Warning About Philippine Real Estate Buying and Investing

[Updated: 3/18/2012]

As a Real Estate Consumer Advocate, I am advising the public in the global scale to be extra prudent in buying and investing in Philippine real estate since November 2010 for the following reasons:

Inhumane Community Demolition Practices. Squatting is very rampant in Philippines because some Local Government Officials purposively allow these informal settlers to build residences on vacant lots so they can exploit these poor people as objects of a command vote. The sad thing is the inhumane practice of burning these informal urban settlements as a shortcut method to demolish the place to pave the way for the implementation of the projects of real estate developers such as condominiums and malls. So if you find out that the development area was used to be a squatter's area that was burned, please don't buy these projects, please don't partner or invest in these companies.

Widespread unprofessionalism. Unlicensed, unregistered, unprofesional real estate agents are operating openly in public, and this is being tolerated by the Professional Regulation Commission (PRC) of the Aquino Administration through the installation of colorums' puppets in the Professional Regulatory Board of Real Estate Service (PRB-RES). Despite availability of laws (RA 9646 and PD 957), government does not apprehend unlicensed practices even if done openly in malls. In my study, 95% of real estate agents operating openly are unlicensed and they are being used by legitimate real estate developers and even by brokers who work for them. Please don't buy these projects, please don't partner or invest in these companies who are doing this anomaly.

Doubtful Structural Integrity. The Chamber of of Real Estate Builders Association (CREBA) of the Philippines protests the inclusion of their salespersons in the professionalization. If the real estate developers fall short of corporate INTEGRITY in terms of professionalization of their marketing agents that deal with the public, then who knows about their integrity in terms of professionalization of their construction engineers who are invisible to the public while they build the structures. For example, there are many cases of multilayer subcontracting in the construction wherein professional engineers lost hands on supervision of the actual workers. In one instance, ten workers installing glass windows in a 39-story condominium plunged to their death 25 floors down when the platform of a makeshift elevator gave way -- all workers dead. Worse, there are rumors spreading from construction workers that some concrete of highrise construction are filled in with empty bottles of mineral water to save materials cost on aggregates and cement. In fact, I remember there was an inhabitted socialized rowhouses in Rizal that in one sudden night fell to the ground like a domino-effect -- investigators found out that the weak concrete was filled with coconut husk, banana stalks, and other garbage. When the integrity of these jeopardized structures are tested by nature, such as earthquake and super-typhoon, catastrophe is expected to happen. Please don't buy these projects, please don't partner or invest in these companies who are doing this anomaly.

Absense of full-disclosure. Real estate properties for sale in the Philippines are being offered in the market like canned good with fancy label but without full disclosure of the contents. Agents are trained on how to answer objections and belittle (if not avoid answering) the importance of full-disclosure. As a result, residential subdivisions that are located on very low altitude places and flood-prone zones get sold without the buyers knowing it. There is even a huge cluster of condominium projects that is sitting directly above a major earthquake fault-line that gets sold without the buyers knowing it. Government policies seem to appear that it has no idea about the relevance of full-disclosure in real estate transactions. The idea of Mandatory Full-Disclosure Certificate by a licensed real estate broker is a proposal that is yet to be appreciated by the market that is dominated by sellers' agents. Please don't buy these projects, please don't partner or invest in these companies who are doing this anomaly.

Buyers lack protection. All professional real estate brokers are representatives of the sellers, so far there is yet only one exclusive buyer agent broker in the Philippines, and the one is being targetted by retaliation by the Philippine government, particularly by the PRB-RES. The Philippine government is repressive on real estate service professionalization and consumer advocacy in the Philippines. We have a PRC in the Aquino Administration now that uses red-tape to retaliate upon the licenses of professional brokers who complain against government malpractices and anomalies in the real estate industry (this fact can no longer be erased in history of Philippine real estate service). Also, the Housing and Land Use Regulatory Board (HLURB) have restrictive policies against complainants of unlicensed real estate agents -- before docking the complaint, the complainant are asked to pay P1,010 (23$) for each unlicensed agent.

Laxity in due diligence. The Pag-Ibig Fund, which is the primary agency of the Philippine government that provides loans and guarantees, is tolerating the real estate developers to use unlicensed agents. As a result, the fund lost Billions of Pesos over a multiple mortgage scams by one developer alone. The rest of the hundreds of developers who also use unlicensed agents are yet to be investigated. Pag-Ibig Fund, which is controlled by the Vice President Binay, has already been prompted to sign a Memo to disqualify developers who used unlicensed agents last November 2010 but it's been over 15 days already the agency seems to have ignored it.

Corruption leads to overpricing. There is also persistent reports that local governments and national agencies regulating the construction and development of mass housing projects are red-taping the development permits. Exorbitant grease money is required to smoothen the paperwork. Some potential developers and investors back out, but some pushes through with the shady pay-offs of payola. As a result, the corruption is translated into higher real estate prices that is unfairly passed on to buyers.


Rampant Land Grabbing. Real estate ownership in the Philippines is also a risky situation for foreigners and even for vulnerable citizens. I have heard many cases wherein the foreigner married a Filipina, bought a huge land and developed it, and then later on the foreigner was mysteriously stabbed to death --- and the property is left to the widow. You can commonly hear news about armed groups will just suddenly enter peoples' property, harass them, massacre the entire family, steal their land, and the grabbers get away with it through a long court process. The use of rogue government soldiers and policemen in the land grabbing modus operandi, in fact, is one of the major causes of armed conflicts and insurgency in the Philippines by the New People's Army, Moro Islamic Liberation Front, and especially the over four decade of struggle by the Moro National Liberation Front (MNLF) in Bangsamoro Land (Mindanao, Sulu, Palawan). The government judiciary, land registration institutions, and real estate professional regulation institutions are a big failure because in just around a decade after the land is grabbed, the land becomes a first-class subdivision complex of someone usually a politician, a General, a high ranking official, or a cronie of a politician. You can easily get these horrible stories especially in the rural areas. See this example: http://newsinfo.inquirer.net/7280/former-movie-director-accuses-armed-group-of-taking-his-land

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ANTI-COLORUM FORM

If there is someone who hands over to you some real estate marketing calling cards, fliers, brochures, please look at the name of the contact person indicated, written or stamped in it. If there is no PRC Lic# or HLURB Broker/Salesperson Registration #, please report it using the IPORESP Anti-Colorum Form. Those are unlicensed real estate practitioners that are hazardous to the consumers. Please share this posting to all your friends. Thank you. http://iporesp.org/anticolorumform.pdf

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The writer is John Remollo Petalcorin, a Pro-Bono Real Estate Buyer Agent, Non-Profit Consumer Rights Advocate, Property Manager for Absentee Owners, blogger Real Estate Service Coach, and Buyer-side Real Estate Broker since 1998.

"EMPTOR BENE MONITUS DECIPI NON POTEST"
A WELL ADVISED BUYER CANNOT BE DECEIVED

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Recommended Readings


1. Philippines is second least attractive investment site in ASEAN. The Manila Times Online. March 2011. URL: http://www.manilatimes.net/opinion/2nd-least-attractive-investment-site-in-asean/

2. Daily Tribune report about the PERC Survey that says Philippines is most corrupt nation in Asia. March 2011. URL: http://www.tribuneonline.org/headlines/20110331hed1.html

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Carol Craigo, Charity Perez Alcober, Elia Sara, Gem Willkom Milay, Janey Anne Mantalaba Paloma, Jasmin Alcaraz Santos, Jp Legaspi, Lykamarie Lorenzo, Ralph Dm, Rengie Remollo, Sarah Jane Castillo, Trino Sheryl

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If there is anything else important that I forgot to include in this article, or if you experienced a real estate transaction that is anomalous, scam, fraudulent scheme that you want me to document and expose for others to be warned, or if you want to donate to the war chest of real estate consumer rights advocacy, please feel free to email me at JohnPetalcorin@Gmail.Com. If you want to comment about this article, there is a provision for this purpose that you can find below.
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