Adventures with Bad Real Estate Agents: Philippine Edition

I mentioned previously that I was looking for a property to buy. I’m not buying to flip. I’m buying something that I’ll use in the foreseeable future (say within 3-5 years). I’m eyeing a property in Nuvali.

Nuvali new beginning
I’m assuming this quote pertains to buyers and sellers of real estate. Image from official Nuvali Facebook page

 

I assumed that the process will be easy for me. Unfortunately bad real estate agents and sellers will come your way. Since I was buying on the secondary market, the agents I dealt with were not officially connected with Ayala (Nuvali’s developer). Here are some of what I encountered:

 

1. The agent and seller who requested me to commit tax evasion

The agent texted me to say that the seller requests that the property be undervalued for tax purposes. I will still pay full price but a second fake deed with the lower purchase price will be made out. The underdeclaration she suggested was so ridiculously low. When I pointed out that this was illegal, she boasted that she just facilitated a  sale and title transfer with a much lower property value (on a per sqm basis).

I kind of expect (though it is still illegal and unacceptable) if a seller suggested the under-declaration (since they will pay the most taxes – 6% of the sale price), but a reputable agent should emphatically say “no”. Unfortunately, it seemed like tax evasion was even being encouraged by the agent. I found out later that under-declaration seems to be a very common practice in Philippine real estate transactions. Aside from being illegal, this practice is also stupid. Unless your paying with a bag of paper bills, the true payments will leave a paper trail. Another stupid thing, leaving a text message trail of the intention to commit crime. Ha!

 

2. The agent and seller who wants me to give non-refundable earnest money without contingencies

I understand the concept of non-refundable option money. If the property is being taken off the market for you over other buyers, then the agent/ seller should be compensated if you withdraw your offer. However, the option amount should be small. Many reputable developers in the Philippines require somewhere from PHP 10,000  to PHP 50,000 as non-refundable “reservation fee”. However this is done for properties with usually high demand and very low initial cash out, so it s understandable for developers to weed out non serious buyers. Also, these reservation fees are transferable to the hundreds of other properties the developer has, just in case the buyer changes his/her mind.

In my case, the agent/seller requested that I write a non-refundable check for PHP 200,000  to declare that I’m a serious buyer (I wasn’t even given all the documents to review at this point). That amount is about 4-5% of the sale price. I also believe in the concept of earnest money (which is what I was being asked to pay), and sometimes you may need to issue a large amount to prove your intentions. However, earnest money should come with contingencies. If the deal does not go through because there were issues with the lot (e.g. litigation, liens, misrepresentation), I am entitled to have my money back. The seller and agent provided no such option. If the sale does not go through for any reason, the money was non-refundable – period, according to the offer sheet “prepared for me” by the agent. I said “no way!” – period.

Read more about earnest money here. In the Philippines, read here how earnest money and is distinguished from option money by law.

 

3. The agent who flat out lied to me – and texted me evidence of the lie

This story was quite amusing. Minutes prior to viewing the property, I was texting with the agent. Suddenly she was sending me bizarre texts that she “won’t take the risk” and  “many shots were fired”. Those texts were obviously mis-sent. I found out later that she was texting about the recent robberies in Nuvali (read about them here), one of them in the specific subdivision I was interested in. Upon meeting with her, I asked her if the area is safe. She said “yes” without hesitation. I didn’t ask her about her mis-sent text about not taking the risk (to go to the property), that would’ve been awkward.

 

More to come…

– thefinancemd.com

Advertisements

Published by

Finance, M.D.

Finance, M.D. is a practicing physician who dabbles in finance and investment. He has passed all three levels of the Chartered Financial Analyst (CFA) exams, all in his first attempts. thefinancemd.com

One thought on “Adventures with Bad Real Estate Agents: Philippine Edition”

To comment just type away. NO need to fill-in your name and email. It may take a while for your comment to appear.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s