Priority and Purpose – It always comes down to every buyer’s unique purpose and goal when determining the ideal type of investment as requirements vary per individual. For example, one’s need for an accessible city condo address that gets him a walking-distant convenience to and from work, does not deem an equal value to another person’s need for a getaway farm house with large garden that produces fresh backyard root crops regularly.
Location – This is one of the core assets that any buyer primarily looks after. You’ve all heard of the cliché slogan “Location, location, location”. This golden rule has always been a vital principle for a reason. Unless specifically preferred otherwise, the perks of accessibility of any real estate guarantees its greater value especially in terms of easy ingress and egress.
Budget Allocation – Construction and renovation costs, furniture, appliances, permits and fees, mortgage rates, and even taxation funds are all combining factors that a buyer must prepare when it comes to allocating a realistic budget for a certain investment. As real estate is a physical endeavor project, this will enable the investor or buyer to mobilize its feasibility.
Fairness on Pricing– It dictates the fair pricing of a property in its given community regardless of the individual sentiment of the seller, a.k.a. “personal high assessment bias” on renovation costs and subjective overpricing.
Best and Cheapest– It embodies the principle of an arms-length transaction as well as the principle of substitution that best follows the unwritten rule that no buyer shall spend a huge amount of money over a similar product that can be obtained at a fairly cheaper rate.
Value Appreciation – It acts as a benchmarking guide in determining a property’s and its immediate community’s historic and forecasted appreciation trend in order to guide the investor of his value for money in the long run.
Examine The Documents – Check for the title’s availability and carefully spot fake titles alongside other documents. Visit the Register of Deeds’ e-LRA to secure all needed Certified True Copies before proceeding with the purchase.
Check For Encroachments – Conduct a site viewing and require a vicinity lot plan for a more accurate determination of the property’s boundaries as well as the frontage and depth. It is advisable to hire a land surveyor’s service to check if there are encroachments to and by the neighboring properties to avoid legal disputes.
Analyze The Geographical Positioning – Is it flood-prone due to very low elevation? Is it landslide-prone because it’s sitting on top of a mountain? Is the area generally prone to disasters such as earthquakes, tsunamis, typhoons, and other acts of nature? Is the nearby body of water polluted in any way? How is the soil integrity of the land? Visit the Nationwide Operational Assessment of Hazards a.k.a. Project N.O.A.H for more verification.
This varies per the terms and agreements of each selling transaction and thus holds no fixed condition or formula as to who handles paying which specific type of taxes and fees. But under common practice, the seller pays the 6% Capital Gains Tax (CGT) and the Broker’s Commission while the buyer handles the rest of the government taxes, certifications, and fees. Here’s a generic breakdown of the general fees for a transfer of title ownership:
Tax Base – Contract (Selling) Price, Zonal Value (ZV), or Fair Market Value (FMV), whichever is higher
Broker’s Commission – There’s no stipulated fixed percentage in the law for a professional fee. However, standard industry practice gets used to a 5% rate; conservative 3% for properties of grand scale; and as high as 10% mark-up for challenging properties to sell.
Tax Breakdown:
6% Capital Gains Tax (CGT)*
0.1% or 0.2% Notarization Fee, Deed of Absolute Sale*
1.50% Documentary Stamp Tax (DST)**
0.50%-0.75% Transfer Tax**
0.25%-0.75% Registration Fee**
*** Other Notarization Fees (SPA),
Certifications
(Certified True Copies, Tax Clearance, BIR
Certification Fee, other miscellaneous fees, transfer
title processing fee)**
Legend:
* Usually shouldered by the seller unless otherwise agreed
** Usually shouldered by the buyer unless otherwise agreed
*** Amount depends on per item and local government office
Bundle of Rights – As mandated under RESA Law (RA 9646), every buyer (provided that the transfer of ownership is concluded) has the right to fully utilize the property, the right to enjoy its fruits (eg: rental income), the right to possess the property, the right to dispose of the property (sell or flip), and the right to abuse the property however way the buyer (now owner) wants to but only in legal ways, or within the restrictions of a homeowners association/condominium corporation (if applicable), and the right to recover the property when deprived.
Caveat Emptor – Also known as “buyer beware”, the buyer legally deserves full disclosure of all major and minor information relative to the real estate being sold, especially about potential or existing issues that may consequentially affect its market value due to factors that directly influence the characteristics of the property.
Access To Documents – The buyer reserves the legal right to access documents, contracts, and all blacks-and-whites to the property as these determine the vital description that respectively institutes the ownership of that land.
Hands-On Broker Service – It’s important to feel that your broker is your partner from the get-go. Beyond the formal association and the transaction itself, the buyer and broker must establish a good relationship throughout the process as it makes the sales conveyance journey more comfortable, relaxed, engulfed in trust, and smooth sailing overall. Moreover, if the buyer needs auxiliary services relative to the property ownership, a broker’s endorsements may come in handy when it comes to other needs such as but not limited to property appraisals, loan mortgage financing, estate lawyers for proper legal settlement guidance, interior designers, architects, engineers and contractors for building and renovation, insurance advisors for mortgage-redemption insurance, etc.
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Buyers Buy With The Eye – As real estate is a physical and tangible thing and is most commonly valued for its aesthetic appeal and façade, arranging the house for sale with a visually enticing look and presentation would surely increase the percentage of its overall marketability. Throw in a few pillows, repaint the walls to re-brighten the walls, fix the leaks and cracks, and some other minor or major efforts of renovation would surely be of help. A well-groomed property will earn more prospect buyers’ appreciation.
Remember Why You Picked It in the First Place – As the current owner, what made you first fall in love with that property? What unique characteristics have you enjoyed, experienced, and took pride in from that house, land, or condo unit? Now with your extended role as a seller, you need to channel out and highlight those great qualities of your property and convey it forward to the buyers for a similar appreciation experience. This will make your property standout from all its competition in the area.
Exhausting Marketing Platforms – We live in a fast-paced digital age with audiences and buyers now just effortlessly scrolling to buy goods in a simple add-to-cart click-and-purchase experience. Thus, aside from prepping the property’s physical character for face-to-face transactions and open houses, it is also equally important to cater to online buyers as well.
As much as brokers would love to have every listed property sold in a jiffy, sometimes, properties for sale take a certain period to get pulled out from the market. Various factors such as but not limited to economic market status or real estate bubble and surplus in the area, the property’s location, its structural foundation, wear-and-tear, and aesthetic value, the status of its immediate community (principle of homogeneity), the asking price, including its marketing and exposure level amongst a pool of competitions are some of the most regarded contributing factors that may directly or indirectly either straight sell the property to a closing deal or may put it on the buffer.
If you’re a seller who newly ventures to buy-and-sell or flips investment for ROI, it is first important to fully and carefully understand the real estate market from its broad perspective. Are you selling a property that is located in the central business district? What about your hectare-huge property that is located on the outskirts of the rural areas? But regardless of the classification, physical condition, and lot area, what you need to be able to analyze better is the principle of highest and best use to that particular site given its economic state. Meticulously studying current market trends and statistics is deemed necessary to manage your selling expectations and desired profits versus the property’s current status relative to its community. Visit Collier’s Market Report Q2 2024 for residential, commercial office, hotel and hospitality industry, industrial, as well as capitalization rate for in-depth insights.
There’s no specific timeline or formula when flipping or selling a property as it is every seller’s right to dispose own’s property whenever he/she pleases under legal restrictions. However, especially when the seller’s main priority is captured within the desire to reap the maximum return and profit from his capital, it is important to observe the bigger contributory factors outside the four corners of the wall. Sometimes, land banking and strategic timing become crucial strategies as well (provided that the selling involves no short-term goal urgent fire sale, or ”pasalo” intent). For example, a condominium unit is bought in the early pre-selling stage from a developer. The best and ideal time to re-sell the property is once the whole condominium building/s is built, established, thriving, and with the highest occupancy and foot traffic rate. This is because of the presence of high demand that now exists in the condominium community vs. its construction years (first one to five years) with no active market demand prevalent at that time yet. Another example is a vacant commercial lot that was once idly sitting in the vast grasslands of a suburban area. One day, the government’s major road infrastructures and transportation accessibilities traverse beside or near the land property. Soon then emerges foot traffic and car traffic, malls are beginning to establish their presence in the area, and other commercial townships and mixed-used developments start to erect around the vicinity. That is when you know it is ripe to sell.
Fair market value is fair for a reason. It is understood that from the seller’s (owner’s) eye, the value of his/her property is close to gold value as this has an expected personal assessment bias. But to the buyer’s eye, it is not always automatically a similar case as value is a subjective thing. What the seller may see as a thousand-buck imported Muebles de Italiano vase that “ups” the property value in his/her determination may just be another random useless vase display to an unsuspecting buyer who won’t be willing to buy its “premium” added cost. Thus, an appraised market value by a licensed real estate appraiser best determines the fairest rate and asking price that the seller may still happily sell the property for with good return and profit, and without extorting the buyer.
