Once homes begin to be put up for auction and start selling for less than market value, a recession has begun. The fact is that even during a recession, finding fire sale discounts requires a lot of work. Similar to digging for oil, plan to put in a lot of time and effort until you find the one golden spot.
When you’re prepared to make the effort, here are some strategies to raise your odds of discovering a home during a fire sale:
To discover a fire sale property, you are ready to put a significant amount of time and effort into your search.
It takes a lot of effort to look for underpriced, firesale homes. There are speculators and researchers that work on this full-time, dedicating their days to making phone calls and concentrating on real estate websites. Don’t have the false sense that you can employ some of these techniques this Saturday and quickly locate a great price, even though you could get fortunate.
You’d actually be safer off contacting a real estate agent to get you the greatest offer if you’re short on time. If however, you’re the type of consumer who prefers to really do it, this is how:
- Declare your intention and preparedness.
- Inquire about postings that have been active for around six months.
- Start your search with smaller units.
- Keep an eye out for developer ABSD deadlines.
- Even worse than it may sound, you may interfere with someone else’s bad luck.
My Tip for Finding Fire Sale Property in Singapore Strategy #1: Make your intentions and preparation known.
Occasionally sellers are so eager to sell the house that they are no longer interested in negotiating a decent bargain.
Sellers who moved up to a more costly home prior to selling their earlier apartment are a frequent illustration of this. They have only six months to market and sell the prior home if they wish to receive the Additional Buyer’s Stamp Duty (ABSD) remission.
If the upgraders are not able to sell their initial home on time, they stand to lose a staggering 12% of the sales price or assessment. In order to avoid completely losing the ABSD, these sellers are frequently ready to sell their previous residences for less money.
Agents might send urgent clients to you if you let them be aware that you have the money or mortgage approval.
One scenario is a homeowner who has to sell their house immediately to prevent insolvency procedures (but in such situations, you should always speak with your property solicitor first). Avoid circumstances where their creditors pursue the property you are seeking to purchase.
These sellers require a purchaser who can move quickly enough to fulfil their deadline. Since you’re the first to contact them with a certain offer, they could accept it even though it’s far less than what they were hoping for, simply to get the deal completed fast.
So, your best course of action is to select a few real estate agents and inform them that you are interested in purchasing a home and that you have a ready home loan or funds available. They will recognize who to contact (you) if they encounter these circumstances if you do.
Most real estate brokers would be reachable for this. To sort through all the barrage of deals they may throw your way, verify the costs of each one to ensure it really is a fire sale. Nevertheless, be ready to get a lot of emails in your email.
My Tip for Finding Fire Sale Property in Singapore Strategy #2: Search for ads that have been active for at least six months.
How come six months?
First, it’s a wise idea to have six months’ worth of expenses in cash saved up in case of need, according to an old saying in personal finance. As a result of the widespread adoption of this rule, many home sellers may have depleted all of their money by the time their listings have been active for around six months.
Secondly, the time limit for ABSD remission is 6 months, as we already discussed. Sellers who are under pressure to sell quickly are probably more anxious to do so.
However, keep in mind that there may also be a danger to you as there may be valid explanations for why the property hasn’t been bought for such a long time. For instance, there may be major maintenance problems, or the neighbours might be the devil’s spawn. Therefore, it’s crucial to do more research into these kinds of traits that seem to be “immovable.”
My Tip for Finding Fire Sale Property in Singapore Strategy #3: Begin your search with shoebox homes
Even though we detest clichés, purchasers with lower purchasing power frequently choose shoebox homes.
Small, or “shoebox,” apartments are frequently purchased by novice investors who typically have less buying power, however, this is not always the case. When compared to, for example, investors who really can spend $7.5 million on a swanky condominium, they are unlikely to have vast funds.
Another factor is that some people choose to purchase a small unit as their first house rather than an HDB apartment. They likely determine they would really like to begin a family, but the cramped apartment is just too tiny for that, and they are unable to purchase an HDB apartment while they are still hanging onto their privately owned property.
Such sellers might be in a hurry since, in accordance with HDB regulations, they must spend 30 months waiting after selling their private home before applying for a BTO/Sale of Balance unit.
So, keep an eye out for studio or one-bedroom apartments all across Singapore. You may occasionally pounce and purchase a small apartment for next to nothing.
My Tip for Finding Fire Sale Property in Singapore Strategy #4: Look out for developer ABSD deadlines
Developers typically pay down 30% ABSD when purchasing land. They can receive a 25% ABSD remission if they finish the project and sell all the apartments in less than five years.
This is a hefty tax, especially considering that property plots sometimes cost upwards of half a billion dollars. Rarely would a developer be content to waste so much money on five or six unsold apartments? You might be able to pounce and scoop up the few leftover properties at fire sale rates as their deadline draws near.
Be aware that this isn’t always the case because developers that have an excessive number of unsold apartments are unlikely to give discounts. Giving discounts is useless, for instance, if 200 units remain unsold and the deadline is one month away since they will most probably still miss it and doing so would hurt their potential purchases.
Developers could decide that it is more beneficial to provide brokers with a bigger commission if they reposition their apartments rather than compromise the location of the building they themselves created.
Also, carefully examine the units. You are obtaining the remaining selections that other purchasers have chosen not to purchase for any reason. The remaining apartments could have a bad view, be too near to the MRT rails, be close to the recycling centre, etc.
My Tip for Finding Fire Sale Property in Singapore Strategy #5: As awful as it may sound, you may take advantage of another person’s tragedy.
A speedy sale may take precedence above price in the event of a divorce or other judicial procedure.
The morality of this activity can be argued over until the cosmos reaches its point of thermal equilibrium, and we never support or oppose it.
Some consider this as exploiting other people’s suffering, while others claim that by offering the individuals involved a cheap deal, etc., they are truly helping them. We won’t get into it; we’re simply letting you know that there is such a way.
People may be forced to sell up their property rapidly due to divorce, bankruptcy, looming jail terms, or a lawsuit. When confronted with these circumstances, their top priorities will be to limit losses, raise money, and finish the issue as swiftly as possible rather than haggling for a lower price. As a result, you could wish to intervene if you possess the cash on hand to make a quick purchase and give them a discount.
Last but not least, keep in mind that to make any of this work, you need to recognize the appropriate rates very well like a pro.
All of this does not matter if you don’t know the neighbourhood’s characteristics, the average price of homes in the project, the expected rental yield, etc. If you’re not cautious, it’s just as conceivable that you’ll find yourself on the losing side of a fire sale just several years from now.
You must be a housing Detective to ascertain whether a house is actually being discounted and by what amount in order to purchase a home at a fire sale and not regret it later on. it. You may team up with a real realtor who really can aid you in your treasure hunt.
