Process of Buying

The Ultimate Guide To Buying Property in the Philippines 

How close are you to buying your own home? Most OFWs dream of going back home to the Philippines. A lot of times the process or the lack of understanding of the process involved in buying property is the only hindrance from fulfilling this dream. It’s not money, it’s time. Do you really have to dedicate your entire precious vacation handling the process? Can you do it while abroad? How can you make sure that the person you entrust to represent you is not getting a runaround by the different agencies you need to secure forms for?

What is “consularization”? Who is the attorney-in fact? How much are the other expenses involved? These are the same questions I went through before and I’d like to share them all to you here. At some point it feels dumbed down, but the assumption that you can tell a fake document from a real document is not fully helpful either.

Step-By-Step Procedure on Buying a Philippine Real Estate Property.

1. First, Briefing Session. It is about presenting the property to the buyer and the price. But of course, you need to sign the Prospect Appoints Schedule (PAS), as my company protocol. 

2.Then, we are going to do the Qualifying session. It is about how will you pay your property with the nature of your work. Buyer should be honest, with this because the agent will help you and give you advise for your own home.

3. After the first two session, we will having a Tripping. Why? So, you will see where your house will be build. So, you can choose.

4. Next is the Reservation Form and the Client Information Sheet. You have to sign the the Client Information Sheet and Reservation form and you need to settle the reservation fee. If you are not here in the Philippines, you will have a representative and he/she will be called attorney-in-fact will reserve the unit for you. He/ She will sign the forms (reservation form, special power of attorney and authorized representative form).

The property agent will then send you the Special Power of Attorney (SPA) for you to sign and consularize. This is the legal document authorizing your attorney-in-fact to act on your behalf. Consularize/ consularization- is a required process that authenticate the documents by the Philippine consulate. The documents will have a seal and a red ribbon over it. It’s non-refundable.

Once reserved, here are the requirements that you need to submit within 30 days:

a. The SPA (Consularized) – this must be authenticated by the Philippine consulate

b. Income Documents (3 months)
   - Latest Income Tax Return (ITR)
   - Contract of Employment with Monthly  Compensation - need to consularized.
   - Copy of 3 months Bank Statement showing monthly flows.
c. Proof of Billing (here in the Philippines)
d. TIN (for verification. If you don’t have a TIN # in the Philippines, the property specialist may do this for you)


e. Employment Contract (should be in English) – must be with the seal of the employer as well as a signature of the authorized personnel (HR manager, etc…). Can be photocopied as long as it is certified as true and correct.

f. Post dated checks (PDCs) for the down payment. Requirement may change to some developers. If you don’t have a checking account yet, your attorney-in-fact may open one in his name. If you have a local savings account, you can request for a checking account thru your representative.

g. Photocopy or scanned copy of your passport and Government IDs.

3. Your attorney-in-fact will apply for a housing loan with the bank (if bank financing), developer (if in-house financing), or Pag-IBIG (if Pag-IBIG financing).

4. Send back all the requirements on step 2 via courier to your agent/ property specialist.

5. The property specialist will then submit all the documents together with the PDC’s to the developer and that is all there is to it. All you need to do is fund the checking account and continue to pay the monthly amortization.

The steps above will vary depending on the terms of the developer and the bank.


The Other Costs

Get your calculators ready for computing these on top of the actual price:

Real Estate Transaction Costs in the Philippines

Purchases from Individuals:
• Philippines Capital Gains Tax – 6% of actual sale price. This is paid by the seller but in some cases it might be expected that the buyer pays. This percentage could differ if the property assessed is being used by a business or is a title- owned by a corporation, in this case the percentage is 7.5%
• Philippines Documentary Stamp Tax – 1.5% of the actual sale price. This is paid by wither the buyer or the seller upon agreement. Normally however, it is the buyer who shoulders the cost.
• Philippines Transfer Tax – 0.5% of the actual sale price
• Philippines Registration Fee – 0.25% of the actual sale price

Purchases from Developers:
• Philippines Capital Gains Tax – 10% of actual sale price. This value might be expressed as part of the sale price
• Philippines Documentary Stamp Tax – 1.5% of the actual sale price
• Philippines Transfer Tax – 0.5% of the actual sale price
• Philippines Registration Fee – 0.25% of the actual sale price

It is always a good practice to inspect the land/property you’re going to buy. Inspect not only the physical location but also thru the Register of Deeds to ensure that everything about the property is in the right place and legally documented. Register of Deeds will help you verify the authenticity of the title and the legitimacy of the owners selling you the property.

Turnover Process

The turnover process is the most important to a new homeowner, because this is when the property finally changes hands. Because we know how important this is to you, we’d like to share some guidelines to make the transition smooth and satisfactory for both parties.

1.Completion of unit will commence upon issuance of Authority-To-Turnover (CLEARANCE) by Documentation

2.Completion date:
a.Thirty (30) days for single condominium unit
b.Forty-five (45) days for tandem condominium units
c. Approximately Nine (9) months for unit construction

3. Punch listing/inspection by the client will be scheduled after the completion date

4. Rectification of punch listed items will be done immediately but completion date may vary depending on the nature of the punch listed items

5. Client is responsible in settling all required fees & deposits prior to unit turnover

6. Homeowner Orientation of community house rules, policies & regulations is done during handover of unit

7. Handover kit and welcome gift is given to client upon acceptance of unit

8. Upgrade/improvements of the client’s unit will be allowed only after the acceptance of unit

9. Note that certain warranties may be voided by any unit material alteration

I hope that this helps broaden your perspective and make it easier for you to set expectations as you invest into buying your dream place. This is something we should all be aware of and I thought as a broker, sharing this knowledge is important for prospective buyers for it helps them truly understand where their investment is going.