While property values almost always rise in the long term, this doesn’t mean Singapore’s real estate market is booming. As with any other kind of asset, there will be periods when prices fall across the board.
An example of this would be 2013 to 2015, when cooling measures and the withdrawal of Quantitative Easing (QE) caused home prices to fall over 15 per cent. Average home prices in Singapore fell from around $1.1 million, to about $932,000 in just three years.
Today, there are worries that the ongoing Sino-US trade war, Wuhan flu epidemic, and property glut that could take four years to clear could drive home prices down.
And while the obvious solution is “don’t sell during such times”, I understand that’s not always an option. Sometimes you need to offload the property, even in a bearish market. Fortunately, there are steps you can take to improve your odds of a good sale, even in a downturn:
The first thing to know is how long you can hold on before you’re forced to sell. Assuming your sale is prompted by financial reasons*, you need to know:
This will give you a sense of how long you can afford to wait, before you must accept an available offer. For example, if you can service the mortgage for another 10 months, then you probably don’t need to grab at the first available offer – give your property agent (or yourself) time to negotiate with more prospective buyers first.
If you are in truly dire straits however (e.g. you are one month from foreclosure), then it’s time to grab the least worst offer available, without further delay.
*It’s another matter if your sale is prompted by non-financial reasons, such as having to offload a shoebox unit because you want to get married this year and need a four- room flat. In these cases, you may be faced hurdles other than just finding a buyer. For example, you need to wait 30 months after selling your private property, before you can apply for a BTO flat. For these more complex situations, contact me so I can work out a way to help you.
One common mistake is to engage multiple agents from everywhere, to market your listing. You may think this will help you sell the property faster, but in fact the opposite can happen.
The reason is simple: most property agents will give priority to clients who engage them exclusively. Not many agents want to risk actively marketing a property, only for another agent to come in and complete the transaction.
Because of that, your property might end up on the backburner. This is the worst- case scenario when you’re trying to sell in a downturn (You need more active marketing, not less, when buyers are cautious).
Also, having multiple agents can mean your property listing is seen with a different agent’s name each time. Buyers who see this will suspect your property has been on the market for a long time and isn’t selling well; or they’ll realise you’re being urgently pressed to sell. The savvy ones will then lowball you in negotiations.
So find a trustworthy agent, and get them to focus on your property through an exclusive engagement.
Why do we pay more for gold than water, even though water is frankly more useful? The answer is scarcity – there’s much less gold than there is water (at least for now).
This is a general economic principle that also applies to property. For example, condos on Orchard Road are not the least bit threatened by high supply in Punggol or Jurong: developers can build a dozen more condos in those areas, and Orchard Road condos will still hold their value, because those other condos cannot replicate the location.
While you may not have an Orchard Road condo, you can still work on finding the unique or scarce value of your property. For example, your unit may be the closest to the pool and clubhouse in your entire block; or your unit may be the only one with “extra” usable corridor space, due to the block’s layout.
Staging your home is a simple process of making it look newer, more spacious, and more attractive. The cost of simple measures – such as repainting walls or removing cracked tiles – are small compared to the potential upsides of a higher sale price.
At the very least, give the living room and bedrooms a fresh coat of paint (if the current one is peeling or faded), and ensure kitchens and toilets radiate neatness. This can mean hacking away sagging cabinetry, and replacing rusted faucets.
I have a background as a contractor; and as a value-add to my clients, I often aim to make improvements that will allow your home to stand out. Contact me so I can suggest some ways to make your property more appealing.
Check the prices of surrounding properties – these will give you a fair sense of what to expect. As you’re selling in a downturn, you may see that prices are much lower than when you checked, say, three or four years ago.
While it might be painful to accept, remember that the consequences of failing to sell – whatever they may be – are likely worse. Be realistic about what can be achieved in the given situation.
Ron Chong is a leading property agent with Orange Tee & Tie, and also runs an Interior Design firm. His background gives him a wider breadth of experience in dealing with Singapore properties, and he aims to provide practical, actionable advice to buyers and sellers today. Like him on Facebook for news and updates on Singapore’s real estate scene.