How to spot undervalued properties?

Reports are saying that it is a buyers’ market. Resale prices are at its lowest point and resale transactions have dropped compared to the last few years.

So how can you take this opportunity to spot and buy these undervalued properties? Here are 4 ways you can spot undervalued properties.

1. Decide on the budget

The first and most important aspect of any purchase you make, either small or big, is the budget. So how do you decide on the budget? You will need to assess how much cash and CPF you have.

For bank loans, you will need to prepare at least 5% in cash and 20% in CPF. The rest can be paid through a bank loan.

For HDB loan, you will need 10% CPF and the rest can be paid through a HDB loan. Do note also there are miscellaneous cost involved such as legal fees and Stamp duties such as Buyer’s Stamp duty and Additional Buyer’s Stamp duty.

For different types of property, there is actually a limit imposed by the MAS on how much money you can borrow when you take out a loan. For HDB, a maximum of 30% of your gross monthly income can be used to repay your loan. For private properties such as condo and landed properties, a maximum of 60% of your gross monthly income can be used to repay your loan.

2. Decide on the area you want to buy

Next, you will need to decide on the location of the property. The decision must be based on what you want to get out from this property.

It is preferable to get homes that are based on your needs such as being near your parents or your children’s school. The future is uncertain. But at least if you buy a home that is based on your needs, you can justify it.

For the more risk adverse, there are some areas in Singapore that are undergoing intensive transformations. You can visit URA to learn more. You can also choose properties that are near to future MRT lines such as the Thomson–East Coast Line (TEL).

Streamline your decision by deciding on the area you want to live in.

3. Use property search engines

PropertyGuru, SRX and 99.co are some of the property search engines that help you spot undervalued properties. I have personally used them myself to help my clients check whether it is a good property to buy.

For PropertyGuru, they have been the longest-running among the 3 websites, hence, they have the most property listings. You have more choices there and the property prices are more competitive. They have a feature called ‘Pricing Insights’, which will show you the past transaction prices and also the various trends such as Capital Gain over 8 years.

For SRX, it has a very cool interface. They have a free feature for everyone to use called the X-value. This is a proprietary feature, which allows home owners to have a rough gauge on the value of their home. For home buyers, we can use this tool to gauge how much we should pay for the property. The X-value tools sets SRX apart from its competitors. I highly recommend you check your own home value on SRX Property Tracker via http://srx.sg/4pn8N

For 99.co, they too have have the past transaction prices of the properties. The difference when searching a property in a certain area, you can actually “draw” on the interactive map for more accurate property listings.

4. Go for seminars

I strongly believe in this saying, “the more you learn, the more you earn.” There are many free seminars out there that provide property market insights. You can follow my page to get an update on the seminars that will be available every week. If you are serious about investing or want to learn more, drop by to some of the seminars to learn. I will promise you that there will not be any selling done at the seminar.

There you have it, my 4 tips on how to spot undervalued properties. Hope this helps!