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Buying A Resale Property (Things To Look Out For)

With the extended waiting times for HDB BTOs, many prospective homeowners have turned to the resale market to meet their property needs.

Unlike the projected 5 year timeline for BTO projects in recent times, the process of buying and moving into a resale HDB or condo typically takes only a few months. Combined with a bumper crop of over 50,000 newly MOP-ed HDB flats entering the market in 2021 and an approximate 31,000 HDB flats in 2022, there are opportunities available in the resale market.

However, resales come with their own pros and cons. With new concerns on the property’s lease, finding the perfect resale unit may be an even bigger challenge than waiting for a new BTO or condo.

To answer some burning questions from our clients, we’re sharing our list of Things To Look Out For when buying either a resale HDB or condo!

Psst, if you’re shopping for a new launch condo, you can check out this article: Buying A New Launch Condo (Things To Look Out For)

Resale Properties: Every Unit is Unique

Every homeowner has their own idea of what constitutes a dream home. Whether they love a certain design aesthetic, have a more sporty lifestyle or are doubling up their home as an office space, each property will reflect the owner’s personality and preference.

This is why hunting for a home in the resale market can be akin to looking for buried treasure, especially if you’re looking to save on renovation costs.

If you only have a few requirements for your new home (or intend to renovate the entire space to your preferences), you’ll have plenty of choices to pick from. Those who are searching for a move-in ready dream home that fits most, if not all, their needs from the get-go though, may take a while.

Regardless of what type of buyer you are, there are still a few common points that you’ll need to consider carefully. At Rain or Shine, these are the top eight factors that we look out for when assisting our clients:

  1. Entry Price
  2. Transaction Volume
  3. Tenant Pool & Rental Yield
  4. Good Neighbours
  5. Convenience
  6. Age/Lease Term
  7. URA Master Plan
  8. Nearby Schools

#1 Entry Price

Price is never far behind when talking about any type of purchase! Outside of ensuring that we don’t go over budget, nobody wants to pay higher than they need to. This is when an in-depth knowledge of the real estate market and savvy negotiation skills come in handy.

Compared to BTO flats and new launch condos that have fixed prices, a resale unit’s owner would generally set the price according to the area’s supply and demand. We can get a good gauge of how much the unit should go for by checking the prices of similar units in the area, however the price is ultimately dependent on the seller.

If the asking price is both reasonable and comfortably within budget, there are unlikely to be any issues. However, if negotiations are in order, it will depend on one main factor: who is more prepared to walk away from the table.

If the seller of your dream home has set their heart on a certain price and has no real need to move out, chances are that you’ll either have to agree to their asking price or be prepared to continue your search.

#2 Transaction Volume

As previously mentioned, the area’s supply and demand plays a large role in determining a unit’s entry price. Part of that can be seen in the number of transactions that are carried out in the area.

When there is high demand for properties in the area and units are selling like hotcakes, prices will rise and the seller will likely receive multiple offers in addition to your own, giving them greater leeway to accept or counter your offer. Unfortunately, with increased competition in the resale market with PRs (HDB) and foreigners (private), property in Singapore is still largely a seller’s market.

On the other hand, with enough time and patience, it is very possible to find fire sale properties. With unemployment rising due to the impact of the COVID-19 pandemic, a number of homeowners have had to downgrade their properties due to the inability to service their loans. Buyers with a keen eye could potentially snap up a great deal!

#3 Tenant Pool & Rental Yield

A unit’s available tenant pool and existing rental yield are definitely crucial to a property investor’s decision. Resale units are actually more desirable for investors due to having a historical reference for both sale and rental price. Compared to new developments that can only rely on speculative data, a resale property is a much more reliable form of investment.

However, these topics are not solely the concern of investors.

Although homeowners may not plan to move again once they have settled in, it is still important to plan for the option. You never know when you might need more space or wish to move nearer to a popular school for your children. The potential tenant pool and rental yield would definitely play a part in how quickly you can sell your home and move to your new one then!

#4 Good Neighbours

Speaking of occupancy rates, your new neighbours will also have a huge impact on your choice of home. You may not be encountering a neighbour from hell or one that has a problem with loan sharks, however good neighbours (or at least quiet ones) are an often unappreciated boon. 

Get to know your potential neighbours or look around for potential signs of trouble. A low asking price may seem attractive, but you might end up paying for it in sleep and peace of mind.

#5 Convenience

Although the need for an MRT within walking distance is a well-known requirement in Singapore, it may not apply to you if you drive or if you’d rather prioritise quieter surroundings instead of hearing the bustle of travelers at peak hours.

Instead, you may prefer to be within driving distance from a cluster of shopping malls or a sports centre.

Whichever amenities you are looking for, it’s best to take the actual walk down to them for a more accurate estimate instead of trusting Google’s 5-minutes walking time (which is brisk for most of us).

#6 Age/Lease Term

With the previous news of Geylang Lorong 3’s expired lease, the topic of a property’s lease has become a growing concern of Singapore’s homeowners. This is especially so for HDBs, which are all 99-year leasehold. 

On top of the restrictions on the usage of CPF for properties with shorter leases, many homeowners worry about outliving the lease. However, this problem is unlikely to occur now that buyers are more aware. 

Instead, savvy investors are now looking at older properties as potential rental investments. Additionally, the en bloc market is expected to rise again, with developers running low on stock and land sales having been reduced this year.

#7 URA Master Plan

As seen from the impact of the Greater Southern Waterfront (GSW), living in an area poised for one of URA’s revitalisation plans could mean reaping great benefits even for older properties.

However, the most important question to ask is: how soon can you enjoy the perks?

If you won’t be enjoying the benefits of a transformation within the next two or three years, then the point is moot. It shouldn’t be an active factor in the selection of your home (even if you don’t plan on moving anytime soon) and you should definitely not have to pay for it!

#8 Nearby Schools

One of the biggest driving forces behind parents moving homes is for their children’s education. In order to enter their children in popular ‘good’ schools, many Singaporean parents are willing to move all the way across the island to live within the 1km radius for priority admission.

Of course, this means that parents should expect to face heavy competition for these homes and may have to budget accordingly. However, remember to stick to the budget and keep it within your comfort zone no matter what!

Conclusion

While there are definitely many factors to consider when buying a resale property, the biggest difference is one of price flexibility. With savvy negotiation skills or in-depth research, it is definitely possible to find undervalued homes or a seller who is willing to compromise.

The most important thing about being a buyer is sticking to your budget and being willing to walk away when the price is too high.

At RoS, our aim is to provide every client with suitable advice and a secured entry and exit plan to achieve their property goals. We do this through our Umbrella Approach, a method to analyse, plan and execute property decisions tailored to every buyer’s specifications. 

If you’re looking for honest and objective property advice, book an appointment with us.

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