Second Property Investors serves 10,000 readers monthly and helped hundreds of homeowners to upgrade/restructure their property portfolio. Read through our case studies
So when they are no longer under pressure to sell more – what will they do to the price?
Will they sell at higher or lower prices?
Usually… they will sell at HIGHER prices.
Now comes the dangerous part.
Imagine if 70% of the residents there buying at prices that are $150k to $200k cheaper than you?
How would YOU feel?
If they all plan to sell in the future with $150k profit – what will happen to YOUR unit price?
Yes, there exists other factors that can affect the price of your unit – eg. different facing, different unit layouts and different floors.
But let’s say – in the future, your competitors’ asking prices in the resale market – is the same price as the price you bought your unit.
How would you feel?
Do you think you will have a chance to make a good profit from the purchase?
Unless you are buying something that has a super unique facing. Something that is very different from the other units in the development.
Otherwise, do not expect that prices will be very different especially if the units are all similar-facing.
Example #1 – Resale EC Transaction
Recently I completed a transaction in a resale EC.
You will be surprised at the amount the owner paid for the better facing unit.
You will be even more surprised about how much the resale market was willing to pay to take over this unit.
The owner bought at a price that was $68k more expensive when compared to everyone else.
Eventually, they are only able to sell at a price that is only $8k higher than another unit!
One unit has a pool view. The other unit doesn’t have a pool view.
But the resale market was only willing to accept a price that was $8K higher.
I sold the unit without the pool view.
An EC resale transaction I recently handled
Do bear in mind that both units were sold at around the same time.
Imagine in a development that price gap is $68k more expensive – the final resale price is about the same…
The unit without pool view made a gain of $200K as it was bought at a cheaper price.
The other unit with the pool view only made a gain of $140K as it was bought at a more expensive price.
Did you know the unit with the pool view had a much nicer renovation than the “no-pool view” unit?
And yet the resale market couldn’t go higher than the $8k price gap…
Imagine what will happen if you bought your unit at a price that was $200k more expensive?
Look at the consistency of the resale selling price of this EC development….
From the transactions, you can see that no matter how much you paid during the launch – you can only sell at around $910k to $940k at the resale market.
This is the behavior of buyers of the resale market.
Imagine if you have this running thought – “Since I got the best view and I will pay $70k more.”
But when you finally want to let it go at the resale market – you only are able to sell at $28k higher. How will you feel?
Example #2 – Resale EC “Bounce-out” Units
A “bounced-out” EC unit being sold at $1.14 million.
Here is another example. This is an EC that has a “bounce-out unit”. A “bounce-out unit” basically means the deal did not complete which could be caused by for example – a couple breaking up.
This is how much the market is willing to pay to get a brand new unit which is completed.
$300k MORE for an EC unit that can move in directly.
An example of a “bounced out unit” from an EC being sold at $1.2 million. The main reason? Ready to move in.
This is the additional premium that buyers are willing to pay – and what potential gains you miss out if you choose to buy at the later stages of construction.
Imagine you brought a condo unit at $880k. In the future, someone is willing to pay you $300k more to you so their family can move in.
Wouldn’t you want to use this strategy to your advantage and gain profit since people are willing to pay so much more just to move in fast?
Or do you want to be the person who pay more to move in fast? This will determine the end outcome of your purchase.
Will you sell to them? For me, I am sure I will if i have a chance like this. 😉
People Are Willing To Pay For Speed and Convenience
Below are examples of people willing to pay more than $200k more just because don’t have to wait so long.
When the development is nearing completion and buyers need not wait for so long – this is the additional premium buyers are willing to pay.
The prices when first launched in 2017
The prices when nearing completion in 2019
(This is what almost everyone is willing to do when they seek convenience and speed. And it is one of the strategies I use to help my readers make profit.)
Are these “later buyers” wrong? Of course not.
Sometimes it just happens as they have their own reasons – people buy at their own timing. They can only wait for a certain period of time and prefer homes that are going to get the keys soon.
They will always be buyers who:
wants a brand new development
are not willing to wait 2-3 years for completion
urgently needs to move in
are willing to pay more than everyone else
For me, I simply want to caution my blog readers here.
You can choose to buy LATER. You can choose to buy when the construction is almost completed.
You can choose to wait first.
Just that… we need to know the consequences and the impact. That’s all.
Conclusion
If you buying at prices that is $200k more expensive… and then it grows another $200k…
Well, the first few buyers of the development will be very happy to sell at $400k profit.
But the challenge is this – we cannot control and ask them to wait till $400k profit before they sell.
(We are talking about mass market private property here. How much would a normal family be willing to pay for a very unique view?
An additional $200K? What is more likely is that they decide that the $200K can exchange for a better car. 😉 )
They decide to start selling at $200k profit and majority of them are doing that.
Guess what?
The $200k profit “price” will become the “market price”.
Once that happens, there will be a strong chance that your property price will stay stagnant – especially if you bought at prices that is $200k more expensive than everyone else.
Ultimately, what is key is that you do your planning ahead. Before you even enter the property market, think about how you want to exit.
Know what you are going to go through before you even buy.
Be aware of ALL the consequences. See the end in mind.
I commonly encounter this common reply – “Aiyah I don’t need to make a lot. Can make a bit – I happy already.”
But my concern – you can try to make more so at least can cover back the interest you spend on the loan…
Most of my clients will know all the blindspots and worst case scenarios very well – before they even sign on the dotted line.
Gary Seah is the founder of Second Property Investors and has been writing since 2015 to share his insights in the Singapore property market.
He has helped many people to strategize, plan & restructure their property portfolio and get the best profit from it.
Gary has been the agent behind many lucrative upgrading case studies.
Learnt something from this post? Help me spread the word!
It usually takes me more than 20 hours to research and write insightful content for each blog post. If you feel you have benefited or learnt something from the above, I sincerely request your help to share this to your friends or family members via WhatsApp – so they can also benefit.
Who knows – they may have been looking for an answer all this while?
The sharing buttons are below:
\n \n ${window.location.hostname} currently does not have any sponsors for you.\n \n `,e)}imprint(e){if(!e)return;const t=document.querySelector("#imprint-text");t&&(t.innerHTML=e.replace(/(?:\r\n|\r|\n)/g," "))}injectStyles(e){if(!e)return;const t=document.createElement("style");t.innerHTML=e.toString(),document.head.appendChild(t)}injectScript(e){if(!e)return;const t=document.createElement("script");t.type="text/javascript",t.src=e,document.body.appendChild(t)}injectJS(js){js&&0!==js.length&&eval(js)}injectHTML(e){this.domNode?(e&&(this.domNode.innerHTML=e),this.domIsReady=!0):(this.domIsReady=!1,console.error("An error occurred when trying to render this page. DOM node not found."))}prerender(e){this.injectMetaDescription(e.domain),this.injectHTML(e.html)}template(e){var t;this.domIsReady||this.prerender(e),this.injectStyles(e.stylesheet),this.imprint(e.imprint),this.salesBanner(e.salesBanner),this.injectJS(e.javascript),null===(t=e.scripts)||void 0===t||t.forEach((e=>{this.injectScript(e)}))}}const Render=new Renderer(APP_TARGET);var Type;!function(e){e[e.Failed=0]="Failed",e[e.Disabled=1]="Disabled",e[e.Redirect=2]="Redirect",e[e.Parking=3]="Parking",e[e.Sales=4]="Sales"}(Type||(Type={}));let State$2=class{get trackingType(){return this._trackingType}set trackingType(e){this._trackingType=e}get track(){return!!this.trackingType}};class Disabled extends State$2{constructor(){super(...arguments),this.type=Type.Disabled}static build(e,t){let n;switch(t===Blocking.BLOCKED&&(n="adblocker"),e.cannotPark){case"disabled_mr":case"disabled_rc":n=e.cannotPark}if(n){const t=new Disabled;return t.reason=n,t.domain=e.domainName,t}}get message(){switch(this.reason){case"adblocker":return"
Content blocked
Please turn off your ad blocker.";case"disabled_mr":return`
Invalid URL
Referral traffic for ${this.domain} does not meet requirements.`;default:return`
No sponsors
${this.domain} currently does not have any sponsors for you.`}}get trackingType(){switch(this.reason){case"adblocker":return"ad_blocked_message";case"disabled_mr":return"invalid_referral";case"disabled_rc":return"revenue_cap_reached";default:return"no_sponsors_message"}}toContext(){return{cannotPark:this.reason}}}class Failed extends State$2{constructor(){super(...arguments),this.type=Type.Failed}static cannotPark({cannotPark:e}){switch(e){case"disabled_b":case"prohibited_ua":case"disabled_fr":case"revenue_cap_reached":case"disabled_mr":case"disabled_rc":case"disabled_cp":case"invalid_domain":{const t=new Failed;return t.reason=e,t}}}static noSponsors({cannotLoadAds:e}){if(e){const e=new Failed;return e.reason="no_sponsors",e}}static fromError(e){const t=new Failed;return t.reason="js_error",t.error=e,t}get track(){return!!this.trackingType}get message(){switch(this.reason){case"disabled_fr":case"disabled_rc":case"no_sponsors":return`\n
No Sponsors
\n
${this.domain} currently does not have any sponsors for you.
`;case"disabled_mr":return`\n
Invalid URL
\n
Referral traffic for ${this.domain} does not meet requirements.
`;case"js_error":return"\n
An Error Occurred
\n
Parking is currently unavailable. We'll be right back.
Leave a Reply