Imagine this scenario – you want to sell your home and engage a real estate negotiator (REN). He advises you about the current market price based on some recent transactions.
He gives you the link to a website where you can check recent transactions – Brickz.my
After your “house for sale” advertisement is up for a few days, your REN informs you that a potential buyer called, and wanted the selling price to be reduced by 30%.
What would your reaction be?
Maybe this: “Are you crazy?”
In fact, this would be the reaction even if you were asked to knock down the price by just 10%.
Well, this is a “buyers’ market” as they say.
Well, not everyone agrees with this, especially for properties in high-demand areas such as in Kuala Lumpur and Penang.
However, this is not confined to just these two states. This same thing happened to famous billionaire investor Warren Buffet for his property in Laguna Beach, US.
An article in the media said he had to chop the price of his Laguna Beach home to US$7.9 million. Last year, he wanted to sell his ocean-view house for US$11 million (RM45 million).
That’s a 28% drop from the original asking price. The property is a 3,588 square-foot, six-bedroom home. He has owned the property since 1971 when he paid US$150,000 for it.
The home is only a block from the ocean and most rooms have views of the surf and rocks. There is a large family viewing deck which is separate from the main house. He uses this property only as a vacation home.
This is not the only home Buffett has in the neighbourhood. He sold a house adjacent to this particular one for US$4.3 million in 2005.
That was a home for guests to stay. By the way, Buffett’s net worth is estimated to be around US$86 billion (RM352 billion) by Forbes.
Coming back to the decision of selling the home you own.
It’s far more important to understand the reason behind your wish to sell. If it’s because there’s a potential good buy in the market, then selling our home faster is much more important than waiting for the next nine months for a buyer who will match your asking price.
Else, you lose that opportunity to buy an undervalued property somewhere new just because you think you are not getting a good price for your other property.
Of course, if you are ONLY thinking of putting it on the market to gauge the price, you could also do that but the REN handling our case will definitely be in for a tough time.
Remember, if your property was advertised last year and has not been sold until this year, anyone searching for the same property may see the price.
It’s not such a good idea because now the buyer will be even more motivated to negotiate for a lower price.
This article first appeared in kopiandproperty.com
Charles Tan blogs at property investment site kopiandproperty. He dislikes property speculators and disagrees that renting is better than buying. He thinks it’s either property or poverty. He is presently the CEO of an auction house auctioning assets beyond just properties.