How to successfully negotiate for your property purchase
When you are acquiring property, it is essential that the purchase decision is taken with great care. Singapore is one of the most expensive real estate markets in the world.
The flat or condominium that you buy will set you back at least several hundred thousand dollars.
For a majority of individuals, acquiring property is the greatest financial commitment that they will make in their lives.
If you take a decision in haste or complete a transaction without first acquiring all the relevant information, you will have to live with the consequences for many years into the future.
How can you ensure that you do everything possible to buy a property at a fair price? Obviously, everyone who plans to acquire a flat cannot first become an expert in the real estate market.
But there are certain steps that you can take which will help you make the correct choice from among the hundreds of options available to you.
What are the prices in the immediate area?
After you identify a property that interests you, one of the first steps that you must take is to enquire about recent deals in the area. Were they done at higher or lower prices than the amount that is being quoted to you?
Of course, each property is different and it is unlikely that sale transactions will be done at the same value for identical flats.
But conducting this basic check will give you an idea about market prices and a starting point for your own negotiations.
Gain a basic understanding of the property market
While there is no need to acquire detailed knowledge about property laws and how they work, it is essential to understand the fundamentals.
For example, when a Singapore citizen buys residential property in the country, a Buyer’s Stamp Duty at the rate of 1% on the first S$180,000, 2% on the next S$180,000, and 3% on the remainder is required to be paid.
Citizens who buy a second residential property or Permanent Residents or Foreigners who buy their first property are required to pay Additional Buyer’s Stamp Duty as well.
It is a good idea to familiarise yourself with all the financial implications of your proposed property acquisition. This will help you arrive at the total sum that you need to arrange for.
Gaining a rudimentary knowledge about the functioning of the real estate market will help in another way too.
You will have a greater degree of confidence when you are negotiating with the seller or in a meeting with property brokers. It is highly inadvisable to be totally dependent on your property agent.
If you have a working knowledge about the steps involved in the purchase, you will be in a position to ask the correct questions and actively participate in the transaction.
Don’t succumb to hard-sell tactics
During the course of a price negotiation, a “take it or leave it” offer could be made to you. You will be told that a property is on sale at a certain price, but the condition is that you have to accept it immediately.
Even if you delay for a day, the offer stands withdrawn.
It is important that you understand that this is just a ploy to pressure you. In practically every instance where you are confronted with such an offer, you should simply walk away.
Keep your emotions to yourself
If you like a particular property and think it is ideal for your requirements, don’t share this thought with the broker. Once the other side knows that you have finalised your choice, you will lose your advantage.
While it is perfectly alright to say that you like a property, (otherwise why would you be willing to buy it?) you should definitely not reveal that it is the only property that you are willing to purchase.
Is it a buyer’s or a seller’s market?
A seller’s market is characterised by a high level of demand, rising prices, and properties remaining unsold for relatively short periods of time.
A buyer’s market, on the other hand, has a large number of unsold properties, and many sellers chasing a limited number of buyers.
Singapore is currently very much a buyer’s market. Prices of private residential properties have been declining for the last three years. In the third quarter of 2016, the price index fell by 1.5%.
Large numbers of residential units remain unsold and even more are under construction. In this situation, there is a greater possibility of negotiating prices downwards.
Be prepared to close the transaction
Finding the perfect property is extremely difficult. Usually, your search turns up several options that are worth considering, but each invariably has some flaw.
But if you patiently go through property listings and make many site visits, you may find the property that meets all your requirements and is also available at the price that you want.
At this point in time, it is important that you finalise the transaction immediately.
If you lose the opportunity, it may take you many more months of effort to find another property that is equally suitable.