Friday, May 1, 2009

Sales talk

My property agent called me today to promote a 500 sq ft property selling at $950/sq ft at balestier area. He claimed that the swine flu is similar to the Sars period in which after that, it is likely that properties would soar. The property is only a 15 minutes walk to Toa Payoh MRT station, good buy best buy must buy!!!

I kindly declined his “lobang”.

To put things in perspective, the swine flu is not even 1% of Sars impact. Firstly, swine flu though contagious is not as lethal as Sars. Many people have recovered from the flu virus and it is still a mystery why people in Mexico die from it.

The global financial crisis is still unfolding, GM, Chrysler and Ford may face bankruptcy and that means millions of jobs off the table. Weak recovery is expected only in 2010 2Q.

Banks are still not lending, credit crunch is still at its thawing stage.

Property market have reached the peak 6 months ago and are now sliding slowly now. Buying a property now is akin to catching falling knives. And if you are leveraging, it means catching falling knives naked!

Usually when they claimed that it is “10 mins” from town or MRT station, you have to add another 50% margin error. Their estimation is usually grossly misleading.

It doesn’t take rocket science to figure out if that person is trying to earn commission or giving sound investment advice.

In another case, my colleague was persuaded to offload their newly TOP at a loss by their property agent as he claimed that their house has depreciated 20% and banks will demand top up on their depreciated amount. Example, they bought the house at $1m, taking an 80% or $800k loan. Now the property is only worth $800k and the bank is only willing to loan them $640k. Hence they are liable to return $160k, “anytime”.

Again, unless they default on their monthly mortgages, banks do not demand sudden top ups for no good reasons.

I believe there are knowledgeable, good property agents around. But the only way not to get ripped off by agents is really to educate yourself.

Sorry agents, but my money is hard earned and hard to earn.


la papillion said...

Hey bro,

I think you made some mistake in your statement.

"Again, unless they default on their monthly mortgages, banks do demand sudden top ups for no good reasons"

I think you meant do NOT demand sudden top ups :) Quite misleading, haha

Sgbluechip said...

Thanks LP! Corrected it already!