Have you come across ads telling you to sell your home? These ads can come in both physical and digital forms. Every few weeks I will see flyers either in the letterbox or directly kiapped at my gate. The ad that prompted me to write this is a YouTube ad by a property agent encouraging homeowners to sell their property as prices are now at “record highs”. But have you wondered who is buying the properties if the prices are at record highs?
Ads On Record Home Prices Targetted At Homeowners
These ads by property agents are targeted at homeowners to encourage them to sell their property through them. The reason given is that property prices are now at record levels and they can help you get the best prices. The news has been broadcasting that residential property prices have been rising every month and that certain flats have been hitting the S$1 million mark. The facts in their ads are not false, and you might really sell your property at super high prices. However, there are some other factors to consider before selling your property.
Where Are You Going To Stay?
Where are you going to stay after selling your property at “record prices”? Unless you have multiple properties, selling your only property doesn’t seem like a smart choice. Even if you are looking at a downgrade/upgrade after selling your current property, aren’t you also buying a property at record prices? Or is it that only your property is at record prices but the next property you are looking to buy is not at record prices?
Who Is Buying These Homes At Record Prices?
Even if you own multiple properties, who is buying these homes at record prices? There are always two parties between a transaction, a buyer and a seller. However, in many cases, there is also a third party, called the agent.
In this case, the agent is telling the seller that they can help them sell their property at record prices. Then what is the agent telling the buyer? “You are buying this property at record prices”?
Instead, they might probably tell the potential buyer that the price might go up even more in the future, so they should better buy now before it rises more. By making use of consumer behaviour, both buyer and seller might succumb to FOMO to go ahead with the transaction.
Price increases or decreases absolutely cannot happen at the same time. The agents are either treating one of the parties (buyer/seller) or both of you as fools. Either the prices are indeed at record levels, or they will continue to increase. They cannot exist at the same time.
More importantly, no one can confidently predict the future consistently, or else they would just keep the lobang for themselves and take on loans to make the purchase themselves. Do they need to spend thousands of dollars to push an ad to you? Unless they have an ulterior motive.
Agents Win No Matter What
Record prices mean record commissions. Agents make money via commissions. They just need to come up with reasons to make property transactions happen as they make money every time a property changes hands. They don’t really care about the actual price direction but the reason they have to come up with to make the transactions happen.
|Situation||Message to sellers||Message to buyers|
|Prices go up||Time to sell at record prices||Time to buy before prices increase even more|
|Prices go down||Better sell before price drop more||Better buy before prices go up|
|Prices stagnant||Time to upgrade/downgrade||Time to upgrade/downgrade|
Remember that interest rates are rising, at least in the short term, and any property purchase decisions should not be taken lightly. Any increase in interest rates can be quite painful for many households. The average Singaporean family might just make one property purchase in their entire life.
You can take their words into account, however, you should also do your own analysis and homework on whether you should buy/sell a property. This is especially so for a transaction with such a big quantum. You have the most interest in your own money, so don’t let one party overly sway your decision, especially when it directly benefits them. Don’t as a barber if you need a haircut.
I have been seeing ads advertising record home prices. If you are selling your home at record prices, who is making the purchase on the other side? Agents make a commission every time a transaction is made, so you shouldn’t ask a barber if you need a haircut.
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