When I was a child my parents had a single storey bungalow sitting on a large plot of land. There was lots of place to run around and play and to plant fruit trees and vegetables. I enjoyed gardening as a child which might be considered unusual.
I took land and space for granted , not realising it was a luxury and not the norm.when I grew up and started working in Kuala Lumpur, I realised the value of land. Small shoe box sized dwellings were being sold and rented out for exorbitant rates.
It did not take me long to realise that I needed to own my own property for two reasons. The first was to have a roof over my own head. The second was as a form of investment as I understood the scarcity of land and the appreciation of value for an asset class that is constantly in demand.
As a young woman in the big city with an entry level salary, I could not afford to rent a house let alone buy one. I started out renting a room which costs me 10% of my monthly salary then. The rest of my salary went for transportation, food,clothing and a rainy day fund.. I had no money for holidays or Amy luxuries. This went on until I got married.
Pooling our resources we managed to buy ourselves a 2 sty link house with a small loan from our parents.
The only reason we could afford the property was because it was sold below market value. It was a house numbered 4 and had a cemetery at the back. On top of it all, it was a leasehold property. All these factors put together made it unattractive to other buyers and the price was reduced sufficiently so we could afford to buy it. We were neither superstitious nor afraid of ghosts.
Some friends and relatives poked fun at us for our choice. But a house is a house and provided a roof over our head.
Our finances were tight and we had to make do with just one car just to stay ahead of the bills. What with a mortgage , childcare, insurances etc we still could not afford holidays. It was tempting to use credit cards but I was determined from day one that I would pay up all bills every month.
So we tightened our belts and hey presto, we managed ….
With prudent spending and increased income,I considered upgrading my house. I thought that a better located property would improve the quality of our lives and provide better schools and co curricular activities for our children.
But in order to afford that we had to sell the existing house first.. Real estate negotiators were engaged to sell the house at a good price.
As expected, some buyers were turned off by the house number and location by the cemetery.
Others expressed interest as the house was in excellent condition and a reasonable size( 22’x 75′).
However, those buyers made offers that were too low for us.
Note: when selling you a property the real estate negotiater tends to downplay the negative aspects of the house i.e location and tenure. However, when you try to the same property the R.E tends to highlight those very same points as a reason the price should be reduced for a buyer who has put in a low price! As a property owner, you should check the value of the property and sell at the value that is a higher or at par with the valuations. If you need to sell quickly then you should reduce the price.
Alternatively , you could consider refinancing your property for much needed cash.However refinancing comes with costs .More about that later.
As I knew the value of my property I held on to it for more than a year from the date I put it on the market. The reason was simple. I was willing to wait until I got a fair value for my property. And I did! The buyer was a born again Christian who was not superstitions nor afraid of possible ghosts in the cemetery. He appreciated the house for what it was- a decent,good property priced fairly.
As I sold it for double my purchase price, I had sufficient money left over after the outstanding loan was paid off to place as a deposit and pay closing fees on my ne have defaulted on any loans or are a poor paymaster.you are likely to be told that you will be eligible for 70-85% of the value of the property you are buying.However, you should ask for a written letter from the bank that states given your income and commitments, you are available for X amount of loan that requires a monthly mortgage of XX for the stated number of years. That way you can calculate the down payment you have to fork out and the property that you can actually buy. Also take the time to shop for a bank loan that offers the best interest rates and other terms.In short, before you shop for a property, shop for a loan.
Armed with the knowledge and confidence that you can buy a property, shop for something in your preferred location. if it is out of your reach look further away.When you find something that you like ,make an offer and negotiate the price. you do not need to hesitate as you know what you want and how much you can afford. In Malaysia, i have come across property buyers who offer a ridiculously low price hoping that the owner is desperate enough to sell or has no idea of his property value. That may work occasionally but not all the time.
In most cases, property owners have the holding power. They will consider refinancing before reducing the price. They may even wait for the property to be auctioned of by their lending bank before reducing the price,not realizing that it is to their detriment to do so.
More about auction properties later.
If the price is fair, you will succeed in purchasing it. The real estate negotiator and your lawyer will help you with the next steps.