May 2021

Real Estate

Top 6 Tips for Property Buyers in Singapore

Tip No 1: Leave Your Money Where It Is

It’s not advisable to make big purchases or move your money back and forth three to six months before buying a new home. You don’t want to take significant risks with your credit profile. Lenders need to see that you are reliable, and they want a complete paper trail so they can give you the best possible credit. If you open up new credit cards, accumulate too much debt, or make any large purchases, you will have difficulty getting a loan.

Tip No 2: Don’t Try To Time The Market

Don’t try to time the market and figure out when is the best time to buy. Trying to predict the real estate market is impracticable. The best time to purchase is when you have found your perfect home and can afford it. Real estate is cyclical. It goes up and down. So if you try to time the market for the most ideal moment, you will probably miss out. Bigger is not always more beneficial.

Everyone is drawn to the most significant, most excellent house in the neighbourhood. But bigger usually does not mean it is better when it comes to homes. There’s an old saying on property that states you shouldn’t buy the biggest and best apartment in the neighbourhood. The biggest house only appeals to a tiny audience, and you never want to limit potential buyers if you’re going to resell it. Your home may only increase in value as much as the other homes around you. If you pay $600,000 for a home and your neighbours pay $450,000 to $500,000, your appreciation will be limited. Sometimes it’s most beneficial to buy the worst house on the block because the most unfavourable place per square foot will always trade for more than the most outstanding house.

Tip No 3: Avoid Threshold Costs

The difference between renting and homeownership is sleeper costs. Most people focus only on the mortgage payment, but they also need to be aware of other expenses like property taxes, utilities, and homeowners association dues. New homeowners also need to be prepared for repairs, maintenance and potential property tax increases. Make sure you plan for threshold costs, so you are covered and don’t risk losing your home.

Tip No 4: You’re Buying A House – Not a Date

Buying a home based on emotion will only break your heart. If you fall in love with something, you could end up making some pretty bad financial decisions. There’s a big difference between your emotions and your instincts. Going with your instincts means you realize you’re getting a great house at a great price. Going with your emotions means obsessing over the paint or the yard. It’s an investment, so stay calm and be wise.

Tip No 5: Investigate Your House

Would you buy a car without looking under the hood? Of course, you wouldn’t. Hire a home inspector. It costs about $200 but can save you thousands in the end. A home inspector’s only job is to provide you with information so you can make a decision on whether or not to buy. It’s really the only way to get an unbiased third-party opinion. If the inspector finds any problems with the home, you can use this as a bargaining chip to lower the house price. It’s better to spend the money upfront on an inspector than to find out later that you have to spend a fortune.

It’s common to be told that the apartment is just minutes from the bus station or the nearest mall. But remember that such guesstimates are usually exaggerated, and you shouldn’t accept them at face value. Distance and speed depend on who is travelling; it may be a four-minute brisk walk for a 26-year-old man, but not for your 50-year-old woman who stays with you.

Tip No 6: Check For Loan Shark Graffiti

One warning sign you should definitely look out for is the presence of graffiti left by loan sharks. If the home has been targeted by loan sharks, the seller will have cleaned up the trail before the inspection. However, you will often detect loan shark graffiti in the stairwell and lift lobby. Remember to closely inspect the main door’s paint; sometimes, you can still see the graffiti under a thin layer. You might also be a victim of collateral damage. For example, when a neighbour is having problems with loan sharks. Also, be conscious of private CCTV cameras that have been installed that are pointed at the common hallway. This may be a sign of loan shark problems

Finance Real Estate

Tips on selling your Property

Sell before you buy

A seller is unlikely to accept an offer from a buyer whose own property is not on the market? By all means, get an idea of what you want to buy and make sure your moving plans are feasible, but before you start making offers, you really need to be sold on contract. Real estate agents rarely recommend that their clients accept an offer from a buyer with an incomplete chain. A rare exception is when a homeowner has a property that sells well. Perhaps one in the catchment area of a popular school, e.g. Raffles Primary or Ai Tong Primary or a house that that cannot be sold for a long time.

Choosing from the most active and top property agent.

A client by the name of Jenny Chou mentioned that she chose an agent because she liked the looks of him, but you’ll probably want to be a bit more scientific in your approach. The best indicator of a successful real estate agent is how many listings they have on the market. Don’t be too impressed, though, if most of the listings say Cheap sale – that could be the result of a special promotion where the commission is lowered or eliminated altogether. The latter can work and save you money, but be sure to read the fine print. After the promotion ends, the fee may be double again what other realtors charge. A “sold” board means the job is done. If an agent recently sold a property in your neighbourhood, he may have had more than one interested buyer. If this is the case, he probably has a list of people who lost out on that property and are ready to buy your property – saving you weeks of viewings.

A sole agency contract is where an estate agent is appointed exclusively to sell a property for an agreed period of time, usually 3 months. During this period, the seller should not switch to or instruct another agent – if they do, they may end up paying more than one commission. Even if a seller who signed a 1 month sole commission cancels the contract halfway through, they can still be held liable if another agent sells the property during the remaining five weeks of the original sole commission.

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With a multiple agent contract, there are no limit on how many agents a homeowner can hire, nor is there a fixed term. The agents market the property at the same time, and the seller only pays the one who introduces a buyer who closes the purchase contract.

Both types of contracts have their pros and cons. The commission rate for single agency is cheaper than multi-agency, but if you use the wrong agent, you are tied to them for the duration of the contract.

With a multi-agency, you are not tied to one broker and can play the brokers you choose against each other. While this keeps them on their toes, it can also keep them from being honest with you. Let’s say your only broker introduces you to a buyer who offers full asking price. Unfortunately, this buyer has an incomplete chain under him. Your broker advises you not to accept the offer until the chain is complete, which is sound advice. Now the same scenario, except this time there are four brokers vying for the commission. The information provided to the seller may vary. The buyer may be portrayed as being in a stronger position than they actually are, so the offer is accepted and the other brokers back off, buying time for the less truthful broker.

Hiring too many brokers can also give buyers the wrong impression.

 I once witnessed a owner give a house he had renovated to five different agents to market. All the agents advertised the property on propertyguru, which meant the property appeared on the search results page five times in a row. Did potential buyers think the seller was eager or desperate? A stream of low offers revealed that the latter was the case.

If you decide to use a realtor, don’t commit to a long contract – six to eight weeks is a good amount of time. If you’re happy with the broker, you can always renew an expiring contract.

If you prefer a multiple agency, stick to a maximum of three property agents. And if possible, hire ones that are strong in different type of clients- that way you’ll have a larger area covered.

Negotiate asking prices and fees

When properties are scarce, competition between estate agents can be fierce. It has proven to be a reliable tactic for agents to give potential sellers an inflated estimate of their home in order to win business over their competitors. As a seller, this can work to your advantage in a rising market; at the beginning of the contract, the property may be overpriced, but by the end of the term, when the market has recovered, the price becomes realistic and the property sells. If the market cools, you could be stuck, unsold and with an agent now recommending a price reduction.