Asking price and what you actually pay for House/Lot

["P2"]

The Mrs. and I are thinking about purchasing some property to maybe build a house on one day in the future OR if the price is right maybe buy an existing house. When conducting our search, we are noticing that the asking price for either property or a house on land seems to be really high (for the Philippines). Is this because they deliberately set the price high because they know that only foreigners are really the only ones who can afford it or is that price legit? I've seen some pretty outrages prices on land/house and was wondering is there a lot of wiggle room with the pricing or are they typically firm on the pricing, because I have seen some property that has been on the market for years. One property/house that we have looked at on Bohol has been on the market for over 3 years. We actually spoke to the owner (Filipina & a Swiss husband) and they seem pretty firm on their price. I'm thinking to myself that is probably the reason no one is buying it because the house/land is not worth it. They claimed that a lot of people have come by to see the house but no offers. They claim that the annual real estate tax they pay is 4000 pesos which tells me a lot about the actual price of the house and lot. Can any of you "enlighten" me on how negotiable real estate/house property is there? Thanks in advance for your help!

[hk blues]

1 minute ago, "P2" said:

The Mrs. and I are thinking about purchasing some property to maybe build a house on one day in the future OR if the price is right maybe buy an existing house. When conducting our search, we are noticing that the asking price for either property or a house on land seems to be really high (for the Philippines). Is this because they deliberately set the price high because they know that only foreigners are really the only ones who can afford it or is that price legit? I've seen some pretty outrages prices on land/house and was wondering is there a lot of wiggle room with the pricing or are they typically firm on the pricing, because I have seen some property that has been on the market for years. One property/house that we have looked at on Bohol has been on the market for over 3 years. We actually spoke to the owner (Filipina & a Swiss husband) and they seem pretty firm on their price. I'm thinking to myself that is probably the reason no one is buying it because the house/land is not worth it. They claimed that a lot of people have come by to see the house but no offers. They claim that the annual real estate tax they pay is 4000 pesos which tells me a lot about the actual price of the house and lot. Can any of you "enlighten" me on how negotiable real estate/house property is there? Thanks in advance for your help!

First of all, it's wide of the mark to suggest prices are inflated as only foreigners can afford it - there are way more wealthy locals than wealthy foreigners.

Back to the question of prices. Unlike most places, here you have to almost ignore value as there is no such thing. The price is whatever idea was put in the head of the owner by goodness knows who or what. And, once it's in there then there's no way it's going to change unless financial pressures force it. Around my way there are countless properties which have been empty for as long as I've lived here and will likely remain so due to this crazy thinking. Try buying a car from many locals and you'll see the same thing.

So, you might get lucky and cone across a more sensible owner or one who needs the cash pronto otherwise you're kinda wasting your breath much of the time - there is no idea of negotiating in good faith or compromise. 

If their annual real estate tax is around 4,000 php then the property could be in the 3 to 10 million range and anything between such is the property tax system here.

We went down the route of buying new build from a developer. It's not for everyone but exactly what I've been doing since I bought my 3rd house 30 years ago. There are compromising on quality etc that you need to consider but given time and a little money you can upgrade the unit to what you want PROVIDED the bare bones are good. Again, it's not for everyone but is another option to consider.

[scott h]

35 minutes ago, "P2" said:

They claim that the annual real estate tax they pay is 4000 pesos which tells me a lot about the actual price of the house and lot.

Boy P2, you have really opened up a can of worms with this topic lolol.  As HK says, DO NOT judge the worth of a house based on the taxes. Our house built 12 years ago is taxed based upon the cost of materials we spent building it. Naturally we low balled the answer to pay less tax. We pay the tax for my brother-in-law who is overseas now. The house is falling apart and the tax has not changed in 8 years.

40 minutes ago, "P2" said:

Is this because they deliberately set the price high

Again HK is spot on, a lot of time they will set the price high and refuse to budge off of it. As he says, unless there is a urgent financial need, there is little urgency to sell it seems. Again, my BIL house is in an OK subdivision, the house is pretty big, but is in need of regular maintenance and some upgrades. Both daughters moved to the states and he and his wife moved with them and are now US citizens also. They are in their 70's, the kids are set in the states and will never move back. So the house just sits there and falls apart. They have set a price of xx million pesos and are happy just to sit and wait for a buyer to pay their price. They could use the cash there in the states, but no matter how hard I try, I just cant talk "Yankee" sense to them.

47 minutes ago, "P2" said:

how negotiable real estate/house property is there?

So long story even longer, if you run across someone who is willing to negotiate, I personally would be very suspect that something is wrong with the title. 

Good luck!

[Mike J]

We lived in a small compound of five house all of which were owned by an older expat.  He decided to sell one of the houses and we liked the house.  It needed work but the  bones were good and it was ocean front.  He wanted 11 million which was out of our price range.  After a year or so he lowered the price to 10 million and told me he would sell it to me for 9 million.   Told him it was too expensive for us.  After several months he said he had a buyer who was a German expat.   The sale fell thru because the German could not get financing.  After time he tells me the price is now 9 million and he would sell it to me for 8.  Sorry too expensive for our budget.  About a year later he says he has a buyer, but again the sale falls thru.  Another year goes by.  Price now 8 and will sell to me for 7.  A year goes buy.  I buy the house for 5 million.  We have since invested about 3 million in upgrades and improvements.  Another house he tried to sell was quite large but not ocean front.  He started trying to sell it at 12 million, ended up selling it for six million after about four years.  All five houses are now sold and he moved to another island.

Long story short.  Sellers will almost always price very high.  Some will not budge off that number, others see it as a starting point for negotiation.  Also it is best if the seller does not know there is an expat involved.  If I were looking at a place I liked, I would offer 2/3 of the asking price if I thought the offer was a reasonable price.  Then stick to that number. 

[Clermont]

8 hours ago, hk blues said:

We went down the route of buying new build from a developer.

We did the same and don’t be put off by subdivisions, most now are run by home owners association and set pretty strict rules. Both subdivisions we bought into charge different HOA fee’s not to be mixed up with land tax’s. When I first came over full time I was sceptical about subdivisions but after a couple of visits to the hospital and an ambulance on hand, my scepticism waned. The land tax the wife’s son pays is only 500 pesos each house and HOA fee 100 & 300 per month. Taxes for foreigners are mainly on beverages, hotels, and a few smaller taxes, nothing to worry about although there is one tax you should be on the ball with, long nose tax. Filipino business people try to apply it on unwary foreigners but if you have a good partner they will steer you in the right direction.

[Tommy T.]

I wanted to just say that I agree whole-heartedly with all the comments above.

There is a huge degree of greed here in the P.I. It is amazing. Cars, motorcycles, real estate... all of it is subject to extreme greed for those who own and are selling. I saw it  when buying a car and also when L and I were were buying some land. I guess that so long as someone believes he or she can get outrageous payment for something, they will hold out for it...

Edited July 9 by Tommy T.

[Possum]

There is a large detachment from reality in pricing land here. Example: There is a 80m2 lot in a lower middle class subdivision for sale near where I live. My wife looked into it as we are looking to build an apartment or two. The price? Only 7500/m2 she was told. Been for sale for over 2 years. Just roughly calculating that's over $50,000/acre.

[hk blues]

I have given up trying to explain to those around me that the selling price of our units new is not the same as for our units due to depreciation.  Now, if supply was limited it may work but it isn't.

Many folk here are simply naive when it comes to pricing stuff.

[graham59]

Back in 2016 I paid p250 per m2 for our 600 m2 lot, which is roadside, and has all 'mains' services. 

A variety of stores, plus the local Elementary and High School are 200 yards up the road.

I have had a house built on it...little by little, now having two storeys and 9 rooms, all within a high perimeter wall (though most people are friendly and related to us around these parts. lol). It's more to keep animals out.

The Mrs tells me that similar lots near to us are going for at least 4 or 5 times the price. Anyway, we're happy with what we have, and it's bought and paid for. 

Edited July 9 by graham59

[Joey G]

Sometimes the biggest problem in "price" is how much it cost to get all the people who have a stake in ownership to sign off.  With the way Philippine law is written there are often brothers and sisters (and sometimes more) who have no vested interest in the house/property other than they can get a cash out when it's sold.  They don't live in it, never will, but.... the law says they own a piece.  Bypassing them in the process results in more legal fees over the title.

Buyer beware !