Got your eye on a resale condo you can move into immediately? Hold your horses until you note these 5 key points.
I understand the allure of buying a resale condo. The idea of:
being able to move-in immediately
being able to check out how the development is like
checking out the actual layout of your unit and truly understand what the facing is
All these factors are attractive.
Perhaps HDB is not available to you due to the income ceiling. Perhaps you hate the idea of buying a new launch because you are unsure of how it will eventually look like. That uncertainty discourages you from the idea of buying new launches.
Or maybe you just don’t like the idea of waiting of waiting 3-4 years for the completion.
Being able to walk-in to an actual unit and imagining yourself living there BEFORE you make a decision to buy is an essential experience for you.
I understand that. At the same time, you are also unsure on what is the best choice for you.
Should you go for a:
freehold or leasehold development?
a newer development that looks nicer?
an older development that looks dated for the chance of an enbloc?
a development near city fringe or further away?
a bigger unit or a smaller unit?
a large development with plenty of neighbours?
or a small cosy, very private development with very limited units?
For every choice that I listed above, it comes with its own set of pros and cons. And some of these pros & cons are not immediately obvious at the beginning.
For example, with a larger development – there is a larger volume of transactions. And with a larger volume of transactions, it tremendously helps in a bank valuation. This means your offer price is more correlated and there is less danger of falling into the trap of overpaying for the unit.
Here are 5 tips to guide you in your journey.
#1: Get your IPA (In-Principle Approval) done so you know your numbers and budget you can work with.
Before you go property shopping, be aware of the budget you can work with. A bank can provide you with an IPA – an estimate on how much you can borrow for your next property purchase based on your income and creditworthiness.
Do take note however that an IPA has an expiry date – for some banks it can be as short as 90 days.
Do be aware of all these fine details – a lapsed IPA or a lack of an IPA will break any offer you wish to submit to a seller. You can easily lose out on that dream home in this 2021 situation of a tight property supply.
#2: Going for multiple viewings can generate fatigue – resulting in poor choices
As we approach the second year in this pandemic, a lot of us are feeling this overall sense of tiredness from the lockdowns and various restrictions. It is called pandemic fatigue.
Similarly, when you go house hunting – this feeling of weariness and exhaustion will set in as you realize the uncertainties and processes arising of selecting your next home.
Your serious offers being rejected again and again…
The idea of spending all your free time going for unproductive viewings….
The feeling of gloom from the uncertainties of figuring out the property market…
Guess what? This is actually quite common and expected.
It is especially challenging if you do it alone without any sort of guidance or experienced help.
But the danger comes in, when you finally say “Fxxx it – let’s just take whatever comes our way.”
The last thing you want to do is make a decision out of fatigue and frustration – it will usually result in post-purchase regret.
#3: A buyer agent can help you with negotiation and protect you from making poor decisions
A great buyer agent is more than just an agent representing buyers. They also protect you from your worst instincts and make sure you are on the right path.
They know what questions to ask that you don’t have any idea about. They help you spot issues that you might never notice.
Buying a home can be a very emotional process and those emotions can cloud our decision-making process.
For example, you might not think to consider about who your future neighbours might be. You might miss tell-tale signs of mis-managed development.
If you were to engage me as an agent to represent you as a buyer, you need not pay commission to me. It is shared with the seller agent in a process known as co-broke.
But if you really think about it….
Since all the monies come from you – the buyer – technically you are paying for both the seller’s agent commission and the buyer’s agent commission. The seller just takes 2% out from their initial proceeds.
#4: Do take note some sellers’ agents might refuse to cobroke – this is technically not allowed under CEA
Unfortunately, in this current hot 2021 market, this is also when you can see some agents at their worst behaviour. Some seller’s agents – in an effort to keep the 2% commision entirely for themselves – will do their best to avoid dealing with a buyer’s agent.
So if you were to inform a seller’s agent that you have an agent to represent you – be prepared to have all the cagey and “sus” behaviour appearing. Viewing slots will suddenly be unavailable. Even worse, your messages might be ignored.
But if you were to mention that you are a direct buyer with no agent – then the red carpet might be rolled out for you.
This only happens in the private property segment.
In the HDB segment, the buyer’s agent is paid from their own client (the buyers themselves) so this issue never comes up. Why the discrepancy?
It might be due to the fact that for a HDB transaction – the paperwork is much more complicated so buyer’s agent is paid their 1% commission from the buyer for that effort.
In fact, in the HDB market – a seller’s agent will love to deal with a buyer’s agent – it makes their job far easier as this means the buyer has been pre-qualified.
As an agent myself, I am sad to say this is a damning indictment of the industry.
For me, I am a big boy and I know how to take care of myself and my clients.
But do be aware of this issue especially if you are buying a resale private property.
The idea of co-broking is to reduce the friction and make private property transactions happen more easily to create a vibrant market. The idea is to have access to more a extensive network of listings and pool resources so transactions are not stagnant.
But unfortunately, not all agents behave or think that way.
So your property choices might be limited if you have a buyer agent. That being said, you also need to weigh the pros and cons.
Is it worth having an experienced agent to guide you in the most important purchase of your life?
#5: Think about the exit strategy as well – how long you plan to stay there and what are your plans for the future
Your property purchase might not be your last home. You may have plans to stay for awhile and then exit. That option needs to be available to you.
In this current hot property market that is fuelled by limited supply, it is so easy to buy your property at a peak price without you ever knowing it.
What happens when you bought a property at a peak price? It means you might get stuck when the market eventually goes down – especially when supply gets restored once this pandemic is over.
I am sure when the time comes for you to sell, you would not want to sell your property at a loss. That is why it so important to have access to someone experienced who can determine whether you are overpaying or not.
It is not enough to be aware of recent transaction prices to guide you.
More importantly, when you plan to sell in a few years time – will there be buyers who are willing to take it off your hands at your desired price?
This is where an understanding of supply/demand, the type of property you are buying and the demographics of potential buyers all come into play.
Conclusion
In any property purchase, there is always an element of risk. Even if you don’t engage with a buyer agent, discuss with an experienced agent on what can go wrong.
The resale condo market is a bit treacherous if you don’t know what you are doing. So plan ahead and get advice from those who know better.
I understand what you are going through as I went through similar when I was buying my first private property back then – before I became an agent.
So if you have questions, feel free to just drop me a message via whatsapp to clarify your doubts.
If something is weighing on your mind, do reach out. For me, it probably just takes a few minutes to answer your questions that might have plagued you for days or weeks.
Don’t feel shy to have some clarity and peace of mind for your own property journey.
Cover image: luxuryhomesg.com
Comments