Understanding Preselling House and Lots
Investing in preselling house and lots has become one of the most popular real estate strategies in the Philippines, offering both significant opportunities and notable risks. With property values consistently rising and developers offering attractive payment schemes, many Filipinos are drawn to preselling properties as a way to secure their dream homes or build investment portfolios. However, potential buyers must carefully weigh the advantages against possible challenges like construction delays, developer reliability, and market fluctuations. This comprehensive guide will examine every aspect of preselling house and lots to help you make an informed decision.
What Are Preselling Properties?
Preselling house and lots refer to residential properties that developers sell before construction begins or during early construction phases. This approach allows buyers to purchase units at lower prices compared to ready-for-occupancy (RFO) properties, with flexible payment terms spread over the development period.
How the Preselling Process Works in the Philippines
The typical preselling house and lots transaction follows these stages:
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Pre-construction Marketing
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Developers launch projects 6-12 months before groundbreaking.
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Early buyers can reserve units with a small reservation fee.
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Staggered Payment Plans
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Downpayment: Usually 10-30% of the total price.
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Monthly amortizations: Spread over the construction period (typically 24-36 months).
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Turnover and Completion
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Full payment is required upon project completion (3-5 years).
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Buyers receive the unit title and keys.
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For official regulations, visit the HLURB website.
Section 1: The Preselling Process Demystified
1.1 What Exactly Are Preselling Properties?
Preselling house and lots refer to residential properties that developers offer for sale during the planning or early construction phases. Unlike ready-for-occupancy (RFO) units, these properties are typically sold 12-36 months before project completion.
Key characteristics of preselling properties include:
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Lower initial price points (typically 20-30% below projected completion value)
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Flexible payment schemes spread across the construction period
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Priority unit selection for early buyers
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Potential for customization in some developments
1.2 The Complete Preselling Transaction Timeline
Understanding the typical preselling timeline is crucial for proper financial planning:
Phase 1: Project Launch (Month 0-3)
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Developer announces the project
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Marketing materials and show units become available
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Reservation period opens (usually requiring 1-2% of total price)
Phase 2: Downpayment Period (Month 3-12)
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Buyer completes 10-30% downpayment
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Payment plans typically stretch over 12-24 months
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Construction permits are secured
Phase 3: Construction Phase (Month 12-36)
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Physical construction begins
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Buyers make monthly amortizations
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Regular progress updates from developer
Phase 4: Turnover (Month 36-48)
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Final payments are settled
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Unit inspection and defect resolution
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Title transfer and move-in
1.3 Legal Framework and Buyer Protections
The Philippine government has established several mechanisms to protect preselling buyers:
HLURB Regulations
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Requirement for License to Sell
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Project registration and approval
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Escrow account requirements for buyer payments
Maceda Law (RA 6552)
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Protection for installment buyers
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Right to refund after certain payment thresholds
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Grace periods for late payments
Section 2: Financial Advantages of Preselling Investments
2.1 Cost Savings and Price Appreciation
The most compelling advantage of preselling house and lots is the significant cost savings:
Price Comparison Table
| Purchase Timing | Price per sqm | Savings vs RFO |
|---|---|---|
| Preselling (Early Bird) | ₱80,000 | 30% |
| Preselling (Regular) | ₱90,000 | 20% |
| RFO (Completed) | ₱110,000 | Baseline |
Historical data from Lamudi Philippines shows that well-located preselling properties appreciate by an average of 10-15% annually during the construction period.
2.2 Flexible Payment Structures
Preselling projects typically offer multiple payment options:
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Straight Payment Plan
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20% discount for cash buyers
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Full payment within 30-60 days
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Deferred Cash Payment
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20-30% downpayment
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Balance payable upon turnover
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5-10% discount available
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Installment Plan
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20-30% downpayment
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Monthly amortizations over 24-36 months
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Often interest-free during construction
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2.3 Tax Advantages and Incentives
Preselling buyers may benefit from:
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Lower property taxes during construction
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Potential VAT exemptions for certain projects
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Capital gains tax planning opportunities
Section 3: Comprehensive Risk Analysis
3.1 Construction-Related Risks
Delay Statistics
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30% of projects experience 6-12 month delays
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10% face more significant postponements
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Common causes: permitting, weather, labor issues
Mitigation Strategies
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Review developer’s track record for on-time delivery
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Check contract clauses regarding delay penalties
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Maintain communication with developer representatives
3.2 Financial Risks and Considerations
Market Fluctuations
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Interest rate changes affecting financing costs
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Currency exchange impacts for foreign buyers
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Economic downturns affecting demand
Personal Financial Risks
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Income stability during payment period
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Emergency fund requirements
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Contingency planning
Section 4: Comparative Investment Analysis
4.1 Preselling vs. RFO Properties
Financial Comparison (5-Year Horizon)
| Factor | Preselling | RFO |
|---|---|---|
| Initial Capital | ₱2,000,000 | ₱3,500,000 |
| Appreciation | 50-70% | 20-30% |
| Rental Income | Starts Year 3-4 | Immediate |
| Liquidity | Lower | Higher |
4.2 Preselling vs. Other Investments
Return Comparison
| Investment Type | 5-Year ROI | Risk Level |
|---|---|---|
| Preselling Property | 50-80% | Medium |
| Stock Market | 30-50% | High |
| Time Deposits | 10-15% | Low |
| Mutual Funds | 25-40% | Medium |
Section 5: Expert Recommendations and Strategies
5.1 Choosing the Right Development
Location Criteria
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Proximity to business districts
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Upcoming infrastructure projects
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Neighborhood growth potential
Developer Evaluation
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Years in operation
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Completed project portfolio
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Financial stability indicators
5.2 Financial Planning Strategies
Budgeting Guidelines
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Allocate 20% buffer for unexpected costs
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Plan for 5-10% annual property tax increases
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Account for association dues and maintenance
Financing Options
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Bank loan pre-approval process
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In-house financing pros and cons
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Alternative funding sources
Top Developers for Preselling House and Lots
1. Ayala Land
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98% on-time completion rate
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Premium developments in key cities
2. SM Development Corporation
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Affordable mid-range options
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Strong presence in Metro Manila
3. Megaworld Corporation
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Innovative township concepts
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High appreciation potential
Exclusive Preselling Properties for Discerning Investors
For high-net-worth individuals, business leaders, and elite investors seeking premium real estate opportunities in the Philippines, VHermosa Bright Corp. offers unparalleled luxury developments. Whether you’re a CEO, doctor, entrepreneur, or seasoned investor, our portfolio includes high-value investment properties such as:
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Luxury Leisure Farm Lots
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Prime Residential & Commercial Lots
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High-End Condominiums
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Agricultural & Tourism Investments
In this guide, we highlight two of our most prestigious developments:
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Mountain View Leisure Community – A serene mountain retreat for luxury living
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East West Breeze Leisure Farm & Resort – A premier leisure and investment destination
Expert Recommendations for Buyers
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Allocate a 15-20% budget buffer for unexpected costs
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Prioritize established locations with proven growth
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Consider mixed-use developments for better long-term value
Conclusion: Making an Informed Preselling Decision
Preselling house and lots represent an exceptional opportunity for Philippine property investors, offering the perfect balance of affordability and growth potential. By understanding the complete picture – from financial benefits to potential risks – buyers can make informed decisions that align with their investment goals.
Key takeaways:
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Preselling properties offer significant price advantages over RFO units
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Proper due diligence on developers minimizes project risks
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Strategic financial planning ensures smooth transaction completion
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Location selection remains the most critical success factor
