Protecting Home Buyers

Protecting homebuyers
By Gilbert YuInquirer
Posted date: June 09, 2007

MANILA, Philippines -- The Philippines is in the middle of a property boom because of the sound fiscal management by President Gloria Macapagal-Arroyo and her economic team.
Given this scenario and part of the my advocacy to protect the homebuyer, my life passion is to house our countrymen with the best quality home they can afford.
A professional architect for more than 37 years, I abide by very simple rules that when it comes to dealing with my clients -- do what has been asked of you and be truthful about all details of the project.
This is the first of a series of tips I am sharing to empower the homebuyer.
1. Don’t believe the flyers. Promise of palaces in the sky at only P9,000 a month with no down payment sounds too good to be true. Flyers don’t tell you everything. They don’t mention the ballooning payments and, most important of all, they don’t say when the project will start and when the unit will be delivered to the homebuyer.
2. Be insistent. As a homebuyer, you must ask the right questions and insist that you should be answered adequately, completely and truthfully.
In more developed countries there are escrow or trustee banks that handle real estate transactions. The homebuyer pays to the bank and the bank releases money to the developer based on construction accomplishment.
Given the inadequacy of our laws, our first question to the developer is: how is my money spent and where does my monthly payment go?
It is a very simple and practical question that you may find their sales agents stumbling over. If the agents cannot answer, go to someone higher until you are satisfied.
3. Investigate. Find out who are behind the project, if it is a new or old corporation and how much their paid-up capital is and if they have the capacity to finish the project. You will be surprised to know that many corporations that develop billion-peso projects have only P1 million in paid-up capital sometimes even less.
Ask about the track record if they claim to be an experienced developer.
Another vital question to ask is about the land ownership. Many developers do not own the land their project is built on. Typically, this is mortgaged to the bank or the developer and the landowner may have a joint venture.
4. Study the joint-venture agreement. Know that this is your right.
You must secure an agreement from the developer and the landowner or the bank that after the homebuyer has fully paid for the property, based on the monthly payment scheme of the developer, they must release the property to the homebuyers and free it from any dispute or lien.
5. Put everything in black and white. We may not have the proper laws in the construction and real estate industry, but the only one that can protect you as a homebuyer is you and your insistence in asking the right questions. And once you get the answers, demand that the answers be written in the contract.
Remember, if the developer can answer your questions truthfully and adequately, then, you can consider yourself protected. Otherwise, just walk away and find another. There are many out there who share the same passion we have to provide shelter for everyone who can afford it.