At any given time, about 80% of homeowners in Singapore are thinking about the same thing. How do you achieve The Best Possible Price for your public housing flat? According to the latest Population Census 2020, about 78.7% of Resident Households are HDB dwellings. In this article, we will be revealing 5 Key Factors that will help you fetch the best possible selling price your flat may potentially achieve when you decide to let go of your public housing flat. Whether you are upgrading to public housing or just want a change of environment, these 5 Key Factors will help you move on with ease.
The Sale of your HDB started 5 years ago
With the recent news of some record-breaking HDB transactions, many will naturally think, How much can my HDB flat fetch? Take the Bishan resale unit that recently made headlines for the highest transacted price of $1.295 Million, for example. While we do not have the actual specifics of the unit sold, The Straits Times reported that it was a unit above level 35. In a 40-storey block, it would not be difficult to infer that much of the sale price is attributed to being on the high floors.
They say a journey of a thousand miles starts with a single step. Well, the journey of selling your HDB flat started when buying your unit 5 years ago. Yes, you read that right. Although we are talking about the sale of your HDB flat, the sale process actually started when choosing to exercise the option for a resale flat or striking the Singaporean lottery of a BTO flat. Either way, you will be “locked-in” for a minimum of 5 years due to the Minimum Occupation Period stipulated by HDB. There are a few implications to this period for eager sellers who are looking to fetch the most value out of their flat. After all, with the 99-Year tenure for HDB flats, the best-case scenario for resale buyers is purchasing that freshly MOP-ed BTO flat that hits the market right on the expiration of 5 years. And do not be mistaken. You are not the only one looking to capitalise on this within your block and neighbourhood. It is typically during these periods that the resale popularity of particular neighbourhood surges, and potential buyers will be scrutinising every unit, every nook, every cranny to get the best bang out of their buck. That is why the Process of Selling actually starts when you purchase your flat. If you had been lucky enough to get a prime unit, top floor, unblocked facing, positioned far from the rubbish centre, the likelihood of your unit fetching a good price is slightly better than your neighbours. But that would also mean that your purchase price of this prime unit might be slightly higher than your neighbours. So that is a compromise that you might want to consider.
Before you start spiralling in a pool of buyer’s remorse, if you are not the owner of a prime unit, we have exactly what you need. Whether you have a resale unit that you want to resell or a freshly MOP-ed BTO unit, these are 5 Key Factors in Achieving the Best Possible Price for YOUR HDB flat.
1. Know your Competition
This is the first step that we recommend you take when deciding whether to start the sale process. HDB has a service called HDB Map Services, which allows the public to view some of the necessary information of a certain block of HDB flats. Things like the Lease Start Date, Remaining Lease, Resale Flat prices of the Block, Resale Transactions within 200M of the Block, Ethnic Group Eligibility and SPR Quota of Buyers, etc. Why is this information important to you? Because it will help you know if there are any restrictions in selling to any Ethnic group and also if you can afford the sale (Side note: Do take note that the ethnic quota restriction is based on the date of Resale Application submission, and not upon date of option granted or exercising of the option to purchase)
The Resale flat prices will reveal the Flat Type, Resale Price and Resale Registration Date. This information will allow you to gauge the price that your flat may be able to fetch and if this is within your expected range. A piece of information that is not included is the Storey Range, which can be acquired through a secondary portal such as Squarefoot.com or Edgeprop.sg. This piece of information is crucial when deciding the target selling price of similar properties. However, the publicly available information on these portals are based on completed transactions and could possibly date back weeks or even months, though it may be newly updated information. Typically in order to get the latest and current information, trends, and analysis, you will need to engage your property agent. However, even then, not all agents have the latest information, at times like these, our contact information is right on our website. You are welcome.
Knowing your competition will not only enable you to determine your target selling price but also provide you with some negotiating power when a buyer views your unit. Buyers will similarly use these services to research their preferred units in order to offer the best price in order to secure the unit. This will also allow them to know beforehand if they can afford the unit valuation and/or the Cash Over Valuation (COV) portion if required when shortlisting their potential units. With the recent happenings in the Real Estate Market, 1 in 3 buyers had to fork out a sum of cash in order to secure the unit of their choice. Averagely about 60% of the transactions that required COV were above $20,000 across the island.
Since the inauguration of the new rule in 2014, sellers will no longer receive valuation reports of their HDB flats and buyers had to pen down an offer before receiving the valuation. This was to provide fair valuation and help buyers secure a housing loan but also put buyers into a position of possibly offering above valuation. With the recent delays in BTO construction and renovations, some buyers have had no choice but to pay a sum over the valuation in order to move into their new homes ASAP. This has, in turn, gave sellers a gauge of the popularity of the area and helped in pricing their units better. Understanding this will allow you to achieve the most value and best possible selling price out of your unit. After all, the last thing you would want is to have your buyers back out because of COV issues. A completed sale is better than no sale.
2. Reno Reno Reno
Let us face it, you, like every other seller, are trying to recuperate some of the renovation costs you put down 5 years ago — no shame in that. But we think that this could be done in a more graceful manner to be more palatable to potential buyers. In case you are wondering about this exquisitely renovated unit, it was a 3-Room flat featured in our Haus Collective series, linked for you to check it out!
First and foremost, the quality of the renovation. Consumers are becoming increasingly educated and informed. Sometimes buyers of renovated HDB flats do not mind paying for the renovation if it is of good quality and the theme suits their preferences. It will be easier to justify the cost of good quality fittings over nameless fittings, which were recommended by your contractor to save cost. Good quality fittings will also save the cost of maintenance and replacement in the long run.
Second, the theme of the renovation. Everyone has different likes and dislikes. If you have selected a very curated type of renovation, then naturally, the pool of people that share the same appreciation is a little smaller than the generic crowd. With the reduced number of people interested in the unit, this will also affect the demand of the unit. At that point, you will be in one of two positions. Either waiting a while longer for that buyer that shares the same appreciation or reducing the price in order to fulfil the sale in your desired timeframe. Generally, most buyers appreciate units that have functional necessities and are not overly cluttered with excessive renovations. This will allow them to save some cost and at the same time still have the flexibility to furnish the unit with their own preferred furniture. Additionally, given the current delays and increase in the cost of renovations due to the pandemic, it may actually be more sensible to purchase a renovated unit. Take this for example:
Non-Renovated Unit
Purchase Price: $500,000 (Combination of Loan, CPF and/or Cash)
Renovation Cost: $50,000 (Cash or Renovation Loan with 4.5% Interest Rate)
Possible Cash Outlay: $50,000 (Not accounting for Stamp Duty, Taxes and other administrative charges)
Renovation Period: 2-3 Months
Renovated Unit
Purchase Price $550,000 (Combination of Loan, CPF and/or Cash)
Renovation Cost: N.A.
Possible Cash Outlay: N.A. (Not accounting for Stamp Duty, Taxes and other administrative charges)
Renovation Period: N.A.
So the main difference between a renovated unit and a non-renovated unit is the reduction of cash outlay and renovation period. Especially in our pandemic plagued times, many have been faced with renovation delays and increased cost, due to the reduced manpower and higher construction costs. Some have even had to scale down the extent of their renovation in order to keep it within their budget.
At the same time, if the price of the unit is within the valuation of the flat, then the potential buyer may even be able to factor in the cost of the renovation through the housing loan. Albeit, this is a generic perspective, and potential buyers will still factor in a small amount as touch up cost. But this still provides a comparison with the specifics subjected to the factors of each flat.
Lastly, the maintenance of the unit. The maintenance of the unit does not only apply to well-renovated units but also units that did not have any heavy renovation done. First impressions matter when putting up your flat for viewings. If a buyer is greeted by peeled wallpaper or paint upon entering the flat, they may immediately form a prejudice against the flat. When looking to fetch the best possible price of your HDB flat, it is inevitable to sink in a little cost to touch up the little wear and tear areas of your flat. Naturally, when you walk into a well-maintained environment, you will feel a little more comfortable with the experience. However, if you decide not to touch up the areas needed before selling, then it will be inevitable to go through several rounds of negotiations with your potential buyers who claim that the cost of repair justifies their lower offer.
3. Be Realistic
This is perhaps the most important consideration amongst the 5 Key Factors. Being realistic on your target selling price will not only help you achieve the best possible price but also make your selling journey a little less stressful. Trust us when we say that we understand that every owner is home-proud. Some owners are so proud of their homes that they have a misconception that they might be able to fetch $100K above valuation. The truth of the matter is that in some cases, certain houses do fetch a handsome sum, but $100K is definitely no more than an exaggeration. These unique situations arise when certain buyers have very special requirements in their next homes. Surely, most have heard of special Feng Shui requirements, while others simply pay for a unique unit number or a preferred floor number. Even if you live on the 8th or 18th floor, which is appealing to HUAT buyers, the chances of that particular unique buyer purchasing your flat with a high COV is still very slim. Our recommendation is not to bank on these very slim chances. Otherwise, even if that one in a million buyer does appear at your doorstep, you may lose out on a chance to purchase your next flat at a lower cost in a fast-moving market.
In a period where everyone around you is also putting up their HDB flats for sale, being realistic will be even more essential. For example, when a certain BTO cluster has met its MOP. Everyone around you will no doubt be gunning to be the first movers. Sometimes you may encounter situations where your upstairs neighbours are selling at a slightly higher price than you are. This may cause you to think, “Hey, if they are asking for this price and I am just one floor lower, I can fetch this price too!” Well, given the same conditions and similar renovations of two flats, the higher unit naturally commands a slightly higher price. So if you were to list your property for sale at the same price as your upstairs neighbour, not only will you not stand to benefit, but your neighbour will now have an extra bargaining chip to tell buyers that a lower floor unit is selling at the same price. Leading buyers to think that the higher unit is at a steal. Of course, if a particular cluster is very popular, there will still be potential buyers for your unit, but you may face the challenge of transacting after everyone else above you has already sold their units. Or worse, when the pool of interested buyers has been diminished, you may need to lower your selling price lower than the original, realistic price in order to attract some interest. Being realistic is definitely more beneficial when achieving the best possible price and a successful sale. This is even more important in an enthusiastic market environment where prices move without waiting. You may pocket an extra couple thousand dollars from the property that you are selling but may also end up paying an extra tens of thousands of dollars for your next property that you will be buying. There is a saying we always like to keep in mind: Penny-Wise, Pound-Foolish.
If in doubt, consider this: A successful sale is better than no sale.
4. Engaging your agent
Now, if you are not one who appreciates doing all the prep work and research for the sale of your flat, then your best bet would be to engage an agent. At this point, you would have already realised that achieving the best possible price is not simply deciding on a selling price and putting it up for listing. At the same time, even if you had a very prime unit, how will you generate interest for your flat? Okay, we get it. We are almost doing self-promotion here, but keep reading. It will also benefit you even if you choose not to engage an agent.
The 228 Method
If you have gone through any form of a search for your next home or an investment property, surely you have seen the abundance of listings on property portals. Badly lit photos, weird angles that do not showcase the entire space, sometimes even weird photos of minute things that do not seem to provide you with any context on what it is about. But have you ever wondered how much it costs to put up a listing advertisement on these portals on estimate?
$228. Hence, the 228 Method.
The 228 method is not something we recommend but rather is an example of how not to advertise your property. When you are trying to achieve the best possible price, you will need more exposure in order to secure better chances of receiving better offers. The 228 method simply does not make the cut for that anymore. With a simple search on these property portals of a certain area, you will be greeted with hundreds of listings. Some are active listings, and some are no longer active listings. Having to sieve through the hundreds of listings is no easy feat, and if your listing is hidden somewhere within, your listing may not even be seen. Buyers typically tend to shortlist through the first few pages and proceed on to view their shortlisted prospects before revisiting the site again if those do not meet their requirements. At times like this, aggressive marketing will fetch the best results in terms of exposure and receiving better offers will be a consequence of your efforts. Even then, aggressive marketing has a few forms, targeted advertising, content creation. The most commonly known these days are video home tours that not only seek to increase exposure but also give context to buyers even before they view the unit. Thus, saving time for both you and the buyer to conduct unnecessary viewings. We at PLB know a thing or two about aggressive marketing, so you can take our word for it.
Staging
Any property agent that is worth his/her salt will know that staging is almost essential when it comes to fetching good prices for houses. Staging provides potential buyers with an overview of how their future houses will look but also declutters unwanted items to enhance the viewing experience. Property agents are not the only ones that adopt staging. If you frequent new launch showrooms, you would have noticed that Developers adopt this strategy to provide context and spatial perspectives to their potential buyers. Again, first impressions count. Compare walking into a messy and cluttered unit with mismatched furniture versus a well kept nicely staged unit, which do you think will make the viewing experience better?
Staging is becoming increasingly important when selling properties because of these factors, and if everyone else around you is prepping their houses to look spick and span for sale. Your unit will only stand to lose out if you decide not to do the prep work because of some cost savings. Either way is fine as long as it gets you that sale. But that is not the point of this article. We are trying to fetch the best possible price. Exposure will be a great benefit to achieving that. Imagine if Apple did not have well-made advertisements each year for their new iPhones. Do you think they would still garner as much interest as they do now? So even if you are an independent seller, consider these two strategies that most property agents adopt these days.
5. Viewing Arrangements
Congratulations, after all that preparation work, it is finally time for potential buyers to view your unit and put up their best offer. But wait, how should you conduct the viewing? A piece of advice, keep an open mind. Buyers are unlikely to view only one unit in the area. Sometimes it is inevitable for them to make a comparison to another similar unit in your humble abode. We know what you are thinking, “The audacity to come into my house and criticise my home!”. But well, that is the natural process in conducting viewings. If you think you would like to save yourself from unnecessary frustration, just throw the viewing arrangements to your agent. You would not have to be there to listen to the criticism and at the same time save yourself the trouble of juggling all the different viewing timings.
Leaving it to your agent will not only save you the trouble and time of conducting the viewing, but also agents are supposedly professionals in making the buyers feel comfortable in this unfamiliar environment, which is key to enticing them to make your unit their next comfortable home. This could also be done on your own accord. But between you and your agent, your agent stands a better chance of handling the criticism to the unit in a more level-headed manner. After all, when you are selling a product, the customer is always right. But if you still insist on handling this on your own, our best advice is to turn on all the lights, prepare the aircon or fans, nod your head and smile when they say something about the flooring.
Final Words
Achieving the best possible price of your unit is no easy task. There is much to do and a lot to prepare for. But if you adopt these 5 Key Things, we assure you that your chances of receiving better offers will be greater. Check out our latest bleubricks video to see how we crafted everything we spoke of in this article into our debut home tour video. If you think that you want to be like PLB and stand at the pinnacle of marketing your property, you can refer to our videos like this Skyville @ Dawson home tour. The various different factors that we covered, the research that buyers will be interested in and of course, the showcase of your unit. But if you still think this is all too much hassle, feel free to contact us on our bleubricks platform that serves to be a transparent and hassle-free way for HDB sellers. Before you confuse it with our pilot brand, PropertyLimBrothers, this is a whole new platform that is a collective and consolidation of all our expertise in HDB Properties. Do check out our webpage here! We hope this article has added some insights and value to you as a seller or even just a reader and enjoyed it as much as we did writing it. Drop us a comment to let us know what you think. Till our next article, Take Care!
