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Finding a Home Away from Home

By:Arrah Manticajon|July 22, 2019

Real estate buying tips for OFWs from the Professionals

Nowadays, it has become commonplace for Filipinos to find work abroad in search of greener pastures. Figures from the Philippine Statistics Authority reveal that from April to September 2018, there were 2.3 million overseas Filipino workers (OFWs). Within the same period, total OFW remittances amounted to PhP235.9 billion, making them a driving force in the Philippine economy.

With all the sacrifices that these modern-day heroes have to make, it is but natural for them to want to make the most out of their hard-earned money. One way to do this is by buying real property, whether it be a lot, a house, or a condominium. However, making such an investment when one is away from the country most of the time makes it more challenging for OFWs. Below are some tips from Cebu-based real estate professionals on how OFWs can ensure that they make a sound investment in real estate.

1. Find a broker and agent who understands your needs.

A trustworthy real estate professional can guide you through your purchase.

Brokers and agents have gained a bad reputation for being eager only to close the sale, or not disclosing important information to the buyer. As such, it is important to find a real estate broker who can find a suitable development for OFW clients based on their needs, not based on the fact that they work abroad.

Joy Casimiro of Leohrine Real Estate Brokerage (LREB) believes in giving property recommendations that are tailor-fit for every client. For OFWs, one of the things the asks if they want to buy property which is available right away, or if they want one that is in the pre-selling stage. She also asks about their future plans, such as how long the OFW intends to work abroad.

“There are a lot of things that I need to understand so I can give you the right advice. For example, if you come to me and you have the funds, that’s a different story. I have to find out what’s the budget and what’s the best location for you. If you just started working abroad and you have a contract of five years, then I have to find something that would be appropriate for your plan. It’s a case-to-case basis,” she says.

2. Consider prevailing interest rates.

Inflation has affected home borrowing rates this year.

Another factor that OFWs need to consider is the prevailing mortgage interest rate. Rappler reports that aspiring homeowners who plan to buy property in 2019 should be prepared to pay “ridiculously high” rates of up to 10% fixed interest for property that is payable in 10 years. This is due to interest rates which reached a peak of 6.7% in September and October of 2018, a figure which was not seen for the past nine years.

Despite high interest rates, Casimiro thinks that it is still wise to buy property. “I think real estate is the best investment for me because it’s tangible. Once it’s yours, you have an asset that you can mortgage or resell. Yes, the interest rate right now is not very competitive. I normally advise them to select a good project for them,” she advises.

One way to work around these high-interest housing loans is getting a self-liquidating asset. Casimiro cites as an example a condominium which one leases out. Under such a set-up, the initial investment would be the equity, and then the buyer can use the rental payments to pay off the amortization. This would allow the buyer to own the property while putting in minimal equity and not exhausting his income to pay for the property.

3. Check the developer’s track record and do
a site visit.

See the property for yourself to compare your expectations with reality.

As part of their due diligence, buyers should do research on the developer and choose those that turn over projects on time. They should also check the track record of the sales agents and brokers that they deal with. Doing a site visit to see the property being offered as well as the common areas helps buyers avoid surprises down the line.

Cirilo Congson, managing partner of Polaris Realty and Development, recounts of a story where a buyer rushed into buying a property upon the assurances of the broker that it is in a good location. The buyer intended to build a house a year after buying the property. However, what he did not know is that the property is a cut-and-build property, or one that needs some clearing before it can be developed into buildable property. As such, it will take five to six years before one can build a house.

For OFWs, it might not always be feasible to ask for a site visit. What they can do is to execute a special power of attorney in favor of someone they trust, making said person their attorney-in-fact. Their attorney-in-fact can then do the site visit, ask the questions the OFW buyer has about the property, and take notes about the development that may be of concern to the buyer.

The decision to buy real estate is not an easy one to make. But with these tips, buying real property would be less of a gamble for hard-working OFWs.

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