Have you ever thought of venturing into the property market in Singapore? Whether you plan to be a serious home buyer, an expatriate or you want to become a property investor in Singapore, the very moment you step into the property market, your venture revolves mainly around property valuations. Learning about how valuation works is crucial to not invest or buy a property that is overpriced. although you can avoid making catastrophic decision by paying attention to the updates of property news in Singapore, it takes time and you might even miss out some important details. Thus, its best for you to learn the fundamental of property valuation.
However, how much do you understand the term ‘valuations’ in terms of property market in Singapore? The term ‘valuation’ might sound new to some people who just started the venture in property market. Even those who have been in the property market might not know much about valuations. Estimating the value of real property in Singapore is necessary for a variety of endeavors, including real estate financing, listing your property for sale, investment analysis, property insurance and the taxation of your property. For most people, determining the purchase price or value of a property is the most useful application of real estate valuation.
First of all, you ought to really understand what ‘valuation’ is, also known as the market value. Why is valuation so important in the property field? A property valuation is the core of property selling process and is very useful for buyers and sellers who are planning to sell or buy their properties in Singapore. Getting a property valuation in Singapore allows you to further understand the difference between the price and the value of your property. Price is the amount that you pay to the seller and value is how much your property is worth. Valuation also allows you to negotiate with potential buyers in the future. Market value is the approximate value for a property that is exchanged on the date of valuation between the buyer and the seller after a property marketing where both parties acts knowledgeably and without constrain. Valuation is calculated based on the recent transacted prices or values from the Government’s Valuation and Property Services Department. However, do take into account that the launch prices of upcoming new projects in the area plays a role in determining valuation as well. Once the valuation is decided by authority, the bank will then expand a mortgage loan of 90% margin of finance based in the valuation figure. There are also articles on what you should know about real estate valuation, the basic knowledge of property valuation, and understanding property valuation that you can read to further understand more on how property valuation works.
Next question that most people wonder. How does valuation affect you? In order to make you understand the effect of valuation, I shall explain it in the form of giving you an example. Imagine a scenario where buyer A is interested in a condominium unit. After negotiating the price with the property seller, both buyer A and the seller reach a price where both parties agree on – $500,000. Therefore, buyer A will need to pay a $50,000 of down payment, after having a 90% home loan. This however, does not include other entry costs that might occur. Now this is where and how valuation affect you.
I am sure the next question that comes to your mind is “why is there such disparity?”. Let me further elaborate on this. Let us say, if you are a watcher of the property market in Malaysia, you would have noticed that property prices in certain area surge very quickly. The issue lies in JPPH. This is because it would take as long as 6 months for JPPH to collect data and then analyse the transaction data, where valuation firms strongly depend on in their calculations. In other words, the valuation would be focusing on the out of date prices or values up to 6 months ago, and have a big possibility of having the valuation lower than the current prices. Despite many firms do not mind taking the hassle to make sure an accurate and fair valuation by taking many factors into account, there are still certain firms that do not go further and take the trouble to ensure an accurate and fair price, which in turn is the reason for the inconsistency between valuations and negotiated prices.
However, do not be afraid as there are some things you can do to control the disparities between valuations and negotiated prices. Here are a few things that you can do to keep it under control. First of all, you need to ensure that there is a section in the booking receipt that clearly indicates whether you would be entitled for a refund of your deposit held if you did not manage to secure a loan. Next, it is also well known among the old hand experienced property players in the Property news Singapore that different banks provide different prices or valuations on different properties. Banks with more aggressive sales agents tend to push up the valuations or prices of your property in order to secure more transaction as compared to banks with less aggressive sales agents. To deal with this, remember to go for banks shopping to check out on their valuation rates. Do not forget to refer what the other banks are offering you because only by doing so, you might be able to get the valuation you desire as they now are dealing with their competitors.
In conclusion, this is basically how property valuation works. Learning about how valuation of your property works in Singapore is important so you do not invest or buy a property that is overpriced. Remember that the property market revolves mainly around valuation and valuation is what affects and influences your purchases of prooperty in Singapore.