It’s been frequently quoted that the number of Do-It-Yourself (DIY) HDB transactions is rising – in 2013, 11 percent of buyers and sellers didn’t use a property agent and as of 2013, more than a quarter went DIY.
What does that number really mean though? We investigated and found that it is actually a somewhat misleading number – HDB considers each property changing hands to really be 2 transactions – 1 for the buyer and 1 for the seller.
What 99.co research has found is that – the number of BUYERS who did not use an agent has decreased to about 50%, while the number of SELLERS who did not use an agent remains at over 95%. (and thus overall, about 25% of transactions, i.e. 50% of buyers, are DIY transactions)
This is because of 3 main factors
i) Improvement in technology and online listings make it easier for self-help search online (Check out 99co’s HDB Listings)
ii) Availability of data, as released by the government, to make pricing extremely transparent and reliable (you can find relevant transaction history on 99.co too!)
iii) For HDB, unlike private property, the buyer typically is required to pay commission to the agent
(we do not see the same trend in private property resale – most transactions still involve 2 agents, the buyers continue to employ an agent because, well, it’s free anyway)
I’m waiting for the day when Singaporeans start to really cut costs, and forego the property developers to lay the bricks themselves. If you must skimp on the property agents though, here’s what you need to think about:
There’s a difference between knowing the property, and knowing about the property
Knowing about a property is not difficult.
There are thousands of websites that will give you rental rates and prices in each neighbourhood. It’s also not hard to find details about amenities, such as which malls and train stations are nearby. If you like 99.co on Facebook, for example, we update you with news like that all the time.
But knowing about the property is not the same as actually knowing the property. A property asset is hard to generalise – there’s a reason a flat two doors down from yours can potentially be worth $40,000 more (or less).
Looking up general property details doesn’t reveal critical facts: you won’t know the next door neighbour doesn’t have a happy family, and is prone to waking you up at two in the morning to loudly explain his marriage problems. You might not know the picture window allows the sun to microwave your living room from noon onward, or that the toilet pipes in a particular unit are more choked than the arteries in an obesity case.
For reference, look up the Seaview condo case. It’s a great location with a great developer, but buyers without an agent could easily have ended up buying a defective unit. Unless you’re a veteran property investor, who knows how to conduct a thorough inspection during the viewing (this includes tedious checks, like dropping by the area at 9pm to experience the noise level), you may be better off with an agent.
Subtle mistakes in paperwork can create financial disasters
Here’s a common error, when a seller has no agent:
A prospective buyer writes a cheque for the Option to Purchase (OTP). The seller accepts it, and banks it in three days later. In that time, the seller turns down one other buyer. Later on, the seller finds out the cheque has bounced, and the prospective buyer is no longer contactable – they’ve changed their minds. There is now no deposit to retain, and the seller may have lost a good price from turning down a sale.
Sometimes, the buyer gets the process wrong and makes a mistake. For example, a first time buyer might sign the OTP before getting Approval in Principle (AIP). They find out, after paying the non-refundable OTP, that the bank is not giving them a sufficient loan. Now a property agent (for either the seller or buyer) would catch a mistake like that – but if both buyer and seller are amateurs, that can and does happen.
There are plenty of other issues we can point out, but suffice it to say the paperwork involved in housing can be very expensive. If you’re a first time buyer or seller, it’s a good idea to engage a property agent to watch and learn.
You should still consider a property agent even if you’ve already picked a specific unit
If you’re a buyer, one of the main services of a property agent is to find a place which suits you. This is most obviously useful if you’re a foreigner, as the differences between our neighbourhoods are subtle (But significant. Don’t even think you’re qualified to know, until you can tell which nasi lemak is from Punggol in a taste test).
Other than that, agents can work out what’s important to you, and pick out an ideal property pegged to your budget and/or interest. For example, you want your children to attend a particular school, so your search is confined to that area. An agent can assist you in streamlining your search and reach out to potential sellers/landlords within said location.
Also, assuming you’ve already done your homework and all the proper research, the agent can also help you speed things up with the paperwork. Sometimes, it is worth paying one percent of the house (commission) just for them to do that.
Besides, if you are buying a private property, it’s free for you anyway.
If you’re a tenant, know that some agents look after you throughout your entire tenancy
Some agents (not all) provide full service when they represent tenants. This means that, when the kitchen breaks four months into your rental period, they’ll help you in the dispute with the landlord. Help can come in the form of everything from legal advice, to ensuring that the landlord produce evidence of cost (in the event that you have to pay for the contractors, when they are hired to repair the kitchen).
Remember that when it comes to rentals, most of the problems don’t occur at the start. They tend to occur toward the end of the rental term (the landlord won’t pay you back the deposit), or in the middle (the landlord suddenly decides to split the unit in two and give you an unwanted room- mate). For that reason, it’s often worth engaging a property agent who provides ongoing support.
A property agent has the knowledge and equipment to stage houses
If you’re a seller, staging the house is important. Sometimes, a bit of track lighting and white paint can make a huge monetary difference. Don’t believe it? Try it out yourself: hang a mirror on the living room wall, place track lighting along a corridor, and ensure all the living room furniture has at least two legs on the carpet (this visually “groups” them). Everything will look newer and more classy.
Now you may think this is something anyone can do, but there are complex principles behind Fittings, Furnishing, & Equipment (FF&E) that make it a science as well as an art. Most property agents – while they are not interior designers – will learn at least the basic rules.
Even if you could do it yourself, it’s a hassle to get the equipment, shift everything around, and clean up after every viewing. It might also be expensive to get your unit professionally photographed.
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Looking to sell your property?
Whether your HDB apartment is reaching the end of its Minimum Occupation Period (MOP) or your condo has crossed its Seller Stamp Duty (SSD) window, it is always good to know how much you can potentially gain if you were to list and sell your property. Not only that, you’ll also need to know whether your gains would allow you to right-size to the dream home in the neighbourhood you and your family have been eyeing.
One easy way is to send us a request for a credible and trusted property consultant to reach out to you.
Alternatively, you can jump onto 99.co’s Property Value Tool to get an estimate for free.
If you’re looking for your dream home, be it as a first-time or seasoned homebuyer or seller – say, to upgrade or right-size – you will find it on Singapore’s fastest-growing property portal 99.co.
Meanwhile, if you have an interesting property-related story to share with us, drop us a message here — and we’ll review it and get back to you.
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