Buying a home in Singapore is a tedious process that requires careful research and consideration. While Singaporeans are becoming increasingly tech savvy when it comes to buying and selling properties, it still pays to seek professional advice. This is especially if you’re buying property for the first time and seeing that a home could probably be the biggest purchase of your lifetime!
For a start, an experienced and competent property agent will be able to provide information on the real estate market and the neighbourhood in which you’re buying. They’ll also be able to take you through complicated paperwork and processes, and help you find the home loan package with the best rates and benefits.
A property agent is basically a middleman who is paid a commission to find the right match between buyers and sellers, but you’ll be surprised by how many people are only vaguely aware of what they really do.
Believe it or not, is not uncommon for property agents to be mistaken for financial advisors, moneylenders and even BFFs you can call anytime. For their benefit (and yours), we’ve compiled a list of things your property agent wish you knew (and you should really stop harassing them about).
1) They can’t approve your loans
This misconception occurs more often that you might think. Property agents have no affiliation to banks and cannot approve your loan. It is on the bank’s loan officer who determines whether or not you qualify for a loan.
In general, your housing loan instalments and other long-term debts such as car loans or other hire-purchase commitments should not exceed 60% of your gross monthly income. As a guide, here’s the salary you need to be earning in order to buy a two-bedroom condo in the prime districts, the city fringes and the suburbs. So, if your loan doesn’t get approved by the bank, it’s not your agent’s fault.
However, your property agent’s job scope does include providing professional advice on your eligibility to buy, sell or rent property. They can also advise you on areas pertaining to guidelines and restrictions for home loans, as well as stamp duties and the various fees payable when you purchase property.
2) They don’t decide how much you can borrow
For HDB home loans (which excludes Executive Condominiums (EC)), you can borrow up to 90% of the flat’s value or the selling price, whichever is lower. For private properties and ECs, buyers will have to opt for a bank loan, which typically lets you borrow up to 80% of the property value or selling price, whichever is lower.
In both instances, the buyer will have to make an upfront payment of at least 10% (if you’re buying a HDB flat) or 20% (if you’re buying private property) by cash, your CPF funds or a combination of the two.
The problem arises when a disparity occurs between the seller’s asking price and the actual market value of a property. For example, the selling price of a condo unit might be set at $1 million, but it is valued at just $900,000.
When this occurs, the buyer will have to fork out significantly more for the down payment, and a property agent cannot help to increase the amount of financing a buyer can get. In the above example, the lower valuation would result in the buyer having to pay a whopping $80,000 more in down payment.
3) If you’re refinancing, they can’t speed up the disbursement process
Since the beginning of 2018, banks have raised interest rates for both fixed and floating home loan packages by up to 30 basis points. They’re expected to rise further this year, so if you’re thinking of refinancing, the time to do it might be now.
Some benefits from refinancing your property include lower monthly payments and the ability to utilise existing equity of your home. The thing is, many people who are refinancing expect to get their cash in a week or two. In truth, the process is as straightforward and involves back-end work like valuation and legal paperwork, and could take up to months.
How long the bank will take to disburse your cash will also depend on factors such as the type of loan, the day of the week the loan closes, and whether the borrower refinanced with the same lender who approved the original mortgage.
4) But they can help you save time (in other ways)
Attempting to conduct viewings or marketing your property on your own can be extremely time-consuming. A qualified property agent can help save you time, as they will know exactly how to ensure that property inspections and viewings go off smoothly.
If you’re looking to buy, an agent can offer exclusive information on newly available units that may not have been listed online, so you get the first dibs. Of course, on the buyer’s end, it helps to honest when providing your personal details to an agent, which may include budget and monthly income. Doing so will enable an agent to quickly and adequately assess which properties you are eligible to buy or to rent.
For sellers, property agents can be lifesavers on viewing days, during which they are responsible for organising, attending and facilitating. They also keep track of prospective buyers and follow up on leads.
Property agents can help screen buyers or renters who aren’t serious and in doing so, help you avoid visits that would be unproductive. This helps to reduce the amount of time that your home sits on the market and towards a greater likelihood of a profitable sale.
5) For sellers, they can also help you choose the best pricing framework
One of the primary roles of a property agent is to provide current advice on how to sell your home for the highest price in the shortest span of time.
While they can’t dictate your property’s pricing (or market value), they can provide you with all the relevant facts, figures and data to help you set a realistic price range for your property. The data could include variables such as: the median and average sales prices of homes in your area or planning region, average psf cost of homes similar to your own, the average time that homes in your area spend on the market, and the total percentage of homes in your area that were sold in the past year.
Besides helping you choose the right pricing framework, all this information can help determine how you can best market and promote your home, and also the optimum time to sell your property.
It is after all, in both you and your agent’s interest to make your property look its best to achieve the most desirable resale price.
What else would you like to see from your property agent? Let us know in the comments' section below!