Why you should invest as much time valuing your property as you spend looking for one.
Regardless of whether searching to buy a new unit, striving to sell an existing residence or simply doing anything property-related, the issue of valuation needs to be taken seriously to ensure that you are getting the most out of your investment and what the market has to offer.
While this is a fairly popular practice for most to form a value estimate based on the average price of properties around the area they live in, industry veterans warn against spur-of-the-moment emotions – the tendency of property owners to inflate prices because of strongly held sentiments towards their assets.
“Some sellers may look at how much their neighbours are selling their property for and intentionally place a higher premium on their own home,” said Eugene Lim, Key Executive Officer, ERA Realty Network Singapore.
“Whilst the seller sets the price, it is the buyer who determines the worth. If you were to price your house above and beyond what the average buyer is willing to fork out, then there will be a good chance of giving the impression that your property is overpriced,” he added.
Colin Tan, Chief Executive Officer, Vestor Realty Singapore, stated: “The most dangerous thing a prospective property seeker can do is to base property prices on hearsay, especially without doing one's homework first. The property market today is transparent; as such property seekers must do their due diligence in ascertaining the fair market value from comparisons of similar properties from online property websites, agents and bankers.”
Both Lim and Tan are part of a panel of influential property thought leaders who will provide their opinions on valuing The Istana, Singapore’s most prized historical monument, in PropertyGuru’s latest social media initiative. This first-of-its-kind contest encourages the public to express their views on The Istana’s value while gaining insights from Singapore’s top real estate experts on how to initiate their own value assessments.
While The Istana is not, and will never be for sale, the contest has proven to be informative in shedding light on how property seekers can achieve proper valuations whilst avoiding the common pitfalls. For instance, one piece of advice is to be rational and objective in approach.
“Buying on impulse happens more often than most would think. A rule of thumb to remember is to only buy and/or sell property that strays no more than 3% away off the average value in the market,” said Alan Cheong, Senior Director of Research and Consultancy, Savills Singapore.
Mohamed Ismail, Chief Executive Officer for PropNex Realty, quipped: “Property valuation is a combination of science, art and a little bit of intuitive thinking. The best way to ensure you get an accurate price indication of your property is to seek three different valuation quotes and take the majority range.”