5 Effective Techniques to Identify Fire Sale Condo


 | Update on 18 Jan 2018

Summary

  • Singapore non-landed private property price has bounced up 1.3% over the last 6 months in 2017, and there’s still a wide gap for growth.
  • Singapore properties transact at a reasonable valuation relative to other high-growth, large-cap and developed cities.
  • Singapore property market is healthy, a new cooling measure may imply before the market goes wild.

Fire Sale Condo

Fire sale condo is the property where the seller or developer is very eager to look for a buyer and willing to let go at an attractive price below valuation.  This property is also known as undervalued property.

There is another circumstance whereby the owner defaults on servicing the housing loan and making the unit to be put up for property auction. Such deal is known as mortgagee’s sale.

According to the latest trend of Singapore Property Price Index, the home prices continue to hit the lower benchmark, almost on par with the figure in 2010.  there is an incline indication since mid of 2017.

Warren Buffett once said that as an investor it is wise to be “Fearful when others are greedy and greedy when others are fearful.” It is now when others are fearful, you can enjoy a good value buying opportunity.

According to the latest trend of Singapore Property Price Index, the home prices continue to hit the lower benchmark, almost on par with the figure in 2010.  there is an incline indication since mid of 2017.

Warren Buffett once said that as an investor it is wise to be “Fearful when others are greedy and greedy when others are fearful.” It is now when others are fearful, you can enjoy a good value buying opportunity.

warren-buffett

This downward trend likely will not last for too long as the current chart shows it is quite close to the rock bottom in 2009. In Nov of 2016, I did mention that the downward trend of Singapore property market will not last for too long, and I urged buyers shall start to hunt for the good deal(s).

However, knowing that now and the near future is the good time to buy (properties), but how do you ensure that you are getting a good deal?  In order to identify fire sale value buy condo, you can read this entire article about the 5 techniques to identify fire sale condo,  then learn to DIY or with the help of your real estate agent.

Note: Previously in Nov 2016, I am telling to identify for fire sale condo, however, as the private property seller market is now on the way, we shall look for “Value Buy” or “Good Deal” rather than “Fire Sale”.

1. Explore Singapore Property Auction

singapore-property-auction

When someone neglects to pay the monthly housing loan for certain timeframe, the bank will eventually repossess the property and put it on property auction, which usually comes with a good discount.  However, the entire process can take several years, therefore these properties are often in need of some major repair.

Colliers International, DTZ, Jones Lang Laselle and Knight Frank are the 4 season auctioneers for Singapore property auction. We can find the auction listing from the respective websites, which are updated monthly.  The property auctions will be carried out every month at Amara Hotel.

2. Search from EdgeProperty Map

edgeproperty-below-fair-value

Typically most of the buyers are looking for properties through PropertyGuru.

But surprisingly, this property portal does not provide any services related to fire sale condo or undervalued properties.  Gathering market information to estimate the market value of the property and check if there is fire sale condo could be a very time-consuming process.

Therefore, EdgeProperty implemented the unique feature into their property portal. Today, you can let the technology do the work. TheEdgeProperty Map can pick out undervalued listings by comparing the property’s asking price against its fair value. Other than that, the map search function even allows you to spot for undervalued properties within a preset radius of a certain landmark.

A property listing will be shown in the yellow marker when the asking price falls below the Edge Fair Value, which is a valuation tool developed in collaboration with licensed valuers. The Edge Fair Value takes into consideration factors such as comparable transactions, floor level and size.

Click here to try out.

Note: EdgeProperty was renamed EdgeProp since Aug 2017. 

Watch this short video by EdgeProp.

3. Search from SRX Hotspot

Download data from SRX Hotspots.  This is one of the SRX powerful features.

srx-property-hotspots

You have to sign up before can download the PDF report, which is compiled with agent listings consist comparison between the asking price and X-Value.

X-Value refers to a computer-generated appraisal of a home’s market value. It sources from the nation’s most comprehensive property database and instantaneously calculates a single value for every home using best practices methodologies, including comparable market analysis.

srx-below-x-value-report

Therefore, for the listings with asking price lower than X-Value can be deemed as undervalued properties.

However, technology comes with limitations, but we should leverage on them to ease our search process and identify fire sale condo.

4. Read Classified Advertisement

Instead of flipping through the newspaper classified advertisement, now we can download the Straits Times Classified App and read through our smartphones.

ST classified-ads

This is extremely convenient and absolutely free.  Traditionally we have to read all the ads in order to find your desired listings.  Now, we can use use the keyword search function on the mobile app to look for fire sale condo.

These ‘Fire Sale’ listings are usually a good hint that is a motivated seller and is a good way to secure an undervalued property.  Not only that, high chance that the listings for sale by owners are also serious sellers as they spent a lot of money to advertise on newspaper.  You should call to get an understanding of how motivated the seller is. This way you can find out how much the opportunity you can negotiate.

classified-ads-fire-sale-1
classified-ads-fire-sale-2

5. Look for Projects Approaching ABSD Deadline

As the 5-year due date for their Additional Buyer’s Stamp Duty (ABSD) remission approaches, some developers are giving a very attractive discount to buyers.

Under the ABSD remission rules, developers will have to pay 10 to 15% ABSD on the purchase of land if they could not completely sell all their units within five years of the date award.

Refer to SRX’s useful article for more details.

Conclusion

Private residential home prices rose 0.6% and 0.7% in the Q3 and Q4 of 2017.

In January 2018, Credit Suisse Group and Morgan Stanley are calling the end of Singapore’s property downturn and estimating home prices to rise by as much as 10% and sales volume to increase 40% this year.

Now is just the beginning of private property price hike, there is still a wide gap for potential growth.

Keeping optimistic perspective at the same time, I am monitoring the surge in supply from successful en bloc.  I felt the en bloc movement is still healthy at the moment, but I would urge buyers or investors shall be wise and selective in their purchase.

The 5 techniques to identify value buy condo is simple in principle, but its never easy when it comes to real execution.  I would suggest you engage a professional real estate agent to assist you.

Sign up today to get your free consultation which includes a financial plan, your customised home purchase plan, property market movement update, and professional real estate service from Stephen. We wish you great luck in your property pursuits.

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