{"id":22170,"date":"2021-01-20T15:03:24","date_gmt":"2021-01-20T07:03:24","guid":{"rendered":"https:\/\/www.99.co\/blog\/singapore\/?p=22170"},"modified":"2024-11-18T15:00:12","modified_gmt":"2024-11-18T07:00:12","slug":"survive-condo-show-flat","status":"publish","type":"post","link":"https:\/\/www.99.co\/singapore\/insider\/survive-condo-show-flat\/","title":{"rendered":"How to survive a condo show flat experience (without getting ripped off)"},"content":{"rendered":"
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It\u2019s not everyday you walk into a makeshift building, and walk out with a seven-figure bill that’ll take you 25 years to pay. But you know what? That\u2019s exactly <\/i>what happens at show flats. Here’s what buyers, especially first-time buyers, should do to minimise your chances of regret and wasting money on a deposit<\/a>.<\/p>\n

Step 1: Prep yourself (before you step into the lion’s den)<\/b><\/h2>\n

It\u2019s incredible what you can be convinced to buy if you don\u2019t prepare yourself before stepping into a show flat. Remember, everything in that makeshift building is finely calculated to make you take leave of your senses and lull you into a sense of complacency.\u00a0<\/span><\/p>\n

To avoid being entrapped by a clever sales pitch, prepare:<\/p>\n

#1: A definite budget<\/strong><\/p>\n

We know you can blow up to 60% of your monthly income on loan repayments (including mortgage) under TDSR rules<\/a>, but ideally you’re advised to spend 10 times your annual income on a property or less. This is besides whatever you have in your bank (minus emergency funds) and CPF Ordinary Account that’s needed to pay the 25% down payment.<\/p>\n

So, if your combined household income is S$15,000 per month (or S$180,000 per annum), the prudent price for your house should be around S$1.8 million. That way, when taking a bank loan with a 25-year tenure and a ‘stress-test’ scenario of 3.5% interest rate, you’ll pay a S$6,760 in monthly home loan instalment, which works out to about 45% of your combined monthly income.<\/p>\n

That being said, consider reducing your budget by 30% if you’re employed without CPF contributions, and further if you have dependents to take care of (such as ageing parents or kids). The prudent advice, then, would be to spend about five to seven times your monthly income on a property.<\/p>\n

Experiment with the 99.co mortgage calculator<\/a>, just to be sure.<\/p>\n

#2: Approval in Principle (AIP) from the bank<\/strong><\/p>\n

An AIP states how much a bank agrees to lend you, if you buy a house. AIPs are usually valid for up to two weeks.\u00a0<\/span><\/p>\n

Get the AIP from the bank first, because you don\u2019t want to end up putting down a non-refundable deposit, and then being unable to get a loan.<\/p>\n

#3: Data on sale prices and rental rates of nearby properties<\/strong><\/p>\n

Visit 99.co<\/a> and check the location of your desired property on the map. Take note of the median average prices in the area, such as in condos across the street, as well as competing new launch condos. Also, take note of the rental rates.<\/p>\n

This helps you to make a fair comparison of prices; a new condo is typically priced at 10 to 15% more than its older counterparts in the area (but at a lower per square foot price). If it costs much more than that, make sure the developer has a justification you can accept.<\/p>\n

You can also use the data as a bargaining chip (e.g. point out that nearby condos have been falling in prices when negotiating for a lower price).<\/p>\n

Step 2: Leave the cheque book in your car, or with a family member who isn’t with you<\/b><\/h2>\n

If you\u2019re new to all this, we suggest you leave the payment methods out of arm’s length for now.<\/p>\n

This will prevent you from being fast-talked or pressured into putting down a deposit. Never underrate how much pressure you can fall under<\/i>; you\u2019re dealing with professionals who have often spent years fine-tuning their methods.<\/p>\n

Outside<\/em> of the show flat, and away from the sales rep and glitzy interiors, is the best place to consider your options.<\/p>\n

The only exception to this is if the property really is selling out fast. Otherwise, you’ll get that precious few moments to mull over your decision if, say, you leave your cheque in the car.<\/p>\n

We suggest you give yourself at least two to three days to think things over before you make your deposit. Do this even if you\u2019ve already viewed other properties <\/i>and narrowed it down to \u201cthe one\u201d.<\/p>\n

Step 3: Prepare the questions you want to ask the property agents<\/b><\/h2>\n

Write your main concerns, be it the distance to the nearby schools, or the noise pollution in the evenings. Take special note of things you won\u2019t <\/i>be able to detect at the show flat, such as:<\/p>\n