A property “bull run” happens when demand exceeds supply, leading to more buyers in the market than sellers for a sustained period. This is an ideal scenario for homeowners and property agents as buyers compete to offer higher prices.
Malaysia, however, is at the opposite end of a spectrum as supply far exceeds demand. Amid a weakened local economy with high competition among sellers and oversupply, trying to sell off a property can be a frustrating experience.
Here are some reasons Malaysian homeowners struggle to sell their property.
1. Oversupply and the pandemic
Data by the National Property Information Centre indicated that 30,290 completed houses remained unsold in the primary market, with a value of RM19.75 billion, as of the third quarter of last year.
Due to oversupply there are far more properties for sale than there are buyers. Hence, prospective buyers have the luxury of choice, and homeowners face greater competition in selling off their property in the subsale market.
Throw in the economic challenges brought on by the pandemic and it makes an already bad situation even worse for sellers. Pay cuts and job losses mean many Malaysians would put off plans to purchase a home.
Homeowners also need to keep updated on the market value of surrounding properties and upcoming developments. Newly completed projects might drive down the prices of older high-rises in the vicinity.
On a positive note, a nationwide overhang might not necessarily weigh down a specific area or building where there is demand. For example, asking prices in areas such as Jalan Ampang and Kenny Hills have recorded the biggest on-quarter growth, according to PropertyGuru.
Asking prices in four key states have also shown signs of recovery; however, pricing a property for sale would ultimately depend on the market value of similar properties in the area.
2. Unrealistic asking prices
A property can be sold quickly if the price is right, as pricing is the most important factor within the homeowner’s control.
Homeowners often demand unrealistic asking prices due to an emotional attachment to their property, outstanding mortgage commitments, or failure to understand current market value.
Properties that are priced much higher than similar units do not generate interest and might not match the valuation price for a bank loan. This means, even in the unlikely event a buyer is interested, he or she would need to fork out an additional sum between the valuation and the agreed-upon selling price.
A recommended step is to pay for a valuation report by a registered valuer. Then, owners can decide to try selling at or just below valuation for a quick sale.
In a fiercely competitive area, owners have to undercut similar units in the building or vicinity, and adjust asking prices in response to the number of enquiries received.
If realistic asking prices are unacceptable, perhaps now is not the ideal time to sell the property.
3. Unappealing property
There is only so low an asking price a homeowner can go before the prospect of selling is no longer viable. In which case, the next best option is to add value and appeal to gain an edge over similar-priced units.
Attractive images go a long way towards generating enquiries on property portals, whereas potential buyers might be put off by cluttered and messy pictures.
Trying to sell a rundown property also leaves more room for buyers to haggle on price and could lead to a much lower offer than expected.
Purchasing a home is often an emotional decision, and creating a positive viewing experience for buyers is far likely to lead to a sale. However, a common misconception is that spending vast amounts on furnishings and renovations adds huge value to the property.
At most, valuation might only factor in half the cost of furnishing and renovation. So focus on cosmetic changes that are relatively light on the wallet but carry a significant impact such as adding a fresh coat of paint, patching up cracks, and replacing broken tiles.
4. Ineffective property agents
The most effective strategy would be to hire property agents who focus on a particular area or building, as he or she would be familiar with the property and might be able to educate sellers on market conditions.
Property agents are unable to provide a valuation of a property – this can only be done by professional valuers – but they could recommend a more realistic asking price based on similar listings as well as transacted prices.
The strategy an agent employs is also vital given that listings on property portals can involve considerable costs, especially for highly competitive areas such as Mont Kiara, where agents might need to pay for top listings of the property.
Ultimately, homeowners must decide whether hiring one or more agents is the best way to sell off their property expediently.
This article was written by Vigneswar Rajasurian of PropertyAdvisor.my, Malaysia’s most comprehensive source of property data, property analytics and insights.