidden fees or penalties for early payment.
3. Visit the Site & Review Floor Plans
Since pre-selling condos are not yet built, buyers rely on floor plans and model units. It’s important to see the location firsthand to gauge its accessibility, surroundings, and future value.
✅ What to Do:
- Visit the actual project site to check its location, nearby establishments, and road access.
- Review the floor plan carefully—Is the layout practical for your needs?
- Ask for unit customization options (e.g., flooring, partitions, or fixtures).
4. Check the Contract & Inclusions
The contract to sell contains all the terms of your purchase, so it’s crucial to read and understand every detail before signing.
✅ What to Do:
- Verify the total contract price and all additional costs (e.g., transfer taxes, move-in fees, association dues).
- Look for clauses about unit size changes, penalties for delays, and refund policies.
- Ensure that the amenities and features promised by the developer are clearly stated.
5. Understand the Turnover Process
Once the condo is ready for occupancy, the developer will hand over the unit to buyers—but this process isn’t always straightforward.
✅ What to Do:
- Ask about the expected turnover date and potential delays.
- Find out if the unit will be delivered in bare, semi-furnished, or fully finished condition.
- Inspect the unit carefully during the turnover inspection—Check for defects or unfinished work before signing the acceptance form.
FAQs About Pre-Selling Condos
Buying a pre-selling condo comes with many questions, especially for first-time buyers and investors. Here are some of the most frequently asked questions to help you make an informed decision.
1. Is buying a pre-selling condo safe?
Yes, but only if you buy from a reputable developer. The biggest risk in pre-selling purchases is project delays or cancellations, so it’s important to research the developer’s track record, check if the project is DHSUD-registered, and review the contract carefully before making a commitment.
2. How much is the reservation fee for a pre-selling condo?
The reservation fee varies depending on the developer and project, but it typically ranges from ₱10,000 to ₱100,000. This fee is usually non-refundable and is deducted from the total price of the unit. Make sure to clarify how long the reservation is valid and what happens if you decide not to proceed with the purchase.
3. Can I sell my unit before turnover?
Yes, most developers allow buyers to resell their pre-selling condo before the turnover date. This is known as “flipping” and can be profitable if the unit has appreciated in value. However, some developers have restrictions on resale or require a buyer transfer fee, so it’s best to check your contract for specific terms.
4. What happens if the developer delays the turnover?
If there are construction delays, your contract should state the grace period allowed for completion. Some developers compensate buyers for delays, while others may not. If the delay extends beyond the agreed timeframe, you may have legal grounds to demand a refund or renegotiate terms.
5. Are pre-selling condos cheaper than ready-for-occupancy (RFO) units?
Yes, pre-selling condos are usually 20% to 40% cheaper than RFO units. Since they are sold before completion, developers offer introductory prices and flexible payment terms to attract buyers. By the time the unit is completed, its value may have already increased, making it a great investment opportunity.
6. Can I move into a pre-selling condo immediately?
No, since pre-selling condos are still under construction, you will have to wait for the turnover date before you can move in. The waiting period typically ranges from 2 to 5 years, depending on the project’s construction timeline.
7. What payment options are available for pre-selling condos?
Most developers offer installment payment schemes for pre-selling condos, including:
- In-house financing – Direct payment to the developer with flexible terms.
- Bank financing – A home loan from a bank after completing the down payment.
- Pag-IBIG financing – Available for eligible Pag-IBIG members purchasing from accredited projects.
Each option has different requirements, interest rates, and payment terms, so it’s best to compare them before deciding.
Conclusion
Pre-selling condos offer a great opportunity for homebuyers and investors to secure a unit at lower prices with flexible payment terms. They also provide the potential for value appreciation and access to modern amenities. However, buyers must be aware of possible risks, such as project delays and unexpected fees, and take steps to mitigate them—like choosing a reputable developer and carefully reviewing the contract.
If you’re considering buying a pre-selling condo, now is the best time to start your search! Submit an inquiry through the Contact Us page if you are already eyeing a specific project and would love to get some guidance or feedback.
Want to know the best locations for pre-selling condos? Read our guide: Best Locations for Pre-Selling Condos in the Philippines.
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