Selling a house in a soft market
WITH the soft property market, buying a house would actually be a good idea. However, what if you own a house and need to sell it?
Following are five points to consider in a tough property market:
> Know the market
Savills (M) Sdn Bhd group managing director Datuk Paul Khong says selling a property in a soft market is a big challenge.
“At this time, financing is tight within an eminent oversupply situation. It is a buyer’s market now and many properties are for sale,” he tells Starbizweek.
Given this unfavourable situation, Rahim & Co International Sdn Bhd real estate agency chief executive officer Siva Shanker says a potential seller would need to be realistic with the selling price.
“The market is price-sensitive. Gone are the days of asking for high prices and expecting someone to snap it up.
“Having a pricing strategy is important.”
City Valuers & Consultants Sdn Bhd real estate services and business development head Ruben Kelvin concurs.
“Setting a sale price around the current market value would help the purchaser get a sufficient loan. A price too high would defer buyers and a price too low would not get you the best return for your investment.
“Calculate all your outgoings in a sales exercise. Take note of expenses such as agent and lawyer fees, marketing expenditure and additional renovation and repair costs needed before selling your property.”
Ruben, who is also director of design and build outfit, Greenhill & Mason, adds that sellers also need to take note of the real property gains tax rate, which will affect returns.
“For disposals within the first three years, the rate is 30% and it is down to 5% in the sixth year and beyond.
“After calculating your returns, you may choose to sell your property or to wait until the market recovers.”
> Spruce it up
Siva notes that a lot of sellers refuse to take the initiative to spruce up a home when they want to dispose of it – preferring instead to sell it the way it is.
“It’s true that some buyers don’t care about how the house looks like, because they are just going to tear it down and rebuild it from scratch.
“But to a lot of other people, visual presentation is important. If they see a home that’s worn down and dilapidated, it will just put them off.”
If you have the means, furnish it and make it attractive to your potential buyers, says Ruben.
“As your property will be competing with other units in the area, you may want to clean it up and conduct necessary repairs. If budget is a constraint, focus on having a working kitchen and spend on your toilets as these are the functioning rooms in any home.
“Spend on quality materials and fittings, which are functional and durable. Loose furniture can always be purchased on the buyer’s end to suit their taste and preference.
“Your property would most likely be sold if it is functioning well as buyers need not incur additional renovation or repair cost on their end.”
SK Brothers Realty (M) Sdn Bhd general manager Chan Ai Cheng says any kind of renovation should be kept simple.
“The do-it-yourself culture is big overseas, but in Malaysia, only a select number of people are really into it.
“Most people are happy to put in as little effort as possible.
“When it comes to sprucing up your home, minor makeovers will do: a coat of paint, for instance. Just small changes.
“Keep it neat and clean. Don’t do large renovations, as big jobs do not automatically translate into better pricing when you want to sell the property.”
> Market your home
Once you’re ready to sell, spread the news, says Siva.
“One of the best ways to do this is to place a sign on your gate. When it comes to a residential property, research has shown that, a lot of the time, potential buyers will come from a radius of a few kilometres from where the seller lives.
“People are creatures of habit. The Cheras guy will most likely buy in Cheras and someone in Bangsar will look for a new place within the same area.
“You can hardly find a buyer in Petaling Jaya looking for a place in Tanjung Malim.”
He adds that one should have property viewing sessions as often as possible.
“Don’t restrict the opportunity to market your home. You can’t say ‘Sundays I don’t want to work.’ Do that and you may lose the deal.
“The market is not in your favour at the moment, so you’re going to have to bend backwards.
“Be flexible. If the buyer needs a few months to sign the sale and purchase agreement, grant him or her that flexibility. Do whatever you can to facilitate the buyer, not destroy the deal.”
Siva says it’s important to “go all out” when the market is tough.
“There is no magic in the magic show. It’s all hard work. If you just place an advertisement in the papers and put a sign on your gate, chances are they are not enough.”
Apart from placing advertisements online and in the newspapers, Ruben says having an open house for people to view the property can help to market it.
“Even if the viewers do not purchase your property, they would potentially introduce your property to their circle of friends,” he says.
> Eng ag e the service of an expert
A good way to sell your property is to engage a qualified and registered real estate agent, says Ruben.
“It would be best to engage an agent who is an expert and has a good track record within the neighbourhood that your property is in.”
Siva notes that a qualified estate agent would have the requisite knowledge and expertise on how to market the property.
“Buying and selling residential property is a specialised field, so it’s best to engage an expert.
“For instance, I run a large agency... If there’s a property that needs to be sold in Damansara, I’ll get a guy that specialises in that area.
“I won’t get someone who’s based in Johor to work on a deal in Kuala Lumpur.”
Khong says a good agent or any successful seller must study the unique selling points of the property and analyse why the buyer will want to pick this particular unit or project.
“Proper and comprehensive marketing is required to cover the markets to ensure the reach to the buyers are effective.
“An international estate agent may be the key to the sale covering both local and foreign markets as buyers can come from almost anywhere.
“This coverage will also depend on the type and price point of the said property. In any event, hopefully a deal can be struck.”
> If all else fails, rent it out
Alas, if you can’t seem to find a buyer, consider renting it out, says Ruben.
“If you do not manage to sell your property, bear in mind that it may not have anything to do with your property and may be due to the current market situation.
“While waiting for the market to improve, you could rent out your property.
“If you have a fully-furnished unit, it would be easier to get a tenant and even if the rental is slightly below market price, you will still have some income and would be able to pay off your mortgage, compared with leaving it vacant,” he says.