Planning To Buy A Property? Find Out If You Need An Agent

With plenty of information available online, I am sure you wonder whether do you really need a property agent to represent you?

With property agents everywhere – sometimes you might feel:

“Eh how hard can this be? It is just paperwork right?”

But if you are planning to purchase a property – which is likely to be the largest purchase of your life – I highly recommend that you take a step back and make an informed decision.

Buying a property is a huge decision.

It is not like buying a car. Neither is it like buying a paper investment.

Let’s explore some situations you might find yourself in:

Situation A: Making an Offer for a HDB

You are eligible to take up a loan up to $600k.

You went to view a renovated resale flat on #15 and you liked the interior design very much.

The seller initially wanted $550k. But now they are willing to let go at $520k.

You are ready to offer and make a deal.

It is “cheaper” than your budget of $600k.

So should you proceed?

If you have an agent present, you will actually be informed that the average resale market transaction prices for that estate is below $500k.

And your agent will inform you that the most recent transaction was closed at the next block on #16 – was transcted at $510k.

Also, those recently sold on #08 to #12 was at $460k to $480k.

All of these units was transacted at below $500k.

The $520k made sense as it was within your affordability.

After you made the offer, the valuation report came out at $505k.

Should you pay a COV $15k?

You might think it is worthwhile as it will cost you more to do the renovation yourself.

So… should you commit to a resale HDB flat that cost higher than the average pricing of below $500k?

But doesn’t it mean it would become more challenging for you to sell next time?

You might reply – So I won’t sell.

But who knows?

Flexibility and option to sell isn’t bad afterall as lifestyle changes and needs change over time.

Situation B: Should You Pay For Cash Over Valuation (COV) ?

To pay COV or not for resale HDB flat?

This is subjective.

As sellers can no longer can obtain HDB valuation before OTP issued – all negotiation is based on recent transactions.

Let us assume the recent done on #17 for the next block is at $505k, will you be ready to offer $520k for this #17?

You really like the décor so is it worthwhile to pay if valuation also turned out to $505k?

It depends on buyers if they feel the décor is worthwhile as it may cost more to do it themselves.

Time and efforts to co-ordinate the renovation has not been considered.

But your friends said that today’s market, no one pays for COV.

Do you risk giving up this unit you like or do you risk being “silly” to pay COV?

Situation C: Negotiating For A Resale Condo

The seller’s agent said that someone has offered $1M for the condo you like.

You have not offered.

And it seems that you are caught in a “bidding war” though the recent done for that size in the condo is about $950k.

But before you managed to offer, the last offer is now $1.05M.

How true? Should you offer $1.06M to “outbid”?

Afterall, you will be busy with work for the next few months.

At the same time,  you have been looking for a house with no avail for past 1 year –  so you decided to go ahead and deal at $1.06M.

It is within your budget.

But is that a good move? Or are there better options?

Did your frustration and fatigue of searching for a new home finally forced you to just “settle down” ?

The Ethical Considerations of Property Agents’ Commissions

Let’s explore who pays for whose commission in the Singapore real estate market.

For a HDB transaction:

For HDB buyers, they will need to pay 1% commission + GST to their agent who represented them in the transaction.

For some HDB buyers, they feel they might save on the commission – so they prefer to do DIY.

For a private property resale transaction:

For private property buyers, they need not fork out any commission to their agent representing them.

This is because the seller’s agent shares the commission paid by seller with the buyer’s agent. In real estate terminology, this is called co-broking.

There are some private property buyers who might feel that without a buyer agent – the seller will “save” from paying out lesser commission to close the deal.

And thus they will get a lower selling price (since selling price most time factor in the selling costs including the agent’s fees).

But in fact – with or without a buyer agent – the agreement between the seller’s agent and the seller has been agreed upon even before the start of marketing for sale.

In the negotiation, the seller should consider all possible offers. Of course, any seller will just look for the highest possible price offered.

But there might be cases of seller’s agent thinking to safeguard their own pockets and choose to close with buyer without a buyer agent in order to avoid “sharing” their commission with buyer agent.

This will be considered an ethical breach and it might be dealt severely by CEA.

In the overall grand scheme – co-broking and sharing commissions is a good thing as it allows for access to a larger pool of potential units for sale – providing buyers with more choices.

A good agent does not just have a large network of clients but also a large network of fellow agents and contacts they can tap to in order to secure the best deal for their clients.

There Is Too Much Hidden Information Out There

Real estate is not your full-time job.

• You realise that some sellers engage several agents to market same unit so it means talking to different agents when going for viewings.
• You realise that there might be some fine print in the documents that you missed.
• You realise that you didn’t fine-tune the words used during the negotiation and offended the sellers.
• You realise that you miscalculated the cash, CPF and loan to cover buying expenses and purchase price.
• You thought you did your sums correctly but you realised that you have not factored in the buying expenses e.g. stamp fees, legal fees and time/ effort for past 1 year finding house.

What if you find yourself short of funds but you have already entered a legal binding agreement to buy?

The truth is this:

• You only have the experiences that you have.
• You only have the strategies and tactices that you can think of.
• You only can believe what you believe because you are you.
• You wouldn’t know what you don’t know.

Conclusion

Yes, I am a property agent so of course I am going to say engaging an agent is a good idea.

But it is good to have someone on your team…

It is good to have someone who will actively look out for your interests – because their interests and your interests will align with each other.

A good agent help you identify the blind spots from the professional perspective, impartial and not emotional aspect. We keep your emotions in check and help you look at your bigger picture – which is your goals in your property portfolio.

A good agent is not pushy, give you space and time and respect your decision making process.

But good agents will push you if she or he finds that it is a deal NOT to be missed based on analysis and fitting of your needs, timeline and finances.

A good agent is not a substitute for information that you can readily found online.

A good agent works as a partner who is able to give you the assurance and confirmation regarding your personal analysis, judgement and research to buy or not to buy.

A good agent is not a one-off deal closer.

He or she helps you see that your next property / buy is a good fit to what you are looking.

Do you feel at ease that there is an expertise representing you for your property journey.

There is nothing wrong to do DIY. But sometimes leaving it to a professional also means unloading a heavy burden.

Agents thrive on referrals and word of mouth.

We prize good relationships and building up a base of solid testimonials to grow our business.

This is the best form of marketing for ourselves.

For me, I always want to get the best deals for my clients as I plan to be in the business for the long term.

Feeling uncertain on your property choices or what your next step should be? Feel free to drop me a message via whatsapp or the contact form here.