Your home is likely to be one of the most expensive assets one will ever own in your lifetime – an asset that will form a significant portion of your net worth. However, you can only extract its value when the property is sold. Thus, many clients approach the PropertyLimBrothers team with excitement to sell their homes so that they can quickly move on to the next chapter of their lives, be it in terms of upgrading to a better home or downsizing to reduce financial commitment.
That being said, we would always advise our clients of the need to take a few steps back and figure out a few things first before committing to the sales process.
In today’s piece, we will be addressing five considerations that you have to take note of before you make the critical decision to sell your home. Without further ado, let us jump right into the first factor:
#1 Purpose of Selling Your Home
With all the logistics involved in packing and moving, the selling process could get exhausting for some. You will need to crystalise the purpose of selling your home strongly in your mind, as this will be your primary driving motivation amidst the selling process. Some of the meaningful reasons that we have understood from our clients include:
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to upgrade to a bigger home as their children are growing up
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to stay closer to their ageing parents
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to upgrade to the private property segment
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to unlock the value of the home for reinvestment into a better-performing property
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to realise their capital gains
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to right-size to a smaller home and secure the monies for retirement
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to have a larger and more comfortable living space
Of course, this list is not exhaustive. Whatever your purpose is – do not lose sight of it, especially if the sales process takes longer than expected.
#2 Financing
This step is crucial as you must be aware of your ability to finance your next property purchase.
To start, you could study the recent transactions for a similar unit at your location to get an idea of how much you can fetch for your current home. One source you can refer to for the most recent HDB resale transactions is the HDB Map Services. While squarefoot.com.sg makes an excellent choice for recent private property transactions, much of the valuable tools may be hidden behind a paywall.
Data courtesy HDB Map Services
Besides the recent transactions, you need to consider other factors that might affect your eventual selling price of your property, such as the overall market sentiment, the property’s floor level, interior renovation, and its remaining lease. Other costs to consider include legal fees, agent’s commissions and the relevant stamp duties payable.
At this stage, you should be able to derive a pretty good estimate of the proceeds that you will receive upon the sale of your property, and whether there is a need to refund your CPF OA for the accrued interest built up. This will then give you an idea of how much you would have available for your next home purchase. Armed with these figures, you will be more confident selling your existing home to prepare for your next property purchase.
#3 Plan Your Next Property Purchase
Have you thought about your next home and the factors that are important to you (e.g. type of amenities, location, space requirements etc.)? It would also be good to frame these factors in order of importance according to your needs. There have been cases where homeowners sell their home hastily without thinking carefully about their next place of residence. Some sellers have even fallen into the stressful situation of finding a place of residence within a short span of time. Before selling your existing home, it could thus be beneficial for you to start looking for your next property, have a discussion with your loved ones, and keep a list of potential properties for your next home.
At this stage, if you’re unsure how you should plan your next property purchase to ensure it holds and appreciates in value over time, do check in with us, as our proprietary MOAT analysis can be used to assist you in finding the right home for you!
At this stage, we also recommend you get an In-Principle Approval (IPA) from one or two banks of your choice, giving yourself better clarity on the budget that you can work with to purchase your next home.
#4 Timeline Planning
Timeline planning is the process of setting the groundwork in your sales & purchase journey such that it ensures that you can move from your current home to your next home with seamless ease. If not done properly, you might find yourself temporarily without a place to stay, and have to rent a unit somewhere first while waiting to move into your next home.
Successful planning requires taking into account:
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legal completion date of the selling and buying process
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negotiation with the agents involved, the buyer of your unit & the seller of your next home
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external factors such as COVID-19 restrictions, Renovation timeline etc.
The PropertyLimBrothers team has helped many clients smoothly transition from their existing home to the next. Do feel free to contact us should you need further assistance in this aspect.
#5 Engaging an Exclusive Agent or Multiple Agents?
There is a belief that the more agents marketing your unit, the merrier it is. However, the underlying issue here is that the agents will be competing to sell the unit first and could likely push you to sell quickly (at the cost of a lower selling price for your unit) just to beat the other agents to close the deal.
With more than one sales agent, some buyers will also be savvy enough to contact the other agents if one agent turns down their offer. Indirectly, this means that having multiple agents is, in fact, in the interest of the buyers instead of you – the seller.
This is why engaging one exclusive agent to represent you could be the better option. That exclusive agent will be in control of the selling negotiations and will work towards fetching the highest price for you.
Closing Thoughts
It is absolutely essential for you to be aware of the various pitfalls that could come alongside selling your home. It can be a very smooth process with the proper guidance and support, but on the flip side, it can also be a harrowing experience if you do not possess the correct know-how.
We hope this article has given you some insights into what you should consider before selling your home. The PLB team has amassed years of experience through selling multiple properties and securing the best deals for our clients. Should you need professional advice, feel free to drop us a message here, and we will be happy to help you.
Take care, and keep a lookout for our next article!
