06 Jan How not to lose a property you like
Singapore property market 2015 forecast
It has been widely reported that Singapore property prices will continue to trend down in 2015 because of the various property cooling measures introduced by the Singapore government over the last few years.
The lower, the merrier?
With this assumption about property prices in Singapore, many buyers have started to have the mentality that any property being advertised for sale should be heavily discounted before they are worth buying. Many also made low ball offers for the property they like. This is where everything can go wrong and backfire on the buyers.
Property buying experience
The following is a real life story about the experience a buyer went through recently. This couple has been searching very intently for a property (to be their new home) over the last few months. After months of searching, they finally found something that they really liked. The property was priced at market price and it was a price that the couple could afford. Having been heavily influenced by media reports about property prices, this couple proceeded to make an offer that was 15% below the asking price. They felt that was the right strategy to adopt and could slowly up their price if their offer was rejected.
The seller was informed about the offer and felt insulted about the offer. The property had good attributes and was not overpriced. There were also a few parties that had indicated positive interest in the property. Because of the low ball offer, the seller had a very bad impression about this couple who was genuinely interested in the property. He became lukewarm towards them. Thinking they had adopted the “right strategy” of offering a very low price for the property, this couple now wanted to raise the price a bit more and requested to meet the seller to discuss. The seller did not entertain them.
Knowing that the property was right for them and that the asking price was fair, the couple finally decided to offer what the seller was asking for but they could not reach the seller’s agent. When they finally managed to reach the agent, they were greeted with the news that the property had just been sold to someone else at that same price – the seller had instructed his agent to ignore the couple. The couple was shocked and in disbelief at losing the property in this manner when all they did was to adopt a strategy that was aligned to media reports. They lost their dream home at a price they were prepared to pay. Sadly for them, the next identical property on the market is 10% more expensive than the one they missed.
When the media reports that prices are gonna rise by X% or drop by Y%, one cannot simply assume that prices for all types of properties will change by X% or Y%. Some will drop more, some will rise more. It is important for buyers to do their own homework (or with the help of a real estate professional) to determine if a property is underpriced, overpriced or priced at market price. If you are a serious buyer who wants to buy a property thais priced fairly and meets what you are looking for, is it worthwhile adopting a low price offer first (ignoring the fact the property is not overpriced)?
If you choose to do what the couple did, the chances of you losing that property that ticks all the boxes is extremely high. In such a situation, do not make low ball offers if you are genuinely interested in the property. Lastly, do remember that even in a property market that is trending down, there will be properties with good attributes that will buck the trend and continue to command strong interest and prices. If you are buying a property to stay and the price is not unreasonable, my advice is to go for it in the correct manner to avoid the pain of losing something you really like.
Photo credit: Flickr/Rana Ossama