Anchor Land Holdings, Inc.

Buying a property during its pre selling period benefits the buyer and developer alike

PAYING for a property in installments before the project’s completion as opposed to paying for it one time big time when it’s done may yield significant savings both for the buyer and the property developer alike. This is especially true when it comes to high rise condominiums which generally take two to three years to be completed. In such cases, people who start payment today for a condominium that just started its construction would need to wait until the project turn over perhaps sometime in 2013.

“The good thing about buying a property during its pre selling period is that the buyer can purchase them at a much lower price,” Elizabeth Ventura told the Inquirer in an
Interview. She is the vice president for sales and marketing of Anchor Land Holdings, Inc. (ALHI).

At the same time she said shelling out some P20,000 to P45,000 per month (depending on the actual cost of the property and the down payment required until the project’s completion) looks more appealing than handing out P3 million pesos up front.

“Pre-selling allows buyers to maximize and reroute the use of their money for other purposes,” she said. “Instead of paying P3 million at once they may be able to use the money to put up a business first or grow it in the stock market.

Of course, there are property developers which entice interested buyers by offering a monthly installment of as low as P6,000 or P8,000 during pre-selling. But Ventura said that “paying lower is not always better.”

“Property developers could use money from pre-selling as additional cash flow to ensure that the projects are well-funded until completion,” she said. If there’s no money coming in, developers may be forced to look for resources else where to continue the pace of construction, the added interests of which, in turn, may be passed on to the homebuyers.

According to her, their company had devised a payment scheme that favors both them and the buyer. In ALHI properties, buyers are spared from paying down payment (usually some 20 percent of the actual cost of the property), but instead pay a set amount per month for four years. This payment scheme has worked well since the company started operations six years ago. In the projects they had completed--which include the Lee Tower in Binondo, Manila; Mayfair Tower along UN Avenue in Manila; and the Mandarin Square in Binondo--they never had any delinquent accounts.

“We’re very fortunate in that regard because usually about 30 percent of individuals who buy a property during pre-selling would back out,” she said. In this case, the money that the buyer has so far paid the developer is forfeited. For the developer, having additional cash flow from pre selling also allows them to buy construction materials sooner rather than later at cheaper cost.

“We prefer having our properties sell out during pre selling as opposed to selling them after its completion,” she said. Because this way there’s a higher possibility that the units will be sold (she said there’s never an assurance that a unit is sold until they had received the payment in full). On average, a 300-unit condominium should sell out in two years to sustain the pace of project construction until completion.

The setback with buying a property during pre selling obviously is that the product is not there to see yet. For many, especially the first time buyers, it could be hard to shell out money for something that isn’t tangible yet, something that hasn’t yet been built.

This is where model units come in. Nowadays, building one has become a necessity if a developer wants to give the buyer that extra push to purchase. This way, interested  parties can experience for themselves what they’re bound to get once the project is completed.

A company’s track record in quality construction and on time delivery also speak volumes. Pre selling involves a lot of trust so people are more likely to purchase a property from an established developer rather than a newcomer.

“Of course, there are risks in buying during pre selling,” Ventura said. Even us in ALHI should not be excused from this notion. These risks include the possibility that the construction may not be completed at all or that delivery date may be delayed.

Fortunately for ALHI property buyers, property units have always been delivered on time. And they would continue to do this in all of their projects.

Anchor Land Holdings, Inc. is one of the fastest growing players in the Philippine real estate industry specializing in the development of sophisticated and luxurious residential condominiums. It has two ongoing projects in Binondo--the Anchor SkySuites, a 56 storey luxury residential tower and the Wharton Parksuites, a 39 storey condominium that will cater to students of Chinese schools in the area.

-    Kenneth M. del Rosario, Philippine Daily Inquirer. 25 August 2010