by: Merlito Castor Catolico, Real Estate Consultant (PRC Lic. No. 062)
A food for thought for former friends and acquaintances (who are now foreign nationals) who are planning to buy a property in the Philippines:
1. The Listing Broker is not your “friend” – His loyalty is with the owner of the house he is selling and not to you!
In fact, he has a contract with the owner to sell the property (called a listing agreement signed by both parties) at the highest price possible because often his professional fee is a % of the gross sales, and worst (particularly for unlicensed “brokers” kuno) he might just simply jack up the prices – and in some hilarious situation ends up getting a higher amount than the owner himself!
2. If you spend millions of pesos to buy a property – common sense tells you to have it properly appraised by a professional real estate appraiser to estimate its market value.
Do not rely on the broker himself (see No. 1 above), the neighborhood gossip, a relative with no real estate experience regardless of how good and pure his intention is, a former office mate you have not seen in the last decade.
Spending say P 20,000 for an appraisal of a P 5,000,000 3 bedroom residential property means investing 0.4% for your peace of mind! Its hard to lie down in your new bedroom looking at the ceiling for the next 10 years knowing that at your age – you were still duped by a glib talker!
3. Common sense will also tell you to have the property be thoroughly “property inspected” for termites, obsolete designs, external obsolescence (present and future – a garbage dump maybe proposed near your backyard by the city hall, or somebody died of a horribly infectious decease in the masters bedroom, God forbid!).
Hire somebody to climb the attic, ceiling, and crawl underneath, and look under the kitchen sink – and not just to leisurely take a walk around the property!
4. A background investigation title or ownership due diligence is also necessary. The property might be in the middle of nasty property dispute – and the back page is littered with a lot of lis pendens, mortgages, etc. The seller might not be the true owner, or his title might be spurious, a duplication, a fake, with a cloud, etc.
The house might be inadvertently standing on another’s property! Have it also surveyed by a Geodetic Engineer to be sure – especially for rural areas whose physical boundaries might be just some rock or trees planted by an ancestor long ago!
5. If you are a former Filipino citizen who is already a citizen of another country, then you have lost the rights of a Filipino citizen, and you are barred from owning real estate in the Philippines, except under certain circumstances like inheritance, previously owned properties, and under the special conditions of BP 185 (Residential up to 1000 Sq. M. Urban, and up to 1 hectare Rural), and RA 8179 ( up to 5000 rural, and up to 3 hac Rural – for business) – just go to the internet an Google it up!
By the way, a foreigner can also buy condos provided the ownership of foreign nationals in the condo corporation does not exceed 40%.
There are a lot of things to consider when buying properties in the Philippines like the taxes to be paid, and the deadline for payment of those taxes (for Capital Gains tax, 60 days from notarization, for Documentary Stamps, the 5th day of the next month).
Also don’t forget to arrange who will process the registration of your new property – there are brokerage firms who does this for a fee.
But never deal with an unlicensed or colorum broker or agent. It is a violation of RA 9646 or the RESA law, and punishable with a fine of P 100,000 or 2 years imprisonment, or both; or even double that for illegal practitioners.
If as a buyer, and your dollar is so burning a hole in your pocket such that you are super anxious to spend it now regardless of the RESA law – just remember that knowing that your broker or agent is an illegal colorum yet you deal with him with this foreknowledge, makes you a complicit to the crime itself – and may bar you from complaining to the authorities in the future if the deal turns south!
What a bad idea to start your new life in the Philippines by violating a law!
if you don’t know this – then you do now. We are now in the information age and its very easy to unmask a fake or illegal broker or sales agent.
Just visit the PRC website to check and unmask the true identity of your broker or sales agent. Just google this and fill in the name of your broker: http://www.prc.gov.ph/services/?id=16
That’s the way it is!