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The Ultimate Real Estate Horror Story: When You Don’t Make a Profit Selling Your Home
Published 30 October 2024
Playing Monopoly is nothing like the real estate market in real life. You can hand over your paper money to the banker and give up your red, plastic houses, but you can still roll the dice and continue playing.
Avoiding Financial Pitfalls in Real Estate
- You Can Lose Money on Your Property
- So, Is There a Way to Avoid This?
- #1: Don't Pay Too Much When Buying a Home
- #2: Don't Forget the Cardinal Rule of Real Estate
- The Right Valuation Can Avoid Unprofitable Condos
The stakes are low and there’s no real consequence, except maybe a bruised ego, because it’s all fun and games.
In real life, the stakes are much higher.
When you’re losing real-life money from selling real-life property, swallowing a rock might be easier to bear.
But ‘tis true, ladies and gents.
You Can Lose Money on Your Property
That is, when you sell your home at a lower price than when you bought it. But also, even if you sell at the same price (or higher), you can still end up with less due to inflation and interest.
It’s truly scarier than seeing a shadowy figure in the corner of your mirror at night. That’s just a figment of your imagination. Making a loss on your home sale will actually hurt you.
According to this report, the following are the top 5 unprofitable condos in the past few years.
Condo
Address
District
Planning Area
TOP
Avg PSF Price
No. of Unprofitable Transactions
Reflections at Keppel Bay
Keppel Bay View
4
Bukit Merah
2011
$1,676 psf
65
Parc Rosewood
Rosewood Drive
25
Woodlands
2014
$1,059 psf
31
The Sail @ Marina Bay
Marina Boulevard
1
Downtown Core
2008
$1,966 psf
30
Eco
Bedok South Ave 3
16
Bedok
2017
$1,352 psf
27
Urban Vista
Tanah Merah Kechil Link
16
Bedok
2016
$1,385 psf
26
Reflections at Keppel Bay saw a total of 65 unprofitable transactions, with losses ranging from $4–$6 million. (That’s… a really high jump) 40% of these were purchased in 2017, when the market was booming and prices were at an all-time high.
The highest loss incurred by a condo seller for this condo is about $7 million, for a 7,050 sq ft unit on the 40th floor, sold in Sep 2021.
Two were sold in 2022:
Sale Date
Address
Area
Sale Price
Purchase Date
Purchase Price
Loss
Reflections at Keppel Bay
33 Keppel Bay View
#04-XX
3,993 sq ft
$1,465 psf
May 2007
$2,499 psf
$4,131,000
Reflections at Keppel Bay
33 Keppel Bay View
#31-XX
2,271sq ft
$1,700 psf
Apr 2007
$2,351 psf
$1,478,500
Another factor that contributed to the unprofitable transactions, for this condo specifically, is that about two other condos are within the vicinity — Corals at Keppel Bay and The Reef at King’s Dock — and have been performing much better.
Another condo unit, this time a 4-bedder at The Marq on Paterson Hill, was sold at a $7.75 million loss last month. The unit previously fetched a price tag of $21.13 million in November 2011.
This marked a new record loss at the luxury condo and in the market in general.
So, Is There a Way to Avoid This?
To be honest, there’s no real, guaranteed way you can avoid making a loss when selling your home. Buuuuuut. All hope is not lost. For example, you can make better decisions when buying a home. Here are two ways you can do that:
Ready to sell your home? We’re ready to help.
Schedule a consultation with one of Singapore’s top agents.
Ready to sell your home? We’re ready to help.
Schedule a consultation with one of Singapore’s top agents.
Ready to sell your home? We’re ready to help.
Schedule a consultation with one of Singapore’s top agents.
Ready to sell your home? We’re ready to help.
Schedule a consultation with one of Singapore’s top agents.
Ready to sell your home? We’re ready to help.
Schedule a consultation with one of Singapore’s top agents.
#1: Don’t Pay Too Much When Buying a Home
There’s really no other way to avoid buying high and selling low except for research and financial planning. You can take a look at the average prices of your dream home and the past transactions in neighbouring areas. That way, you can tell the price trajectory of units being sold in the market at the moment and if the amount you’re paying is justified.
Also, having just enough for the down payment will obviously not cut it. There are other costs to consider, like home loan repayments.
When you borrow money from the bank to finance your home purchase, you’re also accruing interest on top of that loan. The same goes for your CPF. And when you sell your home at a price lower than your outstanding loan payment, then you’re selling at a loss.
#2: Don’t Forget the Cardinal Rule of Real Estate
That is: Location, location, location. If you’re betting on appreciation, then you should seriously consider the area in which your property is located. The value of a home can often be tied to its location — just look at central properties. Because it’s in the city and close to so many good amenities, buyers are willing to pay more, so sellers can set their prices higher.
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One thing you can do to figure out if a property will go up in value, just look at the location and its surrounding amenities. A great tool you can use is the URA MasterPlan, where you’ll find upcoming projects that can raise the value of homes in the area. Many investors swear by this. And so do property agents.
Also, though we mentioned earlier that having profitable properties nearby was one of the reasons some units at Reflections at Keppel Bay were selling at losses, it can do the adverse.
When other properties in the same area are selling high, your home valuation can potentially go up, and therefore, you may be able to sell within the same price range.
The Right Valuation Can Avoid Unprofitable Condos
If you’re unsure how to price your property, get an accurate estimate of your home valuation from us. You can also speak to one of our professional property agents, who can give you more detailed advice on the state of your property and even assist you with the financial calculations, so you can be confident about your expected cash flow upon the sale of your home.
But if you’re not ready to speak with an agent, you can still reach out to us to ask any questions you might have. Drop us a message on WhatsApp, and our Relationship Managers will be in touch with you in just a few minutes.