The most common way developers sell their projects is through pre-selling. It’s a process by which a project, while still on paper, is actually sold to prospective buyers. Many agents actually call this process selling “air.”

Prospective buyers are gathered in the property where the project will be built and are told: “On this land will rise a residential project that will consist of this and that amenities, with so and so open spaces and more.” It’s like telling prospective buyers to close their eyes and imagine what the future development will be like and are then told to buy what the developer promises to deliver in the future.

For the developer, it offers two benefits:

1. With the proceeds from the pre-selling stage, he can use the money to start the project.
2. The proceeds from the pre-selling stage (if it was successful enough) determines the amount of loan he can secure from a bank to finance his project, i.e., the more units were sold at the pre-selling stage, the more money he can borrow from a bank.

For the buyer, buying at the pre-selling stage enables him to buy at the lowest price possible. It’s like saying: ”Own your house tomorrow, at today’s price.” Like I’ve said, the less steel, hollow blocks, concrete and other building materials that have been put in a project, the less its price is.

In effect, the lower price is a discounted price extended to buyers for buying something that isn’t there. For me, it’s a discount that the buyer is rightfully entitled to for pump-priming the project. But it does not, in any way, give the developer the right to shortchange the buyer.

To complement what developers promise on papers, model units are built. These are nothing more than a vivid representation of what a developer promises to deliver. The problem with a model unit is… it’s exactly that – it’s a model, an ideal or a benchmark.

You will also notice that in most brochures, there are disclaimers that say:

Plans are subject to change without prior notice. No representation is being made herein. The particulars, details and visuals shown herein are intended to give a general idea of the project and as such are not to be relied upon as fact.

The buyer is then encouraged to consult a lawyer or any professional who is familiar with the real estate law in the country.

All these are intended to imply that the developer’s promises should not be taken hook, line and sinker and they have no legal obligation to deliver everything they promise.

Do you think that’s fair? Before taking your money, they promise you the moon and the stars, but they will not if they feel they can’t. Developers can do that arbitrarily if they feel they can no longer obtain the margin they set before starting the project. The result: many cut back on promised features and amenities of the project until it no longer resembles what it ones looked like on papers.

I’ve been to a condo whose ceiling almost touches the heads of its residents. I know someone who bought a property from a developer who promised several open spaces. He chose a location where the proposed open space in front was constructed with a road and additional housing units. At the open space on his left, a Napocor transmission tower was erected.

In the 1990’s, another very good friend bought a property in Canlubang, Laguna (right beside SLEX) from a then well-know developer. After almost 20 years, long after the property has been fully paid for, not a single development has been added to the project. To aggravate matters, their monthly dues (which they refused to pay since there’s no development whatsoever) has run to more than 100 thousand pesos. That project sold out like hotcakes. The question is: Where have all the money gone?

In San Lorenzo South in Sta. Rosa, Laguna, where my sister has 2 lots, all Meralco and PLDT posts are inside individual lots. There are hundreds more such horror stories where the Filipino home buyers get shortchanged.

I have a question about Manila Southwoods in Carmona Cavite whose primary developer was Fil-Estate. It was a first-class project in the early 1990’s with 36-hole golf-courses designed by Jack Nicklaus and 350 residential lots around it. That, too, sold like hotcake. The golf course was finished as envisioned, but what happened to the amenities and infrastructures to allow construction of the houses? Whenever I pass by the area, I only see the interchange but none of the houses. I may be wrong, though.

In my opinion, real estate laws in the Philippines are tilted heavily in favor of developers and give little protection to buyers. Victimized buyers have to go through so many tiring and lengthy processes to have their grievances redressed, if at all. After having your dreams dashed and your coffers emptied, will you still have the strength and finances to go through such aggravations?

To summarize, do not always believe what a developer promises to deliver. Buying your dream house may be your best decision ever or it may be your worst. Betting all your hard-earned marbles on a developer who dazzles you with his eloquence and cutting-edge plans without conducting due diligence is the fastest way for you to lose a fortune.

I’ve heard of developers who shamelessly bought helicopters and fast cars from the proceeds of their pre-selling efforts thereby undermining the projects for which they were intended for. These are the worst developers to buy from.

On the other hand, there are those who value their reputation over and above anything, are in the business for the long haul and will not do anything to undermine their buyers.

I look forward to the day when real estate buyers will be treated as kings and not as cash cows of big businesses.

Thank you so much.

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