PROPERTY SELLERS’ CONCERNS
Disclaimer: Below are only the opinions of the writers and readers should not construe it as advice given to them and readers must take full responsibilities for all decisions made.
1. SHOULD YOU UPGRADE?
Before you sell your property to buy another one, there are some considerations that you should look at :
1. When you upgrade, would you be able to retire at age 55? Or age 65? Oftentimes, because of peer pressure or status, many make decisions based on what they must have (not because they really need) versus a wise decision where they can maximize their wealth. Let me give you a few examples:
If you own a HDB that is almost fully paid up, you are likely to upgrade to a condominium or Exec condo. Now which should you choose?
My recommendation is neither. Why?
Keep your HDB for rental income and if you are able to invest in another condominium without selling your HDB, you can upgrade with full confidence knowing that you have another property that you could rent. The rental from HDB is substantial as it can continue to help you build cash and is your passive income when your condominium is fully paid up. You can retire easily with just 2 properties fully paid up.
If you own a terrace that has more than a million equity in it, you are likely to sell and buy the semi-detached. Why not if you already own at least 2 properties that are being rented out. You know that you have good nest eggs when you are older as all properties are being paid down every year and one or two will be fully paid up by the time you retire.
However, if you are not in the above position, then your decision to upgrade is unwise as you are going to be the one paying a higher mortgage when you upgrade and you do not have other property for investment where you can collect passive income eventually. Your upgrading is going to put more strain on you and retirement is impossible. For many people in this category, retirement means sell the property and then buy 2 properties. Why not do it now and it will be more fruitful in the long run.
2. SHOULD I SELL THIS PROPERTY NOW?
This is a tricky question. Some are easy to answer and some are very difficult.
1. For example, if there is another plot of land that is put for sale by government and is going to block your view, the answer is SELL.
2. If you know that your rental in your condominium is likely to go up in a few years’ time due to future MRT or due to new offices in the vicinity, the answer is HOLD till rental improves. Once you get a higher rental, then you may consider to SELL as rent goes up, price will go up.
3. If you have another property that offers better returns and higher capital appreciation, then EXCHANGE your property.
3. If the interest kills you, SELL. The longer you hold, the more you are going to lose if the property has negative rental returns.
4. SELL when your property is peak (you will know when rental returns is low based on current market price). For example, you may have bought a property for $700,000 and currently your rental is $3000. The market price of your property is $1,100,000. Do you sell? Answer is YES for me as my gross rental returns is only 3.2%. based on current market price I will take profit. However, if rental is $4000, then I will HOLD as current property price of $1.1million is not attractive.
5. If you only have 1 property, consider selling to buy 2. That may mean a downgrade but you will be better off in 2 decades as you will be able to retire. Doing nothing is as good as nothing is going to happen to your net worth.
3. SHOULD I APPOINT AN EXCLUSIVE AGENT?
If you are a developer, you obviously will appoint one or more exclusive agents to work on your project. That is perfectly logical as a project will mean multiple properties to sell.
If you are an individual owner, you will also consider to appoint an exclusive agent to sell for you for reasons below:
1. If there is no appointment and is a general listing, you will realize that no agent is committed to push your property and depending on agents to call when they have buyers is as good as waiting for lottery to strike in this tough market. Everybody is competing for serious buyers and without aggressive marketing campaign by your exclusive agent, your property will only sell when you sell very cheap or when property market recovers.
2. Many owners have bad experience with exclusive agents. Their bad experience means that their agents are not pushing their properties and there were few or no viewers. Some agents only specialize in the HDB market; some only do leasing; some only sell certain areas and may not be familiar with another area. What does this mean? It means that you have to appoint an agent who is confident in selling your property.
3. How do you define confidence? Whenever we meet an owner to discuss on their properties and their expectations and the market conditions in relation to those properties, the owners will have a good idea as to achievable market prices for their properties. Only when there is mutual agreement that the owners agree to the achievable prices presented would we undertake to sell for the owners exclusively. Without mutual agreement and collaboration, it will be meaningless to appoint an exclusive agent.
Give us a call today and give us a chance to know you and your properties. Another friend and another brain is definitely better.
Copyright © Tracy Goh 2015