Property Investment 101: 40 percent discount means a great buy?

Property Investment 101: 40 percent discount means a great buy?

Buying a property is not the same as buying a car yeah

If we are in the market for a new car and the model we like is about to be replaced by a new model, the car company may offer a big discount to clear all the remaining stocks before the new model comes. If we like the current car model and does not need the new model, then this discount is indeed a good buy. We get the car we want at a price lower than what we would have to pay in the first place.

Just need to remember that with cars, most of the time, it’s depreciation. In other words, we are prepared to lose money as soon as drive the car home from the showroom. The price we pay will never be matched by the next buyer yeah. However… if we are talking about property, then this does NOT apply!

Why huge discounts does not necessary mean a great buy

#1 – Was the discount given ONLY to you? If yes, that’s great but why ONLY to you? The developer / seller knows you personally? The developer / seller have no other best friends they could give the discount to? If it’s 40 percent discount, why not they give to their relatives first? Or they don’t like all their relatives and all their friends? If not, then why give ONLY to you?

#2 – If the discount is given to many others, that means when you need to sell it in the future, there are many others who could also sell at the price you want to sell. In other words, RM500,000 with 40 percent discount and you pay just RM300.000. With so many people also able to sell at a low price, how sure are we that we could even sell it at the supposedly RM500,000 price?

#3 – Have you actually compared the price you were offered with what’s available to the market? Is it truly 40 percent versus the market or it’s similar to the market price AFTER 40 percent discount? If the price is similar to the market after discount, that means the property was overpriced at the beginning and they are only giving discount in order for it to be attractive enough to be sold. So, don’t be too happy yeah.

Comparing is easy yeah. Maybe go to propertyguru.com or mudah.my or starproperty.my and type in the area, the type of property and you may be able to see if the prices match or if the discount actually makes sense.

View more, compare more before deciding

I disagree with anyone buying right after the first viewing. It’s better to view a few more prior to deciding. In fact, it pays to also drive around the area to see if you also like the area as well because just buying a property you like will not make you love the area yeah. My former CEO just told me this story today.

“My parents decided that they wanted to move to a landed property from the small apartment they were staying. They have ONLY moved to the new landed home for a week and realised that while the size is bigger, but the area lacked everything they want, everything they are familiar with and also all the conveniences they used to enjoy. At the end of the week, they moved back to the apartment.”

Happy deciding by considering the potential even after someone has offered you a 40 percent discount.

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