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Learn 2 Things To Find Out If It Is The Right Time To Sell
So you have a property that you have been planning to sell even before you bought it. It was your plan from the start. Should you sell now or hold onto it a little longer? If knowing if it is the right time to sell can be broken down to a science, it has to come down on these 2 things. Knowing the market, and awareness of consequences.
Knowing the market
If you are not in a desperate situation to sell your investment as soon as possible, relax and take the time to educate yourself of how the property market is performing. Do not fall into the trap of thinking that the only way is up for Singapore properties. There are a lot of property owners who are sitting on properties that are worth less than the outstanding mortgage. Although Singapore is small, local factors still play a huge influence on which direction the local market is heading.
How do you know if your property has reached or is reaching it’s peak? Start by checking the recent transacted prices of similar apartments in the area. Rising prices will generally get property owners excited. But are the prices reaching levels similar to properties in the nearest luxury locations? Assuming your property is not a luxury property, it only makes sense that if prices for your property is at the same price as luxury properties, buyers will buy the latter instead.
Another factor to look out for is whether prices are reaching levels that make rental yields look like an interest on your savings account. At a certain price point, investors will shun properties that does not deliver a good rental yield. This only makes sense to a logical investor. When prices hit this level, transactions will slow down unless buyers have no idea how real estate investment works.
The third factor to learn is how long are properties listed in the market before being sold. The transaction times of properties is a great indicator that shows the appetite of property buyers. If a property took 1 month to sell 3 months ago, how long is it taking to sell now? When transaction time stretches consistently, it is a sign that the market is slowing down.
A lot of sellers have a rough idea of how the market is moving, but are just unable to act with certainty. Make it a habit of reading the newspapers on property news. If you do not have the interest and passion to read up on these news stories, you should ask yourself whether you should get involved in property investments at all.
The classifieds sections with property listings is one of the best places to learn more about the market. You can find out about asking prices in districts and see how long a property has already been advertised. But of course, the classifieds section can only give you an idea of what is going on. To get a clearer picture, more in-depth analysis of data is required. You can actually get your hands on real transaction data from URA and HDB.
There are actually many professionals whose business is to keep track of the market. Your property agent is one of them. It is odd how property buyers and sellers are not using their resources and expertise enough. A top agent will have all the information you need if you ask for it. However, remember to inform them of the specific information you want. As they are compensated by commissions from transactions, if you leave it to them to show you information, the data presented might be biased towards making you sell immediately.
Other professionals who will have first hand knowledge on where prices are moving include accountants, valuers, bankers, brokers, conveyancing lawyers, etc. These are people in the value chain who have raw hands-on data.
The last item to take note is that when properties are not desirable investments anymore, investors turn to stocks. So when the STI shoots up, it could be because properties are being shunned by investors and vice-versa.
Awareness of consequences
Once you have a clear idea of how the real estate market is moving that directly impacts your property price, the next thing to look into are the consequences of selling. These can be best addressed by asking yourself a simple question.
Are you going to lose money from selling?
You might think that it is impossible to lose money in the Singapore property market. But the fact is a lot of people do not work out their sums and may be making a loss without even knowing it. This is because they are primarily focused on capital gains and have neglected to look at the total costs that have been spent. Costs to work out include, renovations, repairs, mortgage penalties, seller’s stamp duties, property tax, stamp duties, opportunity costs, additional buyers stamp duties, agent fees, maintenance fees, interest paid, valuation fees, insurance premiums, relocation costs, etc.
The preparations involved in selling your property can be tedious and challenging to your mathematical mind. But when you have a clear picture on these 2 things explained, you will be able to arrive at a decision whether to sell or hold. Generally speaking, if the market is still going up strong, it could be wise to hold. And if it is going down, everyone will be scrambling to sell. Add this knowledge to the consequences of selling, and your logical decisions should be as clear as daylight.