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Basic Home Buyers Guide To New Launch Condominiums
You have an income that is above average and you just cannot see yourself living in a used house. Your obsessive compulsive disorder regarding that is nothing to be embarrassed about. Many people cannot even imagine themselves driving a used car. And we tend to do more disturbing stuff in a house compared to a car.
Your preference for a new condominium is justified and the rewards you could reap in future is a small bonus for the investment you are putting your money in. So how are you going to navigate the jungle out there that is the new condominiums market? Here are some key things to think about.
A few players
The new condominium market is actually a very controlled market dominated by a few players. There are only so many developers with the deep pockets to buy land parcels for hundreds of millions of dollars, the expertise to build with a high standard, and the economies of scale to generate a profit.
When a market is dominated by a few players like an oligopoly, there is less likelihood of competition based on price. Because price cuts from any one player will result in strong responses from competitors. So unless a developer runs into financial trouble, you are not going to see deep price cuts on the inventory they have. Even should that happen, there would be an incentive for all other players to help out the one in trouble so that they don’t have to slash there prices as well.
This means that you seldom have the chance to drive a hard bargain against a seller of new condominium homes. It’s not impossible, just very improbable.
Be able to see the property for what it is
These days, you can be excused if you thought that a brochure promoting a condominium sales launch is actually promoting a country club. The illustrated beautiful scenery, the pictures of sports activities modelled by good looking models, the attractive leisure activities you can get involved with in the condo, etc. All these paint a beautiful picture of what you are buying into. You wouldn’t expect anything less. Developers running sales launches after all, have the best marketing minds at their disposal.
But don’t be naïve to think that a country club experience is what you are buying into. Some promotional material are so outrages that you wonder what it would take for authorities to step in with a strong intent.
Don’t be misled into thinking that you will be sharing the same living space as the celebrities who are posing in TV commercials. Don’t think for a moment that you will have the swimming pool all for yourself while sipping a cocktail. And you would be out of your mind to imagine having a rainforest of a scenery right from your balcony. You are not child, so don’t be mesmerized by gimmicks like one.
The seduction of wordplays
It is amazing how words can have an effect on a reader. Think about this. If we are taught to communicate linguistically in English, certain words will trigger different perception and feelings within us.
If you don’t believe in the power of using power words, then just consider that copywriters are some of the best paid people in the world. And their occupation is not something we would consider as professionals. But boy can they make people buy stuff with just the simple use of words.
In TV commercials and brochures of new condominiums, you will find a flurry of power words being used such as “luxurious”, “spacious”, “elegance”, etc. But as these words are subjective, you wouldn’t know whether you are buying a luxurious house or not until your unit is built and ready to move in.
There is no specific definition of how power words are represented in real estate. So just take headlines and taglines with a pinch of salt whenever you see them.
Be careful of the artists impression
This is one of the big factors that works for developers. On the one hand, prospect buyers want to see as much as possible what is the end result after building. On the other hand, you simply cannot see the end result when nothing is built yet. This is where the artists impression fully exploits this gap.
Because the completed project is from the artistic opinion of an “artist”, and it is just an “impression” instead of the real thing, illustrations can go into full creative mode to paint the best picture possible of the condominium you are buying.
You will see bright blue skies, vibrant rivers with people wakeboarding carrying smiling faces, scenic water features that resemble the most beautiful waterfalls in Japan, ample open space in the living room to fit in 3 elephants with space for more, beautiful night scenes with little crowd and a sports car in the drive way, etc. You get the picture.
The one which I have the biggest problem with most is illustrated maps that present the impression that amenities are nearer than they really are. They make expressway exits look so near, yet the reality is that they are miles away. They make subway stations look like they are across the street, yet the truth is that you need to be an accomplished marathon runner to get there by foot before fainting. Some are even so confusing that you cannot make sense of the location when you have lived in the area for 20 years.
The best way to get around this is to find a real map that gives you an eagle eye view of the location. What an irony that you can easily find these maps online, but developers prefer to show artists impressions instead. That says a lot about how much they believe in creating an impression.
Marketing environment at the sales gallery
It would be foolish not to go all out to close prospective buyers when they have shown enough interest to actually step into a sales gallery. This is when sales tactics and strategies come into play rather than the product itself. And this is when you are most vulnerable to being sucked into a purchase without being 100% satisfied. Look out for these tactics.
Creating a market-like crowd
If you have never visited a sales gallery on launch day, you would probably think that you would be visiting a place that resembles the calm and luxury of a ROLEX boutique. You are after all, buying an item that costs hundreds of thousands or even millions of dollars. That is far from reality. Launch days are as hectic as you can comprehend. And they very much resemble the type of crowding atmosphere you see in the wet market during peak hours. It is absolutely crazy. You might actually think that a Korean boy band is performing a concert.
The people are real prospects. But the way such events are managed creates a frenzied atmosphere that raises the buying temperature. You can easily get caught in the moment. If you are unlucky, your agent might have scheduled multiple buyers to meet up. You will then have to fight for his attention.
A huge focal point that you cannot miss in the sales gallery is a huge “scoring board” displayed in huge fonts for all to see. They list all units and strike off units that were sold. This creates a somewhat scarcity factor that ignites a fear inside you that you might lose your unit if you don’t buy fast.
These charts also play the part of showing people that apartments are selling like hotcakes. Since everybody is buying them, you should follow the crowd.
Another item that you will find difficult to miss are huge signboards that show “80% sold” or “90% sold”, etc. These statistics might be true, but it seldom tells the whole truth. Because they could be referring to just a phase 1 launch of 100 units out of 800 units. In other words they are just referring to the first 100 units instead of the whole project. But it does create the impression that condominiums are selling out and you have to act fast to avoid missing out.
The classic VVVIP discount
Who doesn’t like to be labelled as a VIP, let alone a VVVIP? And who would like a special discount only available to them?
“VIP discounts” are everywhere. It is just a name for a discount. You are not going to be the only one to enjoy it just because you bought early. The odds are the every other buyer will be offer “VIP status”.
Don’t expect to have the red carpet rolled out for you. And don’t think for a moment that you are getting a special discount specific only to you. You might actually get a better discount when you buy later and sales are dwindling.
Sellers find every reason to give a discount or 2. Buyer feel that they are buying at a promotional price, and developers don’t have to devalue their properties. But so overused is this marketing gimmick that you must be a first time home buyer to fall for it.
The actual showflat
It really boggles my mind that people can buy million dollar condominiums without having an actual look of how it looks like.
There are many different layouts that any project will have. But a showflat will usually have a maximum of 4 layout types built. And by mentioning 4, I’m being generous. This means that many layout types do not have an actual showflat built for it. Yet people are buying them from left right and center.
When you take into consideration that hundreds of buyers are spending millions of dollars, the least you would expect is to let buyers see for themselves what they are buying. That’s not always the case.
You would instead find showflats with ample open space with masking tapes on the floor showing where a wall would reside. You would see huge balcony spaces with masking tapes on the floor indicating the space is for the ground floor only. You would see open spaces created by knocking down walls between rooms. And you would experience the luxury of high ceilings when your unit actually don’t have them. It’s a jungle out there. Be prepared.
Just for your information since we have mentioned high ceiling. A high ceiling actually counts as additional floor area. This means that if your living room is 500 square feet and it has a high ceiling, an additional 500 square feet is added to your total floor area.
Amazing isn’t it? Paying for floor area that does not exist on the floor? I only gathered this information after asking a sales agent about it 3 times. That is 2 times too much.
You can be buying for the first time, but don’t act like a newbie
Every home buyer has to go through doing it for the first time. But that does not mean that you should act like what a rookie would do. When you see things that do not make sense to you, don’t be afraid to ask questions and clarify your doubts. If not, you are going to be eaten alive in the new condominiums jungle out there.