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Fact or Fiction: 5 things to know about property selling

Many people in Singapore still possess a slightly skewed view of the property market. They may have read loads of property articles online but yet still find the market confusing. What does not help is that the information in these articles themselves could be conflicting, exacerbating the problem and making it difficult for property seekers to decide on what to do next.

This is especially so with regards to sellers. With the property market forecasted to remain subdued well into 2015, those intending to dispose of their current property may find that it will take longer than six months to find suitable buyers. Because of this, a common tactic is to make adjustments to their selling price, sometimes at a cost lower than their expectations.

What then should sellers know in order to be in a better negotiation position? We examine a handful of selling tips that property seekers have heard and read about and separate which of them are fact, and which are fiction – with the assistance of property agents*.

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Selling rule of thumb #1:
When selling property, it is advisable to price property higher than valuation price to give yourself more bargaining room.

Fact or Fiction: Fiction

Kevin Seah (KS): In the current buyers’ market, pricing your property above valuation price will likely price it out of the market, hence buyers will not even enquire about your property. To manage expectations (the buyer’s as well as your own), it is vital to know the asking prices for units for sale in your development and of comparable properties nearby. Price your property within a range of these asking prices- nearer the lower end if you need to sell fast or nearer the higher end if you can wait. In addition, it is beneficial to obtain an indicative valuation price, easily from loan bankers.

Kaeden Ong (KO): Competitive pricing is the most important part of any property sale, especially in a tough market. Demand and supply is the key factor to consider when pricing a property for sale. When homes in the area aren’t selling well (low demand based on recent number of transactions or high supply of available home for sale in the particular area or the project itself), the optimal strategy is often to compare recent sales on similar properties in the area, and price it in accordance to the market value.

That said, the pricing strategy of pricing a unit higher than the market value will only work if the property in the area is in high demand (high transaction volume) with a low supply of available units on sale in the vicinity.

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Selling rule of thumb #2:
Always end offer 10 percent below the sellers’ asking price.

Fact or Fiction: Fiction

KS: Negotiation itself is a fluid process and the situation for each property is different, depending on whether the buyer or seller has more bargaining power. This will affect how the bargaining process is carried out and as such, there is no price or percentage benchmark when the seller or buyer should conclude on.

However, sellers should possess knowledge about the price of properties around their area and their own holding power so as to set a reserve price – the absolute minimum price they will sell their property at – before entering into any negotiation.

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Selling rule of thumb #3:
My property should be sold at a higher price because I have renovated my house/added a lot of features (ie. interior design, walk-in wardrobe).

Fact or fiction: Depends

KO: Renovation does benefit a property in terms of value, however, buyers will still tend to base their asking price on historical transactions, especially in a tough market. It is also a very subjective matter as different buyers have different expectations.

First impression do count. It is definitely prudent to clean up and tidy your property to make it look more presentable, fix any piping/ceiling water leakage and add a fresh coat of paint before opening up your property to prospective buyers. Based on experience and feedback from buyers themselves, a property that appears not well taken care of will reduce their confidence in buying said property.

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Selling rule of thumb #4:
I should always trust the accuracy of my property’s valuation appraisal.

Fact or Fiction: Fiction

KS: Property valuation is not an exact science. It is important to know that appraisals are sufficient to only provide an estimate of the property’s value. As such, sellers should give an allowance of up to 15 percent above and below the valuation amount.

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Selling rule of thumb #5:
The value of my property is determined by how much similar properties around my area/district are selling for.

Fact or fiction: Fact – to a certain extent

 

KO: Before any actual valuation (ie. a property valuer visits the property to give an estimation), an indicative valuation can be obtained when a seller does research on similar recently transacted similar units around the vicinity. There are instances when there is a deviation – where one or two similar units are transacted higher than the district average. This could be due to better orientation of the unit (ie. North-South vs East-West facing), the age of the property, the floor number, the layout of the interior as well as the property’s popularity. Luck too does somehow play a part – some interested buyers may just be willing to pay a premium.

 

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Written by PropertyGuru.com.sg

*Contributions by Kevin Seah, Senior Marketing Director of Huttons Asia Pte Ltd and Kaeden Ong, Assistant Division Director of ERA Realty Network Pte Ltd.


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