Tuesday, September 21, 2010

Excuse Me, Are You a Property Agent? (28)

Warren Buffet has reminded his investors that when others are scared, then it is time to be bold, and vice versa. This probably explains why he has made his billions.

For the past years as an agent, I notice that many people tend to be bold when everyone is bold, and scared when everyone is scared. Hence, the prevalent herd

This probably explains why Housing Development Board flats have been driven up to sky high prices until the government had to come in to cool the market! The man who paid for $100,000/- above his valuation for his unit at Choa Chu Kang asserted his stand on why he was happy to pay the price for his unit.! Valuation of a property at any particular time implies the prevailing market price. It is amazing how when the market is hot, people are not hesitant to jump into the bandwagon.

I had advised my neighbour who is currently renting his unit to wait for a while to buy his 3 room HDB flat for I felt that prices would be coming down. Hence, when the rules came in, I was very happy and told him that I would take him around to look for his ideal flat, but to my shock, I found that he had already purchased a unit which he paid at $55K above valuation!

When I bought my 3 room HDB unit, I paid $5000 above the valuation. I felt it was worth it because the windows had been changed, and the flooring is solid granite, and the MRT station is within a stone's throw. Best of all, I could even walk to Orchard Road. My agent told me that after I put down my deposit, ten other buyers who had viewed the apartment earlier, also wanted to buy the unit! The market was very quiet then, and although the prices were already quite low, buyers still wanted lower prices! My agent told me that all the ten buyers had offered at below valuation for my unit, and I clinched the deal because I was willing to offer $5000 above valuation which the owner wanted as her benchmark. I had bought my unit on time before the price started to spiral.

Now that the government had come up with new measures, buyers start to offer their own valuation! My new agent recruit, Saras, was stunned when a buyer could offer her
$800 per sq. ft. for a unit valued at $1200 per sq. ft. for a lovely condominium in the East.! Unrealistic buyers offfering unrealistic prices will keep missing the boats, and soon the ocean liners! Agents have come up with TKK - in Hokkien, it means "Tan koo koo" (wait long long). Some of these buyers soon realise they have missed the boats, and then decide they must somehow get a unit even when the price is sky high! Yet when the price is already low, they want lower unrealistic prices.

The herd instinct is just too strong. Sigh....

Gan Cao

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