Should "developer selling price" be used as a reference now?

My friends and I are doing house hunting now and when compared notes, we found that very so often the developer selling psf is used as a reference. Understanding that there are flippers or original owner who are trying to cash out.. but when the property market was booming developers priced their launches so high they have money coming out of their ears.. and flippers or first owners were willing to pay those sky-high psf prices.. hence we think using developer selling psf is not relevant.

It is definitely true that a big majority of the sellers now are not realistic.. you can be making 100 calls today and all 100 will most likely still be quoting sky-high prices. We believe the strategy is to counter this is to ask really low and see who blinks first :)

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Originally Posted by SL

My friends and I are doing house hunting now and when compared notes, we found that very so often the developer selling psf is used as a reference. Understanding that there are flippers or original owner who are trying to cash out.. but when the property market was booming developers priced their launches so high they have money coming out of their ears.. and flippers or first owners were willing to pay those sky-high psf prices.. hence we think using developer selling psf is not relevant.

It is definitely true that a big majority of the sellers now are not realistic.. you can be making 100 calls today and all 100 will most likely still be quoting sky-high prices. We believe the strategy is to counter this is to ask really low and see who blinks first :)

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1. Developer price is not a good barometer, as you have figured. Stick to valuer's price or below - as this is bear market; in fact valuer's pricing keeps coming down as time goes by.

2. Why bother - especially if u do not have a timeline to get a unit? Wait till the banks / developers call them to pay up and collect keys...then the bottom can be found.

3. In the meantime, DO MORE RESEARCH!!!! Not directed at u per se, but a general advice. Go down, take a look at the development, search for unit design, facing, etc. etc. Google is yr friend

In negotiation strategies, that is call Anchoring the buyer's target price.

You frame the buyer's mind to accept that Developer price is the reference price and then negotiate from there on (up or down). In this way, the seller will never get a losing proposition. Buying at developer price means you are accepting that the developer should never lose money on the project because he bought the land at a premium(in 2007 example) and you the buyer should absorb the developer's folly.

Whereas, for the buyer, it is more prudent to have an idea of how much it is worth before even going to negotiate.

I would say you should look at surrounding properties and comparables properties and then set a value (psf). That way, you will moderate the actual price because of variance in development costs caused by developers who bought land cheap(2003) and develoeprs who bought land expensive(2007). Also, by comparing, you will also have prices by sellers who might have bought it cheap(2003) and who bought it expensive(2007).

Currently the main criteria buyers need to note is how much the banks value the property(market value) and how much will the banks lend u through their internal valuation .

Banks have very strict profile assessment since 2nd half 2008 and getting sticker .
Min 200K yearly income
Max loan 70% of the "market value "
Married and dual income

Lately been seeing ads quoting "below developer's selling price'. LOL

:beats-me-man:

A developer maybe not. Developers then should be reasonable.

I remember some director of a property firm advised people to offer 5-8% lower than the asking price.

I think we should all do that.

Maybe we should also ask if seller is throwing in renovation as well, which BT cited as an example yesterday.

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Originally Posted by firec

I remember some director of a property firm advised people to offer 5-8% lower than the asking price.

I think we should all do that.

Maybe we should also ask if seller is throwing in renovation as well, which BT cited as an example yesterday.

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If the asking price is the developer's asking price, would you be asking 5-8% below? you will kenna frame to accept developer asking price as indicative of fair price and thus when you get discount form it, you think you got a bargain.

What if you look around the surrounding and comparables and noticed that people are selling at least 10% off the developer price, do you grab the unit or should you negotiate 5-10% lower than asking price? which means it is already 20% off the developer's asking price.

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Originally Posted by focus

What if you look around the surrounding and comparables and noticed that people are selling at least 10% off the developer price, do you grab the unit or should you negotiate 5-10% lower than asking price? which means it is already 20% off the developer's asking price.

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It depends. For surrounding units, I can move in immediately. For uncompleted projects, there are uncertainties - economy worsening, developer going bust, better projects coming up, URA & LTA changes to the vicinity - even though I can use DPS or some form of pseudo-DPS payment structure.

So, generally for uncompleted projects, given the current market conditions, I would only pay prices thats lower than prices of surrounding completed units. But it's just me.

That was what I was saying.. We should never take the developer's price as the price to negotiate from.