:(

Not found.

Rent Or Buy? Here’s Cheng’s (BIASED!) Opinion :)

Photo of Dave during one of our family reunions in Fuzhou, China

Recently I have received an email from a distant relative who came to know that I started a career as a real estate agent in Sydney (and channeling investments to Kuala Lumpur, Malaysia). Here’s the message from Dave Hui from Hong Kong -

Cheng, my parents have been pushing me to buy an apartment for the past two months. They are pretty conservative, I must say. Shall I take the plunge? I can’t really afford to buy, and am renting now in Causeway Bay (a room). What do you think?

Well, here’s my attempt to answer Dave -

Indeed, these days, more and more options are presented to potential home buyers. There are a lot of good choices, houses, apartments, condos like one from KLCC (where I am specializing in). While renting seems like a very temporary option for most people, an outright home purchase can be too heavy for some, especially those who are not earning enough to pay for the high monthly mortgage fees. If Dave, neither of these two options work, there’s always the rent-to-own or lease option for everyone else.

rent to own sign

Can you have your cake and eat it too?

But is it really for everyone else? The rent-to-own option, basically and as its name implies, allows for you to pay in a monthly rent where a portion of the rent fee goes to the equity of the house. That said, your future down payment will likely be in a lesser amount compared to when you purchase a house outright. Think about that, Dave!

Good and Bad Sides… Here’s What To Know

But as with anything, there are good sides and bad sides to it (here’s a good guide from RealtyStore which goes into this topic with depth). And it is with careful consideration that you go through each of its pros and cons before jumping into it. For instance, depending on your agreement with the home seller, you may have to pay for the original price tag of the house, no matter what the market trends are.

Dave, you’d be lucky if the market is bad for buyers then you’d get the house much, much cheaper, but you wouldn’t very much like it if everything else is cheap and you stay with its non-fair market price. And even when you do decide to bail out of the lease option at the end of the contract duration, there is no way you can get back the extra cash you put on the rentals.

So before you dot the I’s and line the t’s on your rent to own contract, here are some pros and cons to the less popular lease option:

Rent to Own sign

Rent to own houses.

PROS

  • You get a much longer time to save up for a house without fear of losing it before you can make enough for the down payment.
  • You get to actually try out the house and know how it feels to actually live there before you pay for it to become your own.
  • Your monthly rents don’t go to waste as it helps you get closer to owning the house month after month.
  • If the house’s value appreciates overtime, you don’t have to worry about having to pay it in its appreciated value but only in its original outdated price tag.

CONS

  • The house might depreciate in value but you’d still have to pay for it in its much higher original price.
  • You may fall out of love with the house and bailing out of it meant not getting back your cash.
  • You’d have to pay a much higher rent, and you have very little control on how much of it would go to your lease option fund.
  • You’ll lose everything you’ve invested on it on your monthly fee if you start losing the capacity to pay for it, without the option for refinancing since the contract is only between you and the homeowner.

This is my incidentally my first post and I hope everyone will like it (Dave loved it). Please come back often!

Thanks,
Cheng

Quick Updates From The Road

Alright, I am blogging here from Kuala Lumpur with my good friend Simon Carpenter, and he is the guru of property portals. He has been asking me if I’d like to help him build up a new property site to take on the likes of REA, and I thought he was crazy. But then he convinced me that its a workable business, and there’s a very good chance to get acquired, too.

KLCC

Skyline of Kuala Lumpur. Picture taken from Bangsar.

I mean, how hard can it be? Build up a property classifieds site (I heard you can outsource rather cheaply to India these days), then email out to agents and offer them free listings to build up a kick butt database. Once we have the listings, then we rely on viral marketing to spread the word around, and home buyers will then flock to us. Once we have the traffic, we will then start charging to make money. Very possible.

A billion bucks, here I come! Simon Carpenter, you’re da man!

Garage Decadence: Cheng’s Bulletproof Negotiation (CBN) Unveiled!

Alright, it’s “Garage Decadence” Monday again, and it’s time for a “Cheng article”. :)

One of the first things that my mentor (in real estate) taught me (when I started out as a negotiator – ERA in Singapore) is that every home owner selling his home knows that somewhere between selling and sold is a negotiation. No home buyer would ever pass up a chance to get the house at a lower price than originally posted and it is the goal of the home seller to keep it as close to his original selling price as possible. So much truth in that statement!

If you’re on the bargaining, buying end of the deal, your goal is to trim down as much off that price as possible. And it’s no easy feat! Even the greatest negotiators in any industry in business know that it takes more than just sweet lips to push through with a good bargain. “You have to be part persuasive, part persistent, and a little bit of everything else in between,” my mentor told me. :)

Cheng’s Bulletproof Negotiation (CBN) – Your Deadliest Weapon!

Just last Wednesday my long time client Steven Lee from Ampang told me, “So I  was buying this unit at Hampshire Park in KLCC for about RM780 per square feet and I wanted to get a good deal. I used your Bulletproof Negotiation techniques and won the deal at RM750 per square feet! Thanks Cheng!” Music to my ears, Steve, music to my ears indeed. :)

This is supposed to be the topic of my book (Cheng’s Bulletproof Negotiation For Real Estate), but here’s four techniques you can use immediately to get a good deal -

TECHNIQUE #1: Arm yourself with comparables. You’d have a great advantage over your home seller if you know what to compare the house with. Know which similar houses in the neighborhood and close by have been sold at a much lower price than the house is put up for. This is one way of persuading (backing them up against the wall, really) the home owner that there’s not a reason why his house should be more expensive than the others you’ve compared it with.

TECHNIQUE #2: Don’t hesitate to ask and show him reasons why his house should be lower, but don’t give a below-the-belt kind of remark. Persuade him, yes; insult him, no. As I’ve mentioned earlier, home sellers are well aware that there will be some negotiation involved. But always know that you have to keep it at a professional tone, otherwise he’ll take offense and won’t consider you as a serious buyer (and will only rightfully reject your offer). Just ask, nicely, professionally.

TECHNIQUE #3: Don’t sound desperate. Instead of begging and pleading to the home seller, try a less attached and more nonchalant tone. Don’t make your offers and negotiations sound like rejecting your offer would be your loss; make it sound like it’s his loss. This is where the comparables would be extra, extra helpful. It would make you a convincing, serious buyer who knows what he’s looking for and has tons of options. He wants to be your final choice after all. Play a little reverse psychology too, if you may.

TECHNIQUE #4: Be ready with the money and convince him that you are. Be that sure buyer who is right about ready to sign that cheque for the down payment as soon as the seller agrees to your offer. This is one sure sign of  a serious buyer and no home seller would want to let that pass up.

Now finally: don’t hold on too long. Be ready to move out as soon as you realize the need to. Long negotiations forfeit their very purpose. Don’t hold on too long to something that’s not going to budge, lest you risk losing a chance on other homes that are well worth your time and money.

Questions? Just leave me a message here, or contact me. :)

New Romanticism (Or Don’t Short Sell, Bucko!)

Depositphotos_2806800_original-e1360388032445

Being a new romantic, blogging from Sydney indeed has got its advantages; whatever which has happened here WILL happen in Malaysia (specifically, Kuala Lumpur). :)

You see, many Malaysian homeowners facing foreclosure have considered or actually turned towards short selling their homes to counter the impending foreclosure. After all, compared to most other alternatives to short selling, there really isn’t anything as quick as a short sale.

Just last week an investor contacted me about his Soho Suites KLCC foreclosure (which is pretty sad, really). His earlier property at Andaman Penang was also foreclosed. Shame…

You can probably do a short sale when you’re too close to getting your house or unit foreclosed and your behind getting kicked out of your house.

It is also the fastest, seemingly least complex way to avoid getting at least seven years ban on mortgage loans that people who have had their homes foreclosed get. From selling your home on a SHORT SALE (wikipedia definition here), too, you can get away with all the repairs and the maintenance that most home buyers require of their home sellers. After all, most short sale homes are sold as is. (Sitenote: Read 5 Secrets to Effective Negotiation in Home Buying for context).

But is that really well worth it? Or is short selling full of hidden and not so hidden setbacks that you should reconsider before putting your house on a short sale?

Disadvantages…

To give you a different perspective of this option, here are some disadvantages of a short sale:

  • You don’t get to sell your home at your ideal price. In this case, your ideal price would be something that is close to what you still owe your mortgage lender. And that is something that is much, much lower than your house’s fair market value.
  • Your equities will go to waste. All the money that you’ve put in your house will go down the drain in the event of a short sale so there is nothing much that you could get from your home sale.
  • The sale from your house will all go to your lender as payment for your balance and it might not even be enough. Because your house won’t sell for much anymore, whatever you get from selling it might still not be enough to cover whatever you still owe your now unhappy mortgage lender.
  • You have other fees to pay, still. Just like in a regular home sale, there are tons of other fees that the home seller would still have to pay. So it would actually still cost the home owner a lot to get rid of the house and the debt at the mortgage lenders.
  • Your mortgage lender might not let you do a short sale anyway. You have to go through quite a long process of deliberation and convincing your mortgage agent to let you do a short sale. And mind you, they don’t always allow it.
  • You might still get a ban on mortgage loans. A short sale does not always assure a home owner that he can maintain his good credit record. A short sale is almost just as bad as a foreclosure, that some people still get that mortgage loan ban of at least two years. Sure it’s shorter than seven years, but that’s still two years of bad credit record. And should you at all be allowed a mortgage, you are likely to be written under high risk clients, and your interest rates, higher.

So before making a decision to do a short sale, consider these disadvantages. If you need to more advisory, I’ll be able to help! Contact me here. :)

Setting Up The “Corner Shop” – Can You Sell Without An Agent?

Ever since I became an agent, I thought if it would be possible for Malaysians to buy and sell properties without agents. Indeed, in the US, as many a 35% of all transactions are the “For Sale By Owner” (FSBO) variety. However, it’s not honky dory for many FSBO transactions either.

Home-selling is stressful even with an agent’s help. Malaysian home-selling without an agent is likely to be twice or thrice the stress. The only way it can be a little less stressful than it actually is for other FSBO homeowners is if you’re (a) a former real estate agent, (b) a graduate of real estate school, or (c) you follow any of these tips towards a stress-free FSBO experience:

  1. Think about whether this is what you want or not. FSBO is not something for everyone. It takes a lot of work, a lot of patience, and even more work. You have to do more than just home staging and open houses in Petaling Jaya; you have to do the listing, you have to work on making your adverts awesome and attractive enough to be noticed amongst the tons of other homes on the listing. On top of that, you have to make sure that all the paperwork are well cared for and attended to – down to the last bit. Oh, and did I mention having to face every other potential client and their every visit? Yes, including those who have the ‘I’ll-come-whenever-is-convenient-for-me’ kind of customers. Needs quite a lot of thinking doesn’t it?
  2. Read, read, read. Learn, learn, learn. Ignorance may be bliss at some point in our lives, but ignorance is the biggest enemy of FSBO selling. So be informed. Read all sorts of materials, fill yourself with tons of information that concerns real estate marketing because that is your biggest companion in this endeavor of yours. You have to learn everything from pricing your house to competitive marketing strategies on top of home staging techniques. I like going to MPH in MidValley to stock up on real estate books!
  3. Set a budget. It’s much easier to set a budget if you don’t have to do all the marketing-related work. After all, with an agent, you are free from the stresses of having to pay for every ad and every poster. And by doing FSBO, you have no one else to trust but yourself for every little thing. So go ahead and figure out your every little responsibility, do a thorough research on the costs of each, and then set up a realistic budget for them and more importantly: follow them!
  4. Never be too sensitive on the criticism. The very reason why agents mostly forbid the presence of the homeowner during a client visit is because of criticism. When the Malaysian client knows that the owner is at home, his assessment of the house might be a little limited and he won’t be fully comfortable about telling the truth. Also, as owner, you would naturally be a little overprotective about your house and may not take criticism so well. You just can’t have this when you’re selling FSBO. You have to be objective and totally detach yourself from the home since you’d be listening to practically everything that every potential client would have to say about your house.
  5. Be patient. Patience has won more clients for the Malaysian real estate agent more than marketing prowess. So always have tons and tons of patience for the nitpicky, the fickle, the annoying customers; and more importantly, be patient about the waiting time – it might be loooong!

One client of mine tried to sell her Binjai Residency on her own by doing a listing at property portals. She couldn’t get any leads because she was unable to buy credits to blast her way to the top. Fortunately I was able to save the day by helping her advertise, and I managed to sell her Binjai unit in less than six weeks! Kudos to me :)

Cheng :)

Back To Black: The Devil Seller

Home buying, or at least successful home buying, is a lot of patience and hard work, some luck, and tons of attitude – the good ones, of course! No one wants to work with a very difficult client, so naturally, don’t be one! That’s my prerequisite when I work with a client. :)

I once had a client who had wanted to sell of two units: a nice, plush unit at Zehn Bukit Pantai as well as a plush Establishment condo at Bangsar (Jalan Mesui). His attitude really stunk, and I got really fed up that I didn’t want to work with him in the end.

Censored to protect the innocent!

Censored to protect the innocent!

But what makes a buyer a bad buyer, really? How do you constantly check your character and your actions (and more importantly, reactions!) that make you a bad, annoying home buyer whose offer would likely be turned down merely over grounds of being mean and un-nice, or at least be refused all forms of bargaining and thus end up with not a good deal in hand at all?

Attitudes of a bad home buyer

I’ve listed down the attitudes of a bad home buyer with tips on how to avoid being one (or at least react less meanly)?

  1. Don’t be too mean about your comments on the Malaysian house, especially if you’re looking to get a bargain on it. There are ways to euphemize your description; for instance you can say ‘not too complimentary’ instead of saying ‘they’re a total mismatch’. The rules on proper and effective bargaining never included berating each home you’re interested in just to make the owner feel bad about selling it too expensively. Remember, you need them as much as they need you so do not abuse your consumer power. This is especially important if you’re buying FSBO, although even real estate agents selling on the owner’s behalf would likely hate it too.
  2. Don’t be too vocal about your fickleness. Only give your word when you’re 100% sure about the house. Saying “Alright, we’ll be back for it maybe within the weekend to finalize everything; I’m buying the house” half-heartedly and only to kill their hopes in the end is evil. You’re giving false hopes to people who are in dire need of getting their homes sold (or of the agent getting his commission).
  3. The demanding Malaysian home buyer. So you ask, no – DEMAND – your home owner directly or through the agent to do certain stuff for you; you request tons of changes and they happily accommodate you thinking that you are indeed on your way to dotting the I’s and lining the T’s on that purchase contract. Lo and behold, you suddenly back out leaving a very disappointed owner and his agent. Boy oh boy, you’d be lucky if you haven’t yet signed on anything that could cost you a lawsuit! But trust me on this: you’ve likely gained enmity!
  4. The bargaining Malaysian non-buyer. So you ask, and ask and ask and ask, and then bargain endlessly and aimlessly but you know that no matter how low your home buyer goes, you’re still not going to afford it. There are bargains that are probable; and there are those that would be a great example of miracle to actually happen. If you know it’s not within your budget, if you know your pre-approved mortgage won’t have you afford it (not in a million years!), don’t waste other people’s precious time in your bid to become the best haggler on earth.

Are you guilty of any of these? Be honest! :)

PS: I have asked my prospective clients to read this before engaging me… and as a result, I get better quality clients. Win-win for all!