A young lady friend called the other day to ‘date’ me for supper. Too bad, I was in Ipoh, followed by Hong Kong for a business trip and then Singapore for a 5-day family break. She was considering a new property versus a secondary one. She asked me which one would be better for her. I asked if she needs a place to stay now or she is okay to wait for a few years down the road. She said it would be good to have a place to stay now but she is worried about all the issues with secondary properties. For example, she may not like the renovation and thus the cost of renovations may be even higher than new properties. In fact, she’s also worried because secondary properties are older and tend to have more issues. For example, burst pipes, peeling paint job (external) and even the maintenance of some of its facilities! Maintenance is key to secondary high-rise property
I told her that there are also disadvantages of buying a new property from the developer. For example, no one knows if the development would definitely be completed on time or at all. Of course, the chances of that happening these days would be lower today. In fact, it’s hard to argue or take actions later when what was ‘promised’ was not what was delivered. Do note that if the promise was not specifically stated in black and white, we would have to accept what was built. The prices of these primary properties would already be taking into account the potential future prices too because the developers would also have to factor in the cost increases etc.
The good thing currently would be that the developers would definitely try their best to sell currently which meant better overall packages being offered to buyers. Do note that even when the property is completed, it does not mean we can immediately sell because at the same time there are also many units up for sale. In other words, we may not be able to sell fast. In this case my young lady friend should have no issues because she will be staying but moving in way too soon before everyone else would also be a little scary. My main reason for buying from developers would be if the prices they offer are really extremely attractive or perhaps close to the current prices within the area. Then the purchase would be a calculated risk.
The advantages that I could share with my friend is that buying secondary means you see everything there is to see. Touch, view and feel the whole development. Do you like it or do you not? Besides that we can drive around the neighbourhood too. Oh yeah, check thoroughly too! 12 tips on inspecting condos We are also able to determine if the price we are paying today is below or above the market price too. Just go to the usual property portals to check it out. For the luckier ones who has good real estate negotiator serving you, there may be units which is way below market price! For example, expats who are leaving is not likely to negotiate too long. Who knows, you may find a unit which you love even the renovations! Or at least grow to love it because if you do not, you would have to spend lots of money for it?
Well, there are disadvantages too. Cost of acquisition tend be higher. For example, Sale and Purchase Agreement (SPA), loan documentations, and stamp duty too. You may need some serious renovations. That wall colour, that wall itself and even those ‘classic’ kitchen cabinets? The owner may even ‘chicken’ out and not sell, after you have viewed it three times and checked your finances 10 times. Most of the time, a leasehold secondary property may take a long time to complete and thus not necessarily be by far faster than a primary one. Last but not least, the potential for a bursting pipe is there and there’s no warranty period. 🙂 I told my friend to decide by herself. The feeling of owning something new is special but the time needed to own a secondary may mean more savings since she is paying rental today. Happy deciding!
written on 20 Mar 2017
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