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Property Pitfalls
Property Pitfalls
Mesmerized by the nice renovation, high floor with good view, next to MRT, near parents, accessible to amenities, meets the requirements of your partner or family, price is within budget and around last transacted price. Then comes the pressure, like obtaining an In Principle Approval (IPA) for your loan, and you made an offer which was accepted, and now comes the time to exercise the option-to-purchase. What else could go wrong?
Rushing into a decision. Pressure and not having a clear objective muddles decision. Budget, condition, good location and amenities are not the only important factors. What is the reason and why are you buying? How long do you intend to hold this property and how does this fit into your asset portfolio? Focusing too much on criteria can also
Affection and emotion. Feelings can get uncomfortable. Label your emotions, reframe your thoughts, consider objectives and discuss with people and gather their perspective and opinions.
Surface level data might look positive, but are there other factors driving the prices? The stage of the real estate cycle, along with macro and micro data could affect this development.
Trade-offs and opportunity. Review your objectives, and calculating cost of alternatives such as resale vs new launch, safety net, financial goals, asset portfolio allocation and hedging against inflation are some of the important considerations.
Capacity. Over leveraging can risk an unprofitable sale. There's a saying "buy property to wait, not wait to buy property", and risk management is important as we wait for the right time to exit. Evaluating affordability is also important to sustain the journey.
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