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Thursday, October 23, 2014

Don't rush to pay for your DREAM HOME

Don't rush to pay for your DREAM HOME
When we buy a bag of rice at the grocery store, we pay what is on the price tag. No discussion, no negotiation.
Not the case when it comes to buying, selling or renting Singapore property.
The price tag on a home is negotiable if you and your agent have the facts and know how to use them to your advantage.
There are several methods you can use to find out how much your property is worth.
Some of the more common methods include comparable market analysis (CMA), cost method (the replacement cost of the building) and profit method (the income generating potential of the building).
Historically, professional agents and appraisers used CMA to determine the value of a home. Then they used the CMA value as the starting point to negotiate the actual purchase price.
They determined the CMA value by comparing the unit for sale with the transacted prices of similar homes recently sold.
Good negotiators argued over what constituted similar homes.
Once both sides agreed on what homes were similar to the unit for sale, the seller's agent would do one of two things.
If the listing price was above the CMA, the agent would use qualitative facts to try to justify why the unit is worth more than the other homes used in the CMA.
For example, the agent might have suggested that the price was higher because the unit for sale had an eight-person hot tub on a breezy balcony overlooking the sea, whereas comparable sold homes did not.
Alternatively, if the unit was below the CMA value, the selling agent would remind you, repeatedly, that you were getting a good deal.
There was much human judgement and, thus, debate over the components that went into the CMA. Each negotiator would argue which homes were relevant to the CMA.
In many cases, they would incorporate incomplete, irrelevant or even misleading information into the negotiations.
Nowadays, technology has streamlined and simplified the property evaluation process.
By marrying computers with real-time transactions from large, comprehensive and national databases, it is now possible for a computer to determine the CMA value.
With just a click of your mouse, the CMA value of your home can be easily calculated without confusion or personal bias.
The advent of technology has also made many property appraisal tools readily accessible - free - to the consumer who is looking to buy, sell or rent a home for the right price.
X-VALUE
For example, there's X-Value, a free online real-time computer-generated appraisal for any Housing Board or private flat in Singapore.
To remove hidden bias, such systems must have a strict set of algorithms to calculate the home's value based on key variables like location, block, floor level and individual unit information.
The X-Value is unique to Singapore.
A Singapore company developed the algorithm with Singapore government agencies, academics and professional valuation experts to provide home owners here with a clear and factual appraisal of their property.
The negotiating agents will still have to account for qualitative considerations, like a new kitchen or a person's tastes and needs.
A buyer may be willing to pay a premium for an apartment furnished by a renowned interior designer or for one that features customised, imported interior fittings.
The big difference between these systems and the CMA methods is that the buyer and the seller can start with the same facts laid out in front of them.
With final negotiations now based on the soft touches that make up the sum of your property, it is up to the owner or buyer whether they find it necessary to have multiple valuations.
Sam Baker is CEO and co-founder of Singapore Real Estate Exchange (SRX), a digital information platform that provides the Singapore property market with pricing information, comprehensive listings, and mobile applications to buy, sell or rent property.
To get more information on how to price homes, visit srx.com.sg/pricing
The advent of technology has also made many property appraisal tools readily accessible - at no cost at all - to the consumer who is looking to buy, sell or rent a home for the right price. -Asiaone

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