How to Avoid Getting Suckered Into a Bad Property Deal

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Every seller in the market is out there to earn the maximum amount of money they can against the commodity they are offering. Therefore, the price that they offer is not necessarily the commodity’s worth. This stands true from things like everyday goods to property.

However, when you live in a city where one where financial flexibility is nearly a fictitious concept and costs of living are simply ridiculous to contend with, choosing your property investment is as critical as the challenge of choosing the right life partner. It is a lifelong investment after all.

There is no printed maximum retail price on properties for you to bank on. And just because you love a certain property too much and cannot stop imagining yourself living in it, it does not mean you rush in gung-ho without calibrating its market price. Like every other investment, timing is vital in purchasing a property irrespective of how many people try to convince you that property rates will always keep shooting up.

While property agents may throw out limited offer deals that may seem tempting at times, it is not necessary that the property rates offered are the best you’re ever going to get.

As of Q2 2014, the prices of private residential properties underwent their third consecutive quarter of decline after peaking in Q3 2013. Although the government’s stance on the extent of cooling measures needed is still unclear, it is clear that a minor fine-tuning of total debt to gross monthly income percentage may need to happen first in order for Singaporeans to realistically meet their housing requirements.

Therefore, here are a few ways by which you can find out when you are getting the lowest price for a property:

  1. Do your research well in advance

When the market is bad, go in and buy things for far less than what they are worth. And pick the good ones only — those with top quality, the best location and good rental potential.

There are two reasons why you should be picky when fishing at the bottom:

  • If prices dip further, with more good bargains on offer, you will regret that you havent chosen the best.
  • Once the market recovers, the prices of good properties will pick up earlier and faster than the rest of the market.
  1. Learn to identify the signs of property rates hitting the bottom

The difference between an expert and a novice property investor is a trained eye. Fortunately, you don’t need to be a swashbuckling property agent oozing expertise to identify the signs of an underperforming property market. When property rates are on a massive decline, look out for signs like overtly brief listings of properties in newspapers. You can also stay in touch with a property agent to keep a pulse of the property market.

Secondly, gloomy market sentiment also affects the personal lives of owners and property brokers. If you see visible signs of extremes of behavior in them while dealing with you, then it means they are desperate to close deals due to a lack of demand.

  1. Be patient and denounce impulsive buying instincts

This is where a lot of people lose out if they like a property too much. Great investors advocate buying at the point of maximum pessimism. You must wait until the ninety-ninth person out of a hundred gives up. Buy only when all signs of funds are drained from the property market. In other words, where there’s fear, there’s opportunity.

It’s amazing how many Singaporeans are willing to gamble over a million dollars for small apartments when property prices have only dropped down by a small margin. Similar to buying undervalued stocks, one must only buy property after a major market correction, which seems to be inevitable in Singapore some time soon. Look for undervalued properties and wait for the market to recognize their true value. When you buy way below the fair market value, the risk is lowered substantially.

Have financing ready before you need it so that you are able to act promptly when a good opportunity swings by.

  1. Look for a value buy

Even if the market is bearish, it is important to wait it out because the prices might drop further even if it is at the bottom.

Try your best to bargain for a safety margin of 15 to 40 percent below the current value of your target property. Always keep a positive cash flow from the monthly return of your property.

You dont have to follow my strategy to buy at the bottom. You may just look for a value buy. Use your own strategy and go for it. You might benefit from your niche purchase with less competition and earn a higher profit.

Thus, if you keep in mind these few points, you will become wiser while buying property. More importantly, patience is a virtue and for good reason. Being patient enough for the property to hit rock bottom prices is the difficult part of buying property at its lowest because majority of the people do not want to wait that extra time after the price reaches their preference.

What do you think?