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Property prices do not change just because asking prices are falling…

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A negotiator friend from Penang told me that some buyers do not trust property negotiators. After his sharing, I think it’s important to note a couple of things, whether it’s the negotiator, the asking prices and even the final transacted prices. When we want to sell our home and the real estate negotiator tells us that the property prices are on the way down, what is our reaction?

Response 1: ‘No, I don’t believe, please sell my unit at a higher price because xxxxxx, yyyyyyy, zzzzzzz.”

Okay, so we gave the negotiator a piece of our mind. Anyway, there are three possibilities. First, the real estate negotiator is honest. The seller’s asking price is really dropping across the board. So, should we follow those prices? Somewhere in the middle?   Second, the real estate negotiator is not honest. Property prices wanted by the sellers are actually on the way up BUT there are no buyers. Do we price our units high up there or in the middle somewhere?  Third, the negotiator just wanted to know what’s our bottom price so that it’s easier for them to help us sell. Remember, there’s no point trying to sell higher than everyone in the market because even the negotiator would not be able to sell, usually.

Of course, we could also check brickz.my to understand what’s the actual transacted prices and make our decision to sell on the high side, low side or somewhere in the middle? Frankly, if we really need the money, then it has to be on the lower end. If we are only testing the market, then it’s usually in the middle. If we believe that our unit is the most special in the market, then by all means, put the price highest in the market. For example, we may be the only unit up for sale out of only 8 units which has unobstructed views of some spectacular view? If that’s the case, we have a case to price it higher. However, do note that whatever decision that we make, it has very little to do with whether the prices are trending upwards or downwards. In fact, as I have written earlier, when there are NO transactions, the property prices do not change. 

According to an earlier article here, PropertyGuru Malaysia Country Manager, Sheldon Fernandez shared that asking prices from sellers for their homes are showing a declining trend.  He shared, “the declining trend is consistent with prevailing market sentiments and that the on-going price correction is healthy for the residential sector in the medium and long-term.”  Please note that his statement about on-going price correction is referring to just the asking prices and may not actually represent the actual property prices being transacted. Let’s remember that buyers do not jump into the property market just because of property prices dropping yeah. It may not be the area they like!  Attaching a chart with the latest property price change last year. Anyway, when we manage to sell in a slow market, it also meant that we have the opportunity to use the proceeds to buy other potential properties too. Not selling it simply meant we have no such opportunity. No right or wrong, just a decision based on what we believe okay. Happy understanding yeah.

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written on 28 March 2018

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