Buying a property is no easy task thus learning as much as we can before we make a purchase is good investment in itself. Sharing my own 2 cents of advantages and disadvantages of buying pre-selling and RFO.
Deciding which one to buy depends on your priorities. Hope this can help you decide. Happy reading!
Pros and Cons of Pre-selling:
Price/Payment:
Biggest advantage of pre-selling is obviously the price, you have option to pay a small amount, e.g. 10% down payment and you have earned your way to have your own house .
As the project gets near completion, prices increases 10% up to 40% at different stages. Thus, buying at preselling has the biggest PRICE advantage.
TIP: Buying at the earliest stage is the cheapest which is at groundbreaking and sometimes even before that.
Ask your broker to give you a listing of pre-selling projects at your target location and discount scheme for cash payments as developer gives discounts for spot cash.
Changes into the interiors:
Most townhouse developers allow changes into interiors thus you can incorporate changes to suit your needs during construction. Although there might be a need to pay additional cost for these changes.
For condos, typically changes are not allowed during construction.
Tip: Ask your broker to check what changes are allowed and not as some developers have restrictions.
Availability for occupancy:
If you are not in a hurry to buy then better to buy a preselling property.
If you have a target date of occupancy, it's best to put an allowance of at least 6 months delay from the announced completion date to ensure delays will not affect your moving-in date. Just a warning: Even well known or big developers experience major delays.
Tip: You may ask your broker the track record of the developer in terms of project completion but again no guarantee; delays can be uncontrollable at times.
Visibility of Finishing/Furnishings/Amenities:
Biggest disadvantage of buying Pre-selling is you don’t know what your final unit will look like.
Model unit or artist rendering of the design is not exactly what you will get upon turnover though some developer sell the model unit at a higher price.
Tips:
Ask your broker about a project that has been completed and still ongoing with the same developer. This way, there’s a chance to visit and assess the quality of work and finishing by the developer.
For townhouse dev’t: You can also visit at the construction stage nearing completion to assess the finishing or somehow see what it will look like in the actual. Although price will be higher at this stage.
You may also ask your broker to list down the type of finishing/amenities that will be turnover as this should be clear at the start.
Choices of Units:
Do you want a unit facing the sunrise or house located away from the streets, nearest to the amenities or getting the best view then preselling is the best choice as you can still select the best unit to suit your requirements.
Pros and Cons of RFO:
Price/Payment:
Expensive than pre-selling.
Depending on the quality and the demand for the property, price can increase as much as 40 to 50% upon completion.
Changes into the interiors:
Since finishing are in, you can incorporate changes based on what is already there. Design can match the provided finishing.
Although, there is a need to hire your own contractor and allocate time to monitor the progress of the construction.
Tip: Ask your broker to check what changes are allowed in case you plan to make changes before making the purchase.
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Availability for Occupancy:
This is the big advantage of RFO, you can go and live there ASAP. This is upon payment of certain amount depending on the payment scheme agreed with the owner/developer.
This is applicable to people who are getting married or parents who wants to give a house to their children with a target date of occupancy.
Visibility of Finishing/Furnishings/Amenities:
No surprises. What you see is what you get. Finishing and furnishings are on display.
You can see how the place is maintained, security measures in place and there's opportunity to ask neighbors on how the property management is like.
CCTV and guard are in place thus it is more safer.
Tip: Ask your broker to list down the finishing and furnishings that will be turnover to ensure that you have full inventory.
Choices of Units:
Limited choices as whatever is left will be available for selection.