Real estate on the rise

The real property sector posted a hefty 22.7-percent growth in real terms--now the highest-growing sub-sector within services. In the quarter previous to that, the growth rate was 26.2 percent. Against an average real growth rate of 16 percent in 2004 and 2005, real estate growth appears to be picking up lately. It has come to a point that renewed worries are now being heard that a real property bubble similar to what led to the 1997 Asian financial crisis may be looming.

A notable indicator is the recent upsurge in real property loans being granted by the Philippine banking system. Ten years ago, the Bangko Sentral ng Pilipinas (BSP) saw it fit to impose limits on the real property lending of banks. Is it time to revisit those limits again?

BPO-driven
What is driving the recent growth in the real estate sector? There is much casual evidence pointing to the surge in office space demands from the call center industry, and from the business process outsourcing (BPO) sector in general, as a primary source of the growth. Indeed, non-factor services exports, which prominently include BPOs, grew by a whopping 36 percent last year.

Major centers around the country are seeing a similar boom in these types of businesses, that include backroom accounting, medical and legal transcription, graphic and architectural design, animation, research and a number of others.

There is an interesting sidelight here: the "research" part of it includes the not-so-honest business of made-to-order term papers and thesis manuscripts for lazy students overseas--a business. For decades, this "cottage industry" for manufactured or recycled research papers had been known to students to be thriving in the Claro M. Recto Avenue area in Manila. Guess what: the industry has now gone global--thanks to Internet search engines like Google and Yahoo! coupled with computer cut-and-paste technology, which make it very easy to come up with a credible term paper in whatever subject you can think of, within minutes.


Housing demand
Adding to the BPO office space demand is the persistent unmet demand for housing, especially in the low- to medium-income segment. While the market for high-end condominium housing units appears to have tapered, growing numbers of Filipino families are in need of homes. The demand from OFW families is particularly on the rise, with anecdotal evidence pointing to a growing portion of remittances now going into housing investments. Property developers are taking heed, including those that traditionally focused on the higher end of the market. The big names in the industry have increasingly gone into housing development projects targeted at this rapidly growing market segment.

Helping this trend is the current environment of low interest rates, which has made housing finance much more accessible than before. For this we have the improved government fiscal situation and surging money supplies worldwide to thank. Banks no longer see it as attractive to lend to the government as before, via investments in government securities and treasury bills whose yields are now much lower.

No bubble
At the same time, demand for bank loans from the traditional corporate borrowers has slowed down, with deepening capital markets and expanded financing options. Thus, the banks have turned to consumer financing in a big way--including home and auto financing--which is good news to the housing industry. Adding to all this is the growing demand for property development from the retirement estate industry, spurred by aging populations in rich countries. And then there are the shopping malls sprouting out all over, thanks again in large part to consumer purchasing power fueled by OFW money.

The recent surge in real estate development is not quite the same as the bubble that led to the 1997 collapse. It appears that brisk growth in the sector could be around for a while--and this is good news for the Philippine economy.

Home Buying Tips

How often do we hear someone say: "My dream is to own a house." "I would be happy and contented owning a small house and lot." This is the simple Filipino dream. Concurrently, the measure of one's success is determined by how many pieces of real estate he owns. Truly, for a Filipino, real estate ownership is the barometer of his achievement. It may also be the cause of his downfall, if he does not buy correctly.

The typical Filipino mentality in home buying is that the first home he buys should be his dream home and that is where he is going to stay until the day he dies. If you are looking for the key to money-wise home ownership for the coming decade, keep this rule in mind: When you buy, make sure you buy with an eye to resell, sooner rather than later. This means that if you are a smart consumer, you'll look at any house you're buying with a view to its resale-ability at maximum gain, probably within the next five to seven years. Even if you don't sell within the average time frame, you will find this buy-to-sell perspective will bring you sounder investments.

Simply explained, the first home you buy does not necessarily have to be your dream home. You can use this first purchase as a stepping stone to eventually buying your "castle"” The important thing is for you to make that first step into property ownership: buy with the intention of selling later, and then buy again a much bigger one, until you reach your dream. Here are some basic rules to consider to make this principle work for you:

Rule 1: The most important general principle in house-hunting is - location, location, location. Your home's location within the community will be the most important controller to your resale profit. Good schools, proximity to shopping and transportation, and accessibility to the central employment area are factors that make location favorable. A home purchase is the largest investment most families undertake. When you settle in the community of your choice, you gain a stake in its future, its plans and problems. You will develop a sense of responsibility and pride in home ownership and, with your neighbors, will have a strong influence on the growth of the community. If you choose a home in the heart of the metropolis, you’ll enjoy close proximity to shopping areas and convenient transportation. However, you may want to check on noise and pollution levels. Life in a quiet subdivision, which is a little further away from the metropolis, offers a lot more room in peaceful surroundings, but this may require longer travel time into the city. Take time to weigh all the possibilities before you reach a decision to purchase a home in a particular location.

Rule 2: After you have determined the best location for you, the next important factor to check when buying a house in a development project, is to check out the reputation of the builder or developer. Don’t take other people's words on builder excellence. Check for yourself. See as many houses he has built or projects he has developed. Look around for sloppy workmanship, such as rough edges, unfinished carpentry areas, poor plumbing facilities. If you are buying in a development, talk to other homeowners in that development and ask if they have any problems in their houses and community. Are their houses basically sound? Do they have ample water supply? How is the security in the area?

Rule 3: Choose a house whose architectural style places it safely within the mainstream of your area and price range. Highly personalized and dramatic architectural structures may take more time to re-sell later on as you may have to find a buyer with the same personality and tastes as you.

Rule 4: If you are buying an older house, be certain that your house has, or will when you've finished renovating it, the value added features considered essential for your location and price bracket. Among these may be an additional bathroom, bedrooms, a carport for at least one car.

Rule 5: Avoid the big value losers. A swimming pool may be a status symbol for you but for a maintenance-conscious individual, this may become a liability for resale rather than an asset.

Rule 6: Another consideration you should take is how you are going to finance the purchase. For those who are going to pay the whole amount in cash, there is usually no problem because they will buy or build up to the amount of money they have set aside for the purchase. On the other hand, for those who intend to finance their purchase, the most important thing to remember is - do not over-extend yourselves. In simpler words, do not borrow more than you can afford to pay in monthly amortization. The saddest thing to see is losing ones’ home to foreclosure.

The rule of thumb in financing is your monthly amortization payments should not exceed 30% of your family income per month. Of course, each lending institution will have their qualifying requirements, so I suggest that you visit your bank and get yourselves pre-qualified first before you start your home search. If you know your qualifying limit, then you will stick to viewing only the homes in your price range. The wise and prudent buyer will pick the best looking house in his price range, and then move up to a better one later using the equity build-up and appreciation from the re-sale of the old house.

Rule 7: Be prudent in buying or investing in projects or developments being pre-sold. For me, buying real estate during the pre-selling stage is like investing in an idea. It is intangible, just like anything that cannot be appreciated using the five senses, and may just evaporate into thin air. In a normal market, property appreciation is based on supply and demand. In a boom market, speculating in pre-selling may seem attractive because one thinks he is buying at a lower value. But more often than not, this is an artificial property value because it is based on appreciation dictated at whim by the developers. The real estate market will always seek its normal levels, and when this happens, investments made based on artificial value will crash. You would not want to see yourselves in the middle of the debris. Don't get me wrong. I am not telling you not to make aggressive investments in real estate. I believe that real estate is still one of the most dependable hedges against inflation in a normal market, and it does a whole lot more in a brisk market. Let me illustrate further. If the rate of inflation today is 7%, it is more than likely that the rate of appreciation of your real estate property will go up at least 7% annually.

Rule 8: Determining if the price is right cannot really be formally documented by research unless you hire a licensed real estate broker or appraiser. But you can do some scouting around and find out what the going rate per square meter is in the area, and then determine if the property you are buying is at least within its fair market value range. A word of caution: It is always good to seek professional advice on this matter; you wouldn't want to rely on guess-timates, would you?

Rule 9: An educated consumer will realize the value of working with a licensed real estate professional - a formally trained and qualified agent to help him through the process of finding the property, handling the legal paperwork and details, getting the best financing option possible, and eventually closing the transaction. There is value to the peace of mind generated from using the services of a real estate professional. Commissioning a knowledgeable agent will save you time, provide a greater selection of properties to choose from and will make the buying process less stressful.

Rule 10: Use prudence in your home search, use your heart too. Remember that the home is where the heart is. No matter how well planned your purchase is, but if you're not happy with your choice, all your preparations will have been in vain.

Fee Simple

The law recognizes this form of estate (ownership) in real estate as the highest form. The property owner is entitled to full enjoyment of the property, limited only by zoning laws, deed or subdivision restrictions or covenants.

It refers to the “bundle of rights” that accompany ownership of real property.

The “fee simple” is the largest bundle available for private ownership of land.

Included in the bundle of rights under “fee simple” are: right to occupy and use, right to build, right to restrict use, right to mine, drill, or farm, right to mortgage, right to easements, right to exclude others, right to sell, right to give away or abandon, right to refuse to sell, right to rent or lease, right to license, right to the fruits, and right to devise by will.

Hence, real estate ownership is also really just ownership of the rights to the land.

When a real property is mortgaged, this may be viewed as removing one right from the bundle and giving it to third parties (such as a bank or other financing institutions ).

Although the fee simple represents absolute ownership of land, it is still subject to government’s basic rights of taxation, exercise of police power, eminent domain, and escheat.

As many Philippine landowners know, aside from its yearly taxation on real properties, government also collects taxes on certain transactions — sale, donation, or mortgage — involving land and any improvements thereon such as a house or a building.

A landowner who doesn’t pay taxes risks having his property seized by the government.

Developments on real property are also limited by government’s implementation of building and fire codes and zoning.

Government’s eminent domain power gives it the right to take private property for public use after paying “just compensation.” Expropriating property for road right-of-way is one example.

Escheat is when private property reverts back to government after a landowner who does not have any legal heirs dies without leaving a will.

The fee simple concept has its origins in feudal times and is the most common way that real estate is owned in common law countries like the Philippines.The word “fee” in fee simple has its origin in feudalism where it is used to refer to fiefdom, fief, feud, feoff, or fee, which takes the form of inheritable lands given by a liege lord in return for a form of allegiance.

Productivity and Economic Growth

One of the factors that led to the unsustained economic growth in the Philippines in the last three to four decades is low productivity.

Productivity is the value of the output produced by a unit of labor or capital.

Given the chance and proper training, the Filipino worker can be very productive based on the experiences of some multinational companies in the country, where the efficiency rate of the Filipino worker even reaches the highest global standards.

Productivity could be attributed to many things; the richer ones have more access to capital, land and many productivity-enhancing tools, such as computers, machineries, various types of transportation and other equipments, knowledge, education, training, better health, high motivation, higher aspiration and connections give the affluent ones the advantage over the poor to be more productive. With the many advantages that the rich have at their disposal, they could produce higher value-added goods and services compared to the poor. The result is the rich gets richer and the poor gets left behind.

One aspect that deters the country to be more competitive in the market place is the poor infrastructure of the country.

Globalization and the Economy

In the future, it will be harder to develop lands and find buyers for the low-&-medium cost housing. Since land is getting scarcer and more expensive. With globalization, jobs are now held on for a few months to a few years only. Although OFW’s will still be there, they will be facing many other people of other nationalities who will be able to accept lower wages.

As the country is finding ways to adjust and take advantage of the opportunities of a more-open economy, white-collar and blue collar workers alike will have to lower wages and acquire new skills to look for other employment opportunities or start their own businesses.

Globalization is fast changing the economic landscape, as other countries produce and deliver better goods and services at a lower cost with better quality; more and more local consumers are now buying imported goods, commodities and services. This in turn affects the viability of thousands of small and medium size firms and farms.

The Philippines like other developing countries will have a hard time surviving in a globalized economy. A global economic downturn will affect the country’s export earnings and OFW remittances and with many countries, including our Asean neighbors already economically ahead of the country, it will take double the effort for the Philippines to be not just left behind.

If the country can get its act together, where the government, and everyone else would cooperate and work hand-in-hand, then there is hope for a brighter future for the country. But that is only if ever the country gets its act together, learning to accept, embrace and do something about the fast economic, technological, political and social changes will take a lot of time, money and effort.

Challenging Times

Real estate in the late 90’s saw the currency crisis that came in swiftly and unexpectedly. A number of Real estate companies closed up.

Even with the change of administration, the country still does not have a vibrant economy to be able to make the dead rise again. Just like all businesses, the business of real estate is built on trust.

With other crises and challenges the country is facing, it is very naïve to expect that everyone in the scenario will come out smiling in the future. The crisis taught everyone in the real estate industry a very painful lesson not to be overly optimistic, ambitious or greedy.

But other resourceful and creative developers turned to new scheme to survive the crises. Some publicly listed real estate eased their debt burden by taking in their creations as new investors through a debt-to-equity conversion scheme. Others slowed down their businesses to well-capitalized developers and foreign investors.

Although the medium-and-low cost housing sector has also been affected by the various crises, it has not been as badly hit as the high-end residential condominium units. There is always a demand for these types of housing. But developing these types of housing does not spell fast money or big bucks, unlike the higher end residential condominium units.

There is a real need for housing in the low-and-medium cost sectors, although not all those who need housing units will be able to afford them. Another problem of developers in this sector is the house financing for these market. Since the government requirement for the accreditation of developers is very strict and the loan take-out is a very long process. This is partly due to the lack of funds of the government and the high default rate of the borrowers.

Developers should also be selective when accepting their buyers in this type of market, since many buyers in this sector have unstable jobs and small earnings. The downpayment and monthly amortization per unit is also small, so developers should also have a strong cash flow to finish their projects. This sector can give one a head ache, since there are so many types of people in this kind of market, and many cannot also pay diligently. But not all the buyers give one a headache, there are also people who pay in cash out right, but they are the minority.

Real Estate useful resources

1. Zonal Values
Section 16(e) of the Tax Code, as amended by Presidential Decree No. 1994, authorizes the Commissioner of Internal Revenue to divide the Philippines into different zones or areas and determine for internal revenue tax purposes, the fair market value of the real properties located in each zone or area upon consultation with competent appraisers both from private and public sectors.

In case the gross selling price or the market value as shown in the schedule of values of the provincial or city assessor is higher than the zonal value established herein, such values shall be used as basis for computing the internal revenue tax.

2. Property Ownership in the Philippines

ACQUISITION BY FORMER NATURAL BORN FILIPINO CITIZENS
1. Mode of acquisition is not limited to voluntary deeds (such as sale or donation) but includes involuntary deeds (such as foreclosure, execution or tax delinquency sale)
2. Maximum area that may be acquired:
a) For residential purpose – 1,000 square meters of urban or one hectare of rural land.
b) For business purpose – 5,000 square meters of urban land or 3 hectares of rural land.

Former Filipino Citizens
Former natural-born Filipino citizens, are entitled to own a maximum of 1,000 square meters of residential land and one hectare of agricultural or farm land. For business purposes, a maximum of 5,000 square meters of urban land or three hectares of rural land is allowed. In the case of married couples, one or both of them may avail of the privilege provided that if both avail, the total area acquired shall not exceed the maximum.

In the case of a transferee already owning an urban or rural land for business or other purposes, he/she shall still be entitled to be a transferee provided that when added to those already owned by him/her shall not exceed the maximum.

Business purpose refers to the use of land primarily, directly, and actually in the conduct of business or commercial activities in the broad areas of agriculture, industry, and services, including the lease of the land but excluding the buying or selling thereof.

FOREIGN OWNERSHIP OF CONDOMINIUM UNIT
In the condominium concept of ownership, absolute ownership by a foreigner is allowed not to exceed forty percent interest in the project. The unit owner is the absolute owner of the space within the interior surface of his unit, but is only a co-owner of the exterior façade of the unit.

RIGHTS OF A CONDOMINIUM UNIT OWNER
Absolute ownership of his unit
Co-ownership of land and common areas
Exclusive easement of the space of his unit
Non-exclusive easement to common areas for ingress or egress
Right to sell, lease, or mortgage his unit
Right to repair, paint, decorate the interior surface of his unit
Right to participate and vote in condominium corporation meetings

OBLIGATIONS OF A CONDOMINIUM UNIT OWNER
Pay the realty tax on his unit
Pay the insurance on his unit
Pay the shared monthly dues for maintenance of common areas/amenities/garbage disposal
Comply with use restrictions

RIGHT TO REFUND UNDER MACEDA LAW AND P.D. 957
MACEDA LAW - Right to refund applies as a requisite for cancellation of contract due to delinquency when the buyer has paid at least two years. Refund is 50% of total payments; additional 5% per year after 5th year.

PRESIDENTIAL DECREE 957 - Right to refund applies when the developer fails to complete the development within the required period. Refund is 100% of total payments less penalty interest.

Titled Lands

The best evidence of property ownership is a Torrens title because it is both indefeasible and imprescriptible.

As an indefeasible and imprescriptible document, a land title can neither be annulled or voided nor subjected to prescription.

Hence, a good rule to follow when acquiring property would be to buy only those covered by an original certificate of title (OCT) or transfer certificate of title (TCT).

Top realors discourages clients from buying properties covered only by tax declarations.

A tax declaration is not a guarantee of ownership and conflicts regularly arise over properties covered only by this document. Some cases of conflict involve several people having tax declarations to and laying claim on a single property.

A land without a title and whose owner can only show a tax declaration as his basis for ownership is not registered under the Torrens system.

A modified Torrens system of land registration has been in effect in the Philippines since 1903. The system at the start involved judicial confirmation and recording of real estate ownership through the Court of Land Registration.

Later on, however, the task of registering deeds was turned over to a registry of deeds created in every city and province.

Even if a seller of a property can present a title, it is important to countercheck the document presented with existing records at the registry of deeds because there are syndicates that fake land titles.

It is advised that buyers do a “trace back” of previous title records in the title copy–verify up to 2 to 3 preceding titles and see how these were cancelled or how the change of ownership occurred, whether by les pendens or a deed of absolute sale. A les pendens annotated on the back of the title means the property has a pending lawsuit or is under litigation.If possible, Montuerto said buyers should verify up to the mother title, which is what is known as the original certificate of title (OCT).

Buyers Market

Where ever you are, or where you want to move, home buying and market selling will be swinging towards one of two directions. Either it will be in a buyer’s market or a seller’s market, or both.

Most real estate brokers consider a typical market to be one in which homes take an average of six months to sell. Realtors keep track of this number by keeping up with the days on the market of every home listed and sold.If the number rises above six months inventory on hand, then the market is swinging into a buyer's market. If it falls below, it is becoming a seller's market.

A buyer's market is one in which there are too many homes on the market for the number of buyers. Homes take longer to sell and prices fall.

Sometimes buyers believe that rainy season time is a buyers' market. Although it is true that there are fewer buyers, there are usually a compensating fewer homes on the market as well. Homes offered for sale during slower times of the year are generally aggressively marketed, and may not sell for a significantly lower price than they would if they were marketed in a busier period.

In the summer, a seasonal adjustment occurs, and more homes come on the market. Buyer activity picks up as families with children, buy homes so they can move during summer vacation. A buyers' market can easily exist in the rainy season, if conditions dictate - that there are more homes than buyers.

Sometimes a buyers' market can be created that lasts for a long time. The exit of one or more major employers from a community, a natural disaster such as a flood or earthquake, or some other catastrophic event can affect home values in an area for years.

Seasonal or not, any time there are more than six months' inventory on hand, there is a glut of homes on the market. Whenever there is a surplus of homes, and prices begin to drop, sellers will work harder to attract buyers, including adding incentives such as owner-financing or a large "redecorating allowance."

As homes become more competitive, buyers realize that their interest is at a premium and they will increase their demands to sellers. Those nice chandeliers that normally would not be included in the purchase price of the home, now become a bargaining chip for the buyer. The buyer may ask the seller to provide a home warranty at the seller's expense, or for the seller to pay more of the closing costs than usual out of the settlement proceeds, or any number of other contingencies.

People who have occupied their homes for many years may be able to sell their homes at a profit in a buyer's market because they have built equity, but they will find that if they have performed little or no improvements the home will compare even more poorly with the glut of homes on the market and it will command bottom dollar.

Sellers who are in a must-sell position may take little or no profit from the sale of their homes, or may even be forced to take a loss. The homeowners who are most hurt by a buyer's market are those with little or no equity built into the home. If they are forced to sell, they may have to come to the closing table with cash to pay their mortgage off or allow the home to be repossessed by the lender. The one certainty that can always be counted upon is that one side of the market will never stay on top forever. In fact, it can turn on a cent. The same area that remains depressed for a period of time can make a comeback as lower prices stimulate reinvestment.

Residential Prospecting

A good real estate agent simply looks(wherever) for people who want to buy or sell homes. Some agents consider prospecting a difficult and frightening task, but it doesn’t have to be, there are many, many ways to look for potential clients, direct mail, open houses, calling around listings or sales, farming an area, sphere of influence, networking, chamber of commerce, advertising, brochures, the internet and more. Once you’ve found the potential client, the rest is really pretty simple.
The process of “selling real estate” is really one of matching the clients needs with the needs of another person, buyer or seller. Most of the job is in finding out exactly what the client needs and then determining how to fill that need. Sometimes it can’t be done, but most of the time it can. As an agent is successful in filling a client’s needs, those clients can hopefully be added to a data base for mining. This pool of past clients, when sufficiently large, will provide a steady stream of business.

Exclusive Marketing Set-up

The developers give the exclusive marketing rights to one company so that they can impose sales quotas in a given period that is written in a contract. If the exclusive marketer cannot fulfill the contract then, another brokerage firm can replace them. It is also easier for the developer to communicate his goals and policies with one brokerage firm than with many firms.

The exclusive marketer will do all the required conceptual and actual pre-selling activities, advertising, brochure design, leaflet “saturation drives”, promotions, tripping of buyers to the site, explanations, assisting in the loan requirements, briefing and training of brokers and their agents and sometimes collection of payments to be remitted to the developer.

The competition is very stiff in the exclusive marketing arena. Only a handful of firms and individuals have made a name for a themselves in this area. It would be very difficult if not impossible for new firms to compete head-on against the pioneers and giants in this field.

Other Marketing Set-up

A developer employ the marketing services of lead brokers. Lead brokers are usually employed in the low-cost up to the middle-cost housing projects by the owner/developer. Lead brokers are firms or individuals who have proven themselves in the selling field and together with other selected brokers they act as mini-exclusive marketing brokers for the developers. They also get override commissions from the firms, brokers and agents. They accredit and orient to sell under their umbrella, just like exclusive brokers they have sales quotas to meet.

If the services of head brokers are also not used, then all brokers are of equal status. The commission rate is basically the same, the rate can go up if the broker/s consistently sell more units in a particular project. There are no sales quotas and sales loyalty required for these freelance brokers. The developers give some incentives and support for these brokers so that they will sell more. The usual support given are: the free use of tripping vehicles when the broker has a prospective group or corporate buyers to see the project site, financial incentive when a reservation is made.

In practice, developers all commonly use exclusive marketers, lead brokers and freelance brokers for various projects. But there are also developers who have their own in-house brokers. So they don’t use the services of outside brokers for selling their projects.

Real Estate Marketing2

Marketing real estate requires some marketing research, strategy and planning. In Real Estate, it is the market place that really dictates what is to be developed and sold, since a lot of money and commitment is involved in purchasing a property.

Large real estate brokerage firms and developers have marketing activities such as: having open houses, preselling activities, advertising in newspapers and magazines, direct mailing, billboards and streamers, distribute brochures and leaflets, motorcades when launching new projects.

Another sales and marketing strategy for real estate is the use of the Internet. Bit time developers have a web page about their company and their project/s. Some brokers also have their own multiple listing of the properties they are selling that could be seen around the world, while before, the use of traditional advertising mediums were very limited in their reach. With a click of a mouse, one can access information about the project and can communicate instantly to the company or brokers involve. But the use of internet is still inaccessible for most people in the country as of the moment, the internet is only for investors, suppliers and the more affluent buyers.

The internet is an excellent aide for better decision-making and communication tool for the buyer. But one still need to visit the place, assess the environment and surroundings, check the quality of the house, talk to sales people, check the development, check the documents and compare the chosen house with other housing projects.

Due to the nature of the business, sales agents and brokers are needed because selling property requires extensive personal contacts and explanations to prospective buyers. The details of financing, the quality of house and the advantages of living in the area have to be explained many times by brokers and sales agents to prospective buyers who are really interested.

Brokerage firms also use real estate fairs at shopping malls. The fair gives the firms the opportunity to market and sell the opportunity to market and sell their projects, by displaying the photographs, mini-model house units, brochures, personal consultations of their projects to prospective customers.

Successful real estate marketing is based on number of sales people a company has, the more sales people the better chances to make a sale. So most advertisements in the newspaper offer jobs to sales and marketing people.

A marketing strategy commonly employed is focusing on a special specialization, in terms of areas, services rendered and projects handled.

Many small brokerage firms focus on selling one project at a time. Most successful brokers are successful because of focusing. They learn all the ins-&-outs of a particular project, get to know the types of people who are likely to buy in that project, earn the trust of teh developer and build a reputation for a particular project.

Another secret of a successful realty brokerage is that they negotiate to the developers to have an "exclusive marketing agreement or exclusive authority to sell.

Real Estate Marketing

Marketing real estate is not an easy task to do, even for reputable brokerage firms. This is mainly due to the nature of the product, its high cost, inherent uniqueness(location) and utility. Ones a person has a house, chances are he will not be interested in a new one or if he is interested, he may not be able to afford it due to his monthly payments for his current house/lot or the location may not be according to his preference.

Almost anyone can reserve for a property, especially for the low to the medium-cost housing projects. But to pay for the full down payment and pay the monthly amortization religiously is another matter. Many buyers of low-cost houses, who reserve their chosen unit, are ignorant or inattentive of the schedule of their payment and submission of documents. So in practice a lot of people who reserve have their reservation payments forfeited. In times of crisis, even some rich buyers had their reservations forfeited. So after a few months or so, projects that have been advertised as “sold-out” will have re-openings.

So it is very important to qualify the potential buyers for a particular property. They may be very interested in the property, but they don’t have the necessary documents or cash to purchase it. some people just reserve relatives abroad or from other source. In practice these are the cases that most developers usually encounter in low-cost housing projects.

Other prospective buyers in low-cost housing just go with the broker or agent on a site tour. And that’s about it; they just want to have a “free” trip or picnic to a provincial location, where they can get away from the daily grind of Manila with free snacks. After visiting the place, they are really not interested and they just give a lot of excuses, such as that they need their husbands to be with them or that the place is too far.

The potential buyers of properties can be an end-user, investor or a speculator. The three basic things that the potential buyers are looking for are the location of the property, financing scheme and type of development. The primary element that the buyer is looking for in a property will depend on what type of buyer he is. But if all really depends on their motives and financial capacity. So a canned approach to real estate will simply not work in most cases, since you are dealing with individuals with distinct idiosyncrasies, preferences, motives and backgrounds. So each prospect will have to have a different sales approach.

Brokers, Salesmen, Appraisers, Consultants

They show us around the housing or condo units that are for sale.

They take us for a “tripping”—the term used in the Philippine real estate to describe the practice of bringing prospective buyers to one or more properties so they can choose what they want.

They’re known as real estate brokers and because of the nature of their profession, they need to be a little bit of a PR person, lawyer, accountant, geodetic engineer.

Negotiating the sale of real properties in behalf of the owner is just one of the many things real estate brokers do. Brokers can also look for property that a client can buy, negotiate the exchange of properties between owners, or look for a property investor or developer that can enter into a joint venture agreement with a landowner.

In return, brokers get what is called a commission. The amount of commission that a broker gets is not legislated, rather it is dictated by current industry rates. The prevailing rate of commission for brokers for a single transaction is between 3 to 5 percent of the transaction cost.
Individuals and corporations may be licensed as brokers by the Department of Trade and Industry’s Bureau of Trade Regulation and Consumer Protection (BTRCP). A corporation though has to designate in a board resolution the person who will represent it in real estate brokerage and he or she must be a licensed practitioner.

Helping brokers do their tasks are real estate salesmen. Salesmen do not need to take the licensure examination for brokers but they too must be licensed. A salesman’s license is an extension of that of his or her broker.

Salesmen take on the duties and responsibilities of real estate brokers and they get a “share” in the commission from the sale or transaction that they bring about.

An appraiser is another important real estate practitioner. Appraisers can be individuals or corporations. Their job is to render an estimate of or offer expert advice on real estate values.
The purposes of appraising real estate values can be in line with purchase and sale, financing and credit, corporate affairs, partition of estate, or eminent domain.

Appraisers estimate a property’s fair market value and may use various means to do it. Among the more common methods used by appraisers are market data approach, cost approach, and income approach.

The fourth real estate practitioner is the consultant.

You need to have some serious experience though as broker and appraiser, from 5 to 10 years, and pass the BTRCP exam before you can be considered a real estate consultant.

Consultants can be natural persons or corporations. They provide professional advice and judgment to property developers.

Brokers, salesmen, appraisers, and consultants. They are the four prominent people in the realty service practice and if you’re thinking of buying or selling property, chances are you’ll run into any one or two of them.

Realty Firms and Commissions

Realty brokerage job positions such as branch manager, a marketing manager and a vice-president for sales are fairly common for smaller firms, the multi-level scheme may only be up to three levels. The function of the different major job positions in the multi-level scheme is basically to organize a sales force under them to concentrate and sell a particular project. There is no need to be a graduate degree holder in business or long years of experience in a realty company or real estate firm. A business background is not even necessary; the main requirement is the willingness to work hard adn the ability to plan, organize and motivate the sales agents and managers to sell consistently. The more sales your sales force sell, the higher your position in the organization.

The commission rate varies according to the developer and the project envolved. the rate for exclusive marketing for a low to middle income subdivision project is usually from 10% to 12% of the total contract price. If it is for a non-exclusive basis the rates are usually from 5% to 7% of the total contract price.

For the high-end projects such as first class houses and condominiums, the rates are usually from 1.5% to 4% of the total contract price. Since it is usually the developer who markets the project themselves or they already have a reputable brokerage firm who handles the marketing of their project on an exclusive basis. The outside brokers just sell under the umbrella of the developer or exclusive broker. The rate is reasonable considering the total price of a first class house and lot or condominium.

Realty Brokerage2

The requirements to be in real estate sales is minimal. Anyone can be a sales agent, whether they have finished college or not, or whatever their backgrounds maybe. but chances of becoming an instant millionaire are slim. It is the exception rather than the norm. as we can observe from the number of real estate agents and brokers.

The truism for most things in life especially in sales is that you are only as good as your last achievement(sale) if you can't sell consistently, then chances are you won't become millionaire.

Making money from real estate brokerage is not the only thing that you gain. One of the most valuable things is the experience you can get. You can enrich your life through meeting different kinds of people, you get wisdom from the hardship and failures you went through, you gain new friends and business contacts. You can have some insights for some business opportunities aside from real estate and you can help develop the country in your small way. These are just some of the things you will get through selling that money can't buy.

As a sales agent or broker, you can also earn extra money from referral fees. You just refer potential clients who are interested in the project that your fellow agents and brokers are selling. and if the client you referred buy the property then y0u get a certain percentage of the commission.

Realty Brokerage

You probably heard that one can make a lot of money in real estate or that people become millionaires because of real estate. but it's not easy. It Takes great deal of money to make money in real estate.

It Takes high degree of commitment for someone to sell lots, build and sell houses or develop a subdivision or condominium. It takes a lot of time, money, planning, perseverance, disappointments, patience and other qualities, which will separate men from boys.

Real estate can be a complicated stuff, but for the moment we will just discover it and who knows we might get lucky and real estate could be a start of something big in our life.

You can make it in real estate through real estate sales. You can either be a real estate agent or real estate broker. a real estate broker acts in behalf of the owner or someone looking for a property. He negotiates the sale, purchase of a real estate. In return he gets a commission.

Visit this site often for more of real estate.

real estate blogging

At last! i have a blog. I have been tinkering about this blogging thing for sometime now. i don't have specialty topic to blogg about but i will try real estate. It is a vast subject area but i will write about realty in the Philippines, Real estate brokerage, etc.