With a huge inventory of pre-owned properties available in the market today, you might be wondering, is it more prudent to purchase these units instead of buying new ones or is it better to build your own house?
One of the major reasons for acquiring a pre-owned unit is its relatively lower price point compared to other types of properties such as brand new ones or those still at their pre-selling stage.
Unfortunately, despite it being cheaper, the total price is still considered a sizable investment. As such, buyers need to understand the pros and cons of acquiring these units.
Pros
Immediate availability. One of the prime reasons behind buying a pre-owned unit is that the unit is ready and available for immediate occupancy. Thus, buyers can save substantial time by transferring to these ready-for-occupancy units.
Meeting buyers’ expectations. Most desirable pre-owned units meet the requirements of the buyers, are located in built-up but safe and secure communities that are strategically located near offices, schools, commercial areas and or amenity centers.
Nicer landscaping. Buyers wishing to buy properties with large lawns and open spaces also look for grown and mature trees on-site, and wish to beautify the soft and hard landscapes based on their desired designs.
Lower purchase price. As stated above, one of the main reasons behind buying a pre-owned unit is its cheaper price. Depending on the condition and age of the properties, buyers can get moderate to substantial discounts compared to other types of units.
Flexible payment terms. In many instances, and unless sellers are in dire need to urgently dispose of their pre-owned units, buyers should be able to secure an acceptable payment term that is agreeable to both parties.
Stable investment. Most buyers consider real estate properties as great investments. As generators of wealth, entrepreneurs can buy and keep these properties for lease, and earn recurring incomes that guarantee them stable cash flow over time.
Tax breaks. Businessmen know fully well that they can also acquire real properties to reduce their yearly tax obligations via depreciating the value of such purchases (improvements) over time.
Higher profitability. Buying them cheap and eventually selling them, with or without substantial improvements, provide investors with higher profits and margins than when the same amount is deposited in banks or invested in other financial instruments.
Cons
Buying pre-owned properties is not necessarily without concerns. Buyers need to consider the following:
Leaks and deficient utilities. Given the age of some properties, buyers are warned to thoroughly check them for obvious and hidden defects, such as leaking roofs and wall seepages, non-functioning and problematic utilities, among others. Unless caught early, new buyers may be faced with unwanted repair bills, substantial time needed to address numerous patch-up work, not to mention high maintenance costs.
Unpaid bills. Buyers need to understand why pre-owned units are being disposed of. Some sellers may have other reasons like difficulty in paying the housing loans, long and unsettled utility bills. Buyers need to also understand if there are legal issues associated with the sale of the property.
Major renovations. Renovations and remodelling work due to fit personal taste will entail cost. Depending on the extent of the proposed changes, it may result in added cost, sometimes even higher the original purchase price.
Extra furniture and appliances. Some sellers who want to simplify their disposal process usually include everything within the house or condo unit, including old furniture and appliances. Understandably, not all property buyers are interested in owning them, as the furniture may not match the new buyers’ other furniture, while older appliances may no longer be energy efficient.
Bottomline
Pre-owned units are still good buys. However, before you decide on purchasing them, make sure you are clear with your goals and objectives. Understand your requirements and diligently research what options are available in the market. Shop around for options and other choices.
Do not be in a hurry. Vet both pros and cons. If needed, seek advice from relatives, friends and professionals.
Good luck!
Henry L. Yap is an Architect, Fellow of both Environmental Planning and Real Estate Management, and one of the Undersecretaries of the Department of Human Settlements and Urban Development.