House hunting undercover

Today reporters were offered discounts and freebies to sweeten the deal

BARELY an hour into the showflat tour, the senior executive of a property consultancy firm, brokering a private condominium, decided it was time to reveal his trump card.

“Don’t say I said it,” he said, almost whispering, as he pushed across the table to us a piece of paper with a blow-by-blow breakdown of his offer. The latest scribbled figure was 15 per cent just beside the previous offer of 11 per cent.

We had asked him earlier what the “threshold” level was for a discount should we decide to put in a bid with cheque attached for a two-room apartment in the 99-year mid-tier development.

Property watchers later told Weekend Xtra that 15 per cent is a good discount, especially for owner-occupiers.

“It is only during such times that you can see such packages. In good times, there is no room for bargaining; what you see is what you get,” said the agent for this site let’s just call it Property A who was pushing the unit for a large developer.

His sales pitch did not surprise us it was a sign of the times in the property scene.

It was not too long ago when condominiums were being snapped up before they were even launched to the public.

During the property bull run, from 2007 to early last year, some properties located in Orchard, the core central region, were fetching as much as $5,500 per square foot (psf). A development in Little India, priced at around $912 psf, was sold out within two hours of its launch.

But these days, with the property bears out in force, some developers are revising their prices to sell off their units. A CBRE report noted that prices of units in Evania at Upper Paya Lebar Road had been reduced from more than $800 psf, when it was first launched in March, to between $610 and $650 psf last November.

GOING HOUSE-HUNTING
To get a better picture of what is happening, a Weekend Xtra team visited the showflats of four mass-market to mid-tier developments over two weekends recently. We posed as an engaged couple out on a house-hunting spree with a budget of $800,000.

The surburban developments currently being built are located in areas like Bishan, Boon Keng, Kovan and Potong Pasir. They are owned by an even mix of small and big developers.

What we saw was not pretty: Barren car parks and empty showrooms with only property agents idling around. In one case, they were lining the front door to welcome us even before we stepped in.
We spotted only two other couples at the Property A showflat, while at the other showflats, we were the only ones.

Things have been so quiet in recent months that the four showflats are now open only on weekends “to save on electricity and manpower costs”, in the words of one property agent.

Still, the slowdown has not translated into aggressive price cuts and hefty discounts for all developments. And contrary to conventional wisdom, it is the small developers, rather than the heavyweights, who seem to be holding back on dishing out the goodies.

“Small developers usually start their launches already on a more affordable level, unlike the big boys, who can afford to mark up their price and then adjust downwards, ” explained one property agent, representing a small developer for a condominium.

For those who do budge, the sweeteners usually range from the absorption of stamp duties and maintenance fees to giving out furniture vouchers with an outright price discount offered only when all the other offerings refuse to do the trick.

Mr Melvin Goh, a property agent for six years, said most developers are careful not to lower the per-square-foot prices too drastically as they want to protect the overall valuation of their projects.

SWEETENING THE DEAL
At Property A, only 25 per cent of its 110 units have been sold since it was launched last July. That may explain the eagerness of the property agent who served us he went on a charm offensive the moment he saw us stepping into the showflat.

When we noted how his first quote for a two-bedroom unit was “way out of our budget”, he was quick to add: “Of course, there are sweeteners”, and offered furniture vouchers of up to $22,000 upfront without any prompting.

After a quick tour of the showflat, he promptly sat us down to start the negotiations proper even, as he sketched out a detailed repayment plan to fit our budget.

He gradually offered more concessions first a two-year waiver of maintenance fees, then a reimbursement of the 3 per cent stamp duty.

The sweeteners eventually amounted to an 11-per-cent discount and we could sense his desperation as we waited for his next move. Finally, he said: “Okay, now that push has come to shove, what can I do to sweeten the deal?”

We asked for an outright discount and we got it.

While the agent for Property A seemed keen to seal the deal on the spot, others, like the developer of Property B preferred to deliberate first before pushing out its offers with a vengeance.

No freebies were offered when we visited the showflat, not even when we asked for them, although the property agent of the 212-unit development a local company’s first foray into property promised she would contact us when the developer produced a revised listing the following week.

One week later, we received two calls and a few text messages from her to visit the showflat again.

She told us the asking price had come down. The price of the unit we had told her we were interested in had been revised from $774,000 to $689,000.

She also said that after this promotion, the developer will no longer be offering any more units for sale until the temporary occupation permit is issued.

SMALL DEVELOPERS HOLDING OUT
On the other hand, the smaller developers we visited seemed to be holding on to their selling prices.

At two showflats, there were no freebies or offers to lower the asking price. Instead the property agents harped on about other factors, such as the location.

Property C, a 616-unit development, claimed that its prices are reasonable compared to the bigger players in the market. When we told the property agent there that the unit prices were beyond our budget and asked if there were any discounts or freebies, she said it is not the Mainboard-listed developer’s practice to give discounts.

She went on to explain that the condominium’s location is in a prime heartland district and the surrounding HDB flats commanded high prices as well.

However, she said we could consider the units closer to the ground floor, which might be within our budget. She added that we could table a bid by issuing a cheque with an amount equal to 5 per cent of our desired offered price, to indicate our interest.

“If the developer is not agreeable with the price, the cheque will be returned to you,” she said

The agent added that she would also try to negotiate with the developer for furniture vouchers.
We had a similar experience at Property D, where the marketing agent kept asking if we could show our interest to the developer.

The senior sales director told us that no gifts or discounts would be given. To differentiate his development with the others in the area, he mentioned that the freehold property would be completed by the end of this year and we could get it sooner than others.

However, he said he could propose to the developer for a rebate in stamp duties, on the condition that we issue a cheque with our asking price. “This is to show the developer that you are genuinely interested,” he said.

That, to us, did add up to a sweetener of sorts.

So, would the Weekend Xtra team have been tempted to buy any of the developments we visited had we been house-hunting for real, given the benefits of being the buyer in a buyer’s market?

Well, he would buy if he had the money while she would wait for the market to drop further before deciding.

Then again, when it comes to taking advantage of good property deals in these tough times, it may be wise to heed the words of Mr Colin Tan, research head at Chesterton Suntec International.

“You may have come out tops in the negotiation, but at the end of the day, you have to ask yourself whether you can afford it. You shouldn’t buy just because it’s on sale. You may not need it or it may get you into trouble,” Mr Tan said.

Source : Weekend Today - 10 Jan 2009