Upgrading from a HDB flat to a condo is something many Singaporean families aspire to do. With a fresh round of cooling measures in July 2018, private property market prices have slowed in growth, making it a good time to consider moving up the property ladder.
Here are a tips from PropertyGuru to help you maximise your chances to upgrade and get you into the right home.
Getting The Most Out Of Your Current Home
Often, the funds to purchase the next home come from cashing out on the current home, i.e., selling it at a good sum, so that you can have the cash in hand for the next home. It’s therefore important to sell your current home at a good price to set yourself up well for the next purchase.
To get an idea of what you can realistically fetch for your current home, you can also visit PropertyGuru to see what the latest transaction prices are for homes in your block or project.
At the same time, it would be a good idea to contact a few real estate agents to have them give you their estimate for what you can fetch for your home.
One thing to note is that many people try to time the market and follow the adage of “buying low and selling high”. If you are selling high, it is likely that you will be buying high as well, because of the need to purchase the next property quite soon after.
When selling a home, packaging it well matters. As such, when either yourselves or the agents are taking photos of your home to market the unit, make sure that the shot is uncluttered (put those toys and clothes away), well-lit (always take photos in the day, rather than at night), and wide enough to provide a good idea of the space.
Better shot photos improve the quality of the listing dramatically, making them a lot more attractive to home buyers.
The same principles carry over when showing the unit to prospective buyers. Maintain a general state of neatness and cleanliness, so that you can show off the best aspects of your home and convince buyers that it’s worth the price you’re asking for.
How Much Buffer Is Enough?
We typically advise home buyers to have a buffer of between six to 12 months of funds that can service the home loan and pay for the costs of ownership, such as utilities and maintenance, before they commit to the purchase.
For those with dependents, it’s safer to have at least a 12 months buffer, to be prepared in the event if one were to suddenly lose a job.
When buying or selling a home, there are some hidden costs that can take you by surprise.
Buying Resale Properties
For those looking at taking out a mortgage from the bank to purchase a resale property, it’s important to remember that the bank will provide the mortgage based on either the agreed upon transaction price or the valuation of the property, whichever is lower.
The buyer will need to pay the difference between the valuation and the purchase price before the mortgage can be disbursed and the transaction is complete. As such, home buyers need to buffer some money for this scenario as well.
If you’re buying resale properties, it’s important to note that you’re buying the property as is. The previous owner can’t be held responsible for any defects in the unit after the purchase, unlike if one was buying a new launch from a developer.
Buyers need to be prepared to make repairs to the unit, or even purchase new appliances such as air-conditioners, if necessary.
Other costs to bear in mind include the fees involved in the buying and selling process, such as agent commissions, if you’ve engaged an agent to sell your unit, as well as the legal fees for the conveyancing lawyers.
Long-Term and Short-Term Considerations
Upgraders often have many more considerations to factor in when making their property choice, compared to buying a first home. Besides the respective work place locations for parents, there’s also the children’s schools to consider.
The property should also have good potential for capital appreciation, so that it can help build one’s nest egg as well.
The important thing to bear in mind are the long-term and short-term considerations.
For instance, one’s kids are likely to switch school locations after a few years, and it should not be a prioritised factor. What’s important however, is access to transportation, such as being close to an MRT station, which would make it easier for the kids to commute to school on their own.
Properties near MRT stations also tend to see better price growth over time and support long term capital appreciation.
When Viewing A New Condo
When viewing condominium units, it’s important to keep an eye out on some qualitative factors. For one, how does the overall project feel?
Some projects, in a bid to maximise the number of units, end up being dark and cramped. In contrast, projects with good natural light and well thought out facilities and landscaping can really improve the quality of life for you and your family.
Check on the monthly maintenance fees as well, because they will factor into the costs of home ownership.
In general, smaller projects have higher fees, while larger projects allow you to divide the costs among more households.
It’s also important to look at how well facilities are cleaned and maintained, especially high usage areas like the pool and the gym, to give you an idea of how the maintenance dollars are spent.
This article is contributed by Winston Lee, Regional Head, Special Projects at PropertyGuru Group.
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