Whether it is from an HDB flat to a condo to a landed house, or from owning one to multiple properties, the Singaporean dream is to upgrade, upgrade and upgrade some more. But given how expensive property is in Singapore, this is easier said than done.
Hence, quite unsurprisingly, you may find many property advertisements touting how you can buy a swanky new condo with little to no money, or how you can ‘flip’ your property for a windfall.
We’re not saying they’re lying or that these property buying ‘strategies’ are bogus, but it does pay to be a little more discerning when viewing such ads. Very often, when something seems too good to be true, it is.
To help guide you along your search, here are six potentially misleading things you should keep an eye out for.
1. “Buy With No Money Down!”
You may have seen property ads on social media and newspapers with these statements: the promise of teaching you to become a property millionaire with “no money down”.
With property costing millions, the prospect of owning another property without needing to fork out any money is indeed enticing. It’s normal to give such ads a second look… But how true are they?
The simple answer is, we always need to put money down (i.e. pay a downpayment) to buy a property in Singapore—regardless of what anyone says! When these ads say “no money down”, they often mean without tapping into your cash savings.
However, it’s wise to remember that the funds in our CPF Ordinary Account (OA) is our money too! If we took that statement literally, and are so enticed by it, buying an HDB BTO is probably one of the only real ways to buy a property with no money down. And even then, that’s provided you have enough in your CPF OA and/or qualify for enough CPF housing grants.
For private properties, the current Loan-to-value limit (LTV) allows a new borrower to take up to 75% loan of the purchase price. This means the remaining 25% downpayment needs to be made “with money down”. Furthermore, a minimum of 5% has to be paid in cash, whilst the remainder can be paid in a combination of CPF OA funds and/or cash.
Whether we have signed an option to purchase by providing a cheque or buying a property that hasn’t been built up yet, we eventually need to pay for it in this manner.
2. “90% Units Sold on Launch Weekend”
Let us just start by saying that such statements are factual and in no way a lie. We often come across such headlines in the mainstream media too.
The important tip here is not to take these numbers at face value. A high launch-sales percentage does not necessarily mean that the project sold like hotcakes, so don’t read the headline and let your FOMO take over!
You will need to read deeper for a better understanding of how the project performed before making your decision.
For instance, sometimes, only a small portion of the total units are released at launch. Say a project has a total of 300 units, but on the launch weekend, only releases 100 of those for sale. Of the 100 units, 70 are sold. With these numbers, the papers and advertisements are likely to say "70% of units sold at launch".
That’s factually correct, but if you’re a property seeker, it can create an illusion that the project sold way better it did. Using the above example, the 70 units actually only make up 23% of the 300 units in the project.
Don’t get us wrong! This is not to say that these projects are good or bad. After all, the number of units sold on launch day isn’t exactly a measure of how good the property is. This is simply an illustration of why you should be more discerning and look beyond attention-grabbing numbers.
3. “Upgrade With Only $X,XXX Income” or “Sell One, Buy Two”
If you are a Facebook or YouTube user, you probably would have come across video ads promising to share the secret of how you can upgrade from your HDB flat to a condo with a relatively low income (e.g. $6,000 household income).
Many also share stories depicting how people regret holding on to their HDB when they find out how much they were missing out on, tugging at your heartstrings. Agents touting this property “strategy” may impress you with numbers showing how it is possible and how they have helped other clients of theirs to achieve the same.
Spoiler alert: no such secret exists.
Yes, technically speaking, it may be possible—perhaps with a small shoebox unit and with the help of a lot of savings, plus sales proceeds from the HDB flat—but there are many conditions required for this to work. Not to mention, is upgrading above your means is really recommended? Does this advertiser really have your best interests at heart?
Same goes for the “Sell One, Buy Two” tactic, which we have also previously written about here: “Sell One, Buy Two”: Does This Strategy Actually Work?
The Government and authorities have always eschewed the tenets of prudence amongst residents when it comes to home ownership. That’s why we have rules like the Total Debt Servicing Ratio (TDSR) and Mortgage Servicing Ratio (MSR). If you’re unsure and looking to estimate if your desired property is realistically within reach, you can also check out these four personal finance ratios.
At the end of the day, the onus is on you to properly assess your own financial situation and consider your unique circumstances. Always enter the transaction with eyes open, especially if your income is at the ‘bare minimum’.
If you need more guidance around home financing, our expert home loan advisors are happy to help you (it’s free!). PropertyGuru Finance partners all major banks to bring to you the most competitive selection of home loan packages in Singapore, but we are not the actual lenders, which is why we can promise personalised and 100% unbiased advice.
4. Dummy Ads That Are Too Good to Be True
In an increasingly digital world, our searches for good property deals have evolved from sifting through pages of the Classified ads to quick and convenient searches on property web portals, like ours!
Unfortunately, there will always be black sheep in any industry, and you may have come across a thing known as ‘dummy ads’. Dummy ads often feature a too-good-to-be-true property, priced $100,000 to $200,000 below what it is worth in the market. In reality, the property may not even be for sale. The tactic is to leave the ad online and circulating, and when interested buyers reach out, tell them that it is no longer available and try to upsell another property instead.
There’s no sure-fire way to identify these ads, since it’s entirely possible that such a deal once existed, but the property was since sold. While we do our best to put a stop to any dishonest practices on PropertyGuru, some inevitably slip through the cracks.
Hence, it’s important to keep a keen eye on the details of property listings, and always compare the advertised prices and details with other similar properties. This will give you clues. For example, if there seems to be a really good deal that has been advertised for many months, it may be a red flag. Genuinely good deals are usually snapped up quickly!
Other things to look out for are generic stock images, coupled with a copied description that can be found on previous already-sold property ads.
5. Deliberate Omission of Key Details and Information
Another tactic used to fish for direct clients is to mislead by withholding or omitting important information.
For example, the ad might say an 870 sq ft property is selling for a low per-square-foot price (psf) but exclude important details that includes a breakdown of how the floor size of the unit is calculated. It could be that the unit only has a living space of 550 sq ft, and the remaining space is used as a patio.
Unwitting buyers may assume that all of the 870 sq ft is living space and be enticed by the low psf pricing stated in the ad. A tell-tale sign is if an ad message overly focuses on one detail, and when you reach out, the agent seems to avoid questions about anything else.
The information that is not revealed is often more important than information that is highlighted. This is slightly tricky because you don’t know what you don’t know, right? Our advice is then to do your due diligence reading up, ask as many questions as you need, https://www.propertyguru.com.sg/property-agent-directoryand speak to more agents whenever unsure.
6. “Bad” Property Agents
Finally, most properties for sale are represented by a property agent. On PropertyGuru, only licensed agents can create an account and list properties for sale. This gives property seekers peace of mind and minimizes risks of foul play.
But we understand that there are many other different avenues from where you might come across a property ad. Wherever you find the listing, it is important to take note of the agent’s details. This includes identifying the agent’s name, CEA registration number, contact number, the agent’s property agency and the agency’s license number.
With these details, it is good practice to do a quick check in the Public Register of Estate Agents and Salespersons available on CEA’s website. You will be able to verify the agent’s details provided in the ad, how long the agent has been registered with CEA and whether the agent has received any awards or if any disciplinary action was taken.
These are important details you may want to consider when dealing with an agent. If their details are omitted in the ads, that’s another red flag.
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