Property deals are out there for the discerning buyer.
Property deals may at times have a bad reputation, but don’t let that stop you. There are genuine offerings out there which can help you save time and money. Here are six tips on how you can find them and negotiate your way into a property purchase.
By Denise Djong
1. Identify a specific objective
Are you looking to purchase as an investment or will you be an owner-occupier? At this stage, a pros and cons list will help. You need to know what’s the opportunity cost for being either, or if you’re fortunate enough, to be both. Key factors to consider include your current financial and personal situation, future plans, and how likely they are to change.
You may be tempted to put both investment and personal reasons in one basket, but this can be to your detriment because you may find yourself without a suitable tenant and having to move out without the rental income to pay off the mortgage. Ideally, invest to earn a comfortable nest egg before purchasing a family home which you’ll be financially sound to upkeep without additional income if necessary.
2. Do your homework
Researching online may be more convenient, but it can be frustrating especially when a project is marketed by different real estate agencies. One way around this is to find out who the developer is, contact them and ask them who their preferred agencies are. This way, you’ll be guided to the right people.
Read up on project reviews and get to know the industry. This will let you gain perspectives into the developers’ credibility, capabilities, and discern between what’s marketing fluff and actual potential. Gather data from multiple sources such as governmental agencies like the Urban Redevelopment Authority (URA) and impartial international insights from reputable sources like PropertyGuru and Bloomberg.
3. Measurable steps
Armed with extensive research, you are now well-informed to set definitive, tangible steps in finding and negotiating deals with property developers. This means that you’ve sufficiently studied reports like PropertyGuru’s Market Outlook, recognised the financial tools at your disposal, and registered yourself for the relevant property launches.
You’re well-versed with terms such as Deferred Payment Schemes (DPS), Additional Buyer’s Stamp Duty (ABSD), Seller’s Stamp Duty (SSD); and you have an understanding on the financial restrictions and foreigner occupation regulations if you’re considering overseas properties. You’re also aware of the legal ramifications if construction of the development is abandoned for one reason or another. You’ve prepared all the required documentation and are ready to meet with developers and negotiate the best deals for yourself.
4. What’s in a deal?
Generally, new projects, especially Building Under Construction (BUC) types are launched in three phases – soft, official and subsequent phases. Developers usually use soft launches to attract investors with discounts of up to 20 percent as they may need to raise cash flow. Early birds share in the risk of a BUC as market sentiment is being tested. Prices will most likely increase during the official launch and your choice units may be unavailable. But this doesn’t mean you’ve missed out. You can still get a good deal if remaining units prove to be difficult for the developer to sell.
Break down the deals to their basic elements. Are you getting the best price? This is especially when you’re purchasing BUC projects because essentially, you’re paying ‘future prices’. Check online valuations and past transactions. Weighing the evidence allows you to make a more cerebral than visceral decision. When a deal is too good to be true, it warrants a closer look.
5. Act at the right time
Finally, it’s time to put down the deposit and sign on the dotted line. Now, if you still have doubts, make sure they are addressed. Don’t rush into deciding.
Did you have to put more money down just to secure the deal? In the case of an investment, have you correctly calculated the returns on the property? Do secondary markets exist for your choice of purchase so that you have the option to sell quick if needed.
6. Review your decision
You’ve realised your aspiration to be a homeowner, but it’s not yet time to sit on your hands. Consistently update yourself on the property market, especially on the progress of your home.
They say there’s no time like the present, but with uncertainties in the global economy, there may
never be a perfect time, just the ideal situation unique to you. You should be ready to walk away if you must, but you’ve done your due diligence and the decision rests with you.
|This article was first published in the print version PropertyGuru News & Views. Download PDFs of full print issues or read more stories now!|