When considering buying a house in the Philippines, one of the major decisions you will face is choosing between Ready for Occupancy (RFO) and Pre-selling property. Both options come with their unique advantages and drawbacks, making it essential to understand which is better: RFO or preselling houses in the Philippines. In this article, we will delve into the details of each option to help you make an informed decision.

Understanding the Difference between RFO Houses and Pre-selling Houses

What are RFO Houses?

Ready for Occupancy (RFO) houses are fully constructed properties that are immediately available for move-in. These homes are typically finished and have all the necessary amenities in place, such as plumbing, electricity, and interior fixtures. Buyers can inspect the property in its completed state before making a purchase decision. Some RFO houses may also be semi-furnished or fully furnished. 

Advantages of RFO Houses

1. Immediate Availability: One of the biggest advantages of RFO houses is the ability to move in right away. There is no waiting period for construction to finish, making it an ideal choice for those who need a home immediately.
2. What You See is What You Get: Since the house is already built, buyers can inspect the actual property, eliminating the uncertainties associated with preselling houses.
3. Reduced Risk: With RFO houses, there is a lower risk of construction delays or changes in project specifications, ensuring that buyers get exactly what they paid for.

Disadvantages of RFO Houses

Higher Cost: RFO houses may come with a higher price tag compared to pre-selling houses. This is because the developer has already invested in the construction and finishing of the property. That is unless you can find a foreclosed property or a rush sale listing, that is selling below market value.

What are Pre-selling Houses?

Pre-selling houses are properties that are sold before construction is completed, often even before it has started. Buyers essentially purchase a property based on plans and renderings, with the promise of receiving a completed home at a future date.

Advantages of Pre-selling Houses

1. Lower Cost: Pre-selling houses are typically offered at a lower price compared to RFO houses. Buyers can take advantage of pre-construction prices, which can result in significant savings.
2. Flexible Payment Terms: Developers often offer more flexible payment terms for pre-selling houses, making it easier for buyers to manage their finances over time. This is because the down payment of 10-20% can be paid over a period of time at no interest. Buyers can also make advance payments to decrease their loanable amount.

Disadvantages of Pre-selling Houses

Which is Better: RFO or Pre-selling Houses in the Philippines?

The choice between RFO and pre-selling houses ultimately depends on individual preferences, financial situation, and priorities. Here are some key factors to consider:

Timing

If you need a home immediately, RFO houses are the clear choice. They offer the convenience of moving in right away without any waiting period. On the other hand, if you have time to wait and are looking to potentially save on costs, and don’t want to have a huge cash out, pre-selling houses might be more appealing.

Budget

Budget is a significant factor in deciding between RFO and pre-selling houses. RFO houses generally come at a premium price due to their ready-to-move-in status. If you are looking to maximize your investment and can handle a longer wait, pre-selling houses offer a more cost-effective solution with flexible payment terms and no bulk cash out.

Risk Tolerance

Consider your risk tolerance when making a decision. RFO houses come with fewer uncertainties as you can see the finished product before purchasing. Pre-selling houses, while potentially more affordable, carries the risk of construction delays and changes in the final product.

Customization

If you have specific preferences and want to customize your home, pre-selling houses provide more opportunities for personalization. RFO houses, being fully constructed, offer limited scope for changes.

Conclusion

In deciding which is better: RFO or pre-selling houses in the Philippines, it is crucial to weigh the advantages and disadvantages of each option. RFO houses offer immediate occupancy and lower risk but come at a higher cost and limited customization. Pre-selling houses provides cost savings and customization options but requires patience and a tolerance for potential delays and uncertainties. Ultimately, the best choice will depend on your individual needs, financial situation, and willingness to take on certain risks. Evaluate your priorities carefully to make an informed decision that best suits your circumstances.

If you want to discuss more on the pros and cons of both, talk with a licensed real estate agent today by clicking the button below.