Friday, October 02, 2009

Marketing technique of property consultant

My friend visited a new property launch. The price of the property had increased by more than 30% during the past six months. At the current price, the property was very expensive.

The property consultant recommended a specific unit at a good facing and with the price still not adjusted by as much as the other units. There is only one unit left with "good value". It was so enticing, that my friend almost presented a cheque to book that unit. She did not consider the heavy commitment, the monthly repayment, affordabilty and other factors.

Fortunately, a family member stopped her from making this "on the spot" purchase. After returning home, she realised that it was really beyond her reach.


Falcon said...

HaHa, I hoped I have helped by pointing out the perils of the buying on the spot practice in my earlier posting. I think this agent will have used the same tag of "One unit only and no more if you do not buy now". In fact, I think there are many agents who are telling all their potential buyers the same tag. It seems that the human psychology hungers for that special exclusive one time one piece only carrot dangling in front of them without realising the big stick behind that enticing carrot. Whatever you buy, just do not buy on the spot. If there is indeed only one unit with good value, you can be sure that even the agent will be second placed and not be able to get it. Why? Because the developer will have got it for his mistress. That is why. HaHa...

Tan Kin Lian said...

Most developers now release their units for sale a few floors at a time. This creates the impression of a large demand for a small number of available units. It is easy for the property consultant (sale person) to push the client into buying the "last unit" with "good facing" at the "current price", which is "going to be raised soon".

Parka said...

Maybe there should be a 14 days cooling-off statute somewhere as well.

Anonymous said...

Dear Singaporeans

In my humble thinking, if I am the legal owner of a $1 million dollar condo unit. And I have a housing loan of $800,000 against my condo unit.

Then it's the bank that really owns my condo unit.

If you don't believe me, then stop making your mortgage payments. Then you'll find out very quickly who is the real owner.

To Mr Tan Kin Lian:
I wonder if you or your team can enlighten us Singaporeans as to how many Singaporeans fully own our own homes.

Thank you.

Anonymous said...

She is fortunate to have a family member stopped her.

Many are not so fortunate and as a result contributed to the crazy rise in property prices!

Same for HDB flats.

I have known some newly married couples, working for only 2 or 3 years, going above the $700K range property as their matrimonial home. And they are not scholar civil servants or doing business. Maybe their daddy is doing the financing, wholly or partially!

Anonymous said...

I think after many years of working, one should be able to fully own a first-hand hdb flat.


Anonymous said...

Mr Tan,

Reading your blog and contributions from other readers has really made my life better.

Thank you.

Anonymous said...

private property is for rich people, if you can't afford it, you should not be there wat. buy HDB lah...mah said affordable for all singaporean.

Anonymous said...

REX needs help:

Good morning sir,
Yesterday i came across a post in TOC which frightened me. This poster predicted, the way things are going, in singapore people keep on buying properties (via bank loans) often beyond their means, and also the constant propaganda by govt that prices are "affordable" - suggesting to citizens to go ahead to stretch loan to 30 years...

the TOC poster suggested that it is difficult to assume that one can keep a job for 30 years .. therefore singapore will have a sub-prime crisis down the road with huge banks collapsing because loan defaults go up, and the banks no longer have sufficient liquidity to maintain operations, just like USA subprime loans.

Whilst right now, banks do scrutinse financial/employment status before approving loans, what happens to a borrower's fortune within 30 years is difficult to judge.

There is possiblity of very large number of good standing loans turning bad - 30 years loan is downright ridiculous. So the poster on TOC predicted that eventually the banks will crash just like what happend in USA when large numbers of loans default. this is scary!

What do you think.

Anonymous said...

Hope they do crash and we start all over again from the bottom. Cheap valuation attractive enough for everyone. Alternatively, the banks can sell the loans or repackage themselves and sell them as wholelife products because the average tenor of the loans is more than 35 years.Let the insurance companies disrtibute them and the insurance agents con their trusting clients to bring about liquidity. This is economics. This is creating money and more money, a technique John Keynes didn't know or foresee his consumption theory put to best use.

Anonymous said...

Dear Anonymous 5.09 pm
Goodness me. what you have described is precisely the Lehman Bros. et al saga. The sub prime loans in USA caused the banks to repackage these loans into cdo's related bad products etc which are churned out by lehman etc. If this happens (i hope it doesnt) we will have very very big problem, the root of all the evil is really the subprime loans.

Also you must be nuts to "hope they do crash". If the banks crash, it means your money in POSB is not safe anymore, and when the rumour starts, run-on-the-bank begins and there will be panic.

I am really concerned that a subprime crisis will occur in singapore because of the widespread purchase-beyond-means mentality for property hunters. Please refer to my original post.

I hope that Mr Tan will share his wisdom with us on this matter. I need some peace of mind, the prophecy is very real.


Henry said...

Hi Mr Tan, this is Henry. If you like my artciles, plse publish it without my name. I like to have nobody get into financial trouble and I'm worried for them. I have been to many showflats in the last 10 months and below is my experience and thoughts.

I just want to tell everyone who is reading this blog to exercise prudent and extreme caution when buying property. Below are some guides, from an ex-property agent.

1. Your job or income is not guaranteed but your monthly loan payment is a MUST. The bank or developer does not guarantee your job until you finish paying your loan. Try missing one payment and see what the bank will do to you; they are the legal owner of your house, not you.
2. Interest rate will go up next year. I'm 100% sure. YOu have to pay more and more as it goes. I foresee some hardship for some people next year onwards.
3. Never buy on the spot, or give a cheque to any agent, or pay any form of booking fee. Control your emotions, otherwise don't visit show flats.
4. Never trust any agent or bank loan officers. The higher the price goes, the longer the loan period and amount, the more commission they make.
5. Never believe the any agent who say that property price will continue to go up becuase of IR or pent-up demands, etc. S'pore is no exception to the US, what goes up must come down. The higher it goes, the heavier and quicker it will fall.
6. Never believe that the casinos will make property price go sky high and forever that you cannot afford later. It's this kind of KS mentality at work currently. and we are in for some trouble now the road. The casions also have their own financial problems now, and raising cash in the stock market. See my point?
7. Never believe any loan officer that tells you that it's ok to take a 20 to 30 years loan, because you can sell later and make a profit, even if you becomes unemployed. When many people becomes unemployed, property prices will plunge, so how do you make a profit if you buy now? I'm puzzled.
I had challenged several agents and loan officers with those questions and none of them can answer me except give me a black face.
S'pore can only grow by another 1 million people or so while about 30% of properties sold are for "investments". When the time comes for the baby boomers to retire and cash out, let's see what happen. Supply will exceeds Demand.
My own guide line is loan maximum 50% of the valuation. Loan period 15 years maximum, the shorter the better. This approach brings me no problem until now. As one aged, his outstading loan MUST become lower and lower and not the other way. Ideally be debt-free when you reach 50 years old. At that age, job security is at stake for many of us. Why add one more worry when you already have to worry about job security ?

Blog Archive