I first met Mr & Mrs Senthil back in 2012. Mr Senthil was a civil servant while Mrs Senthil was working in a bank.
They were initially staying in a 3-room HDB flat in Circuit Road.
Back then, they met me as an interested buyer for an EA flat in Sengkang I was marketing at that time.
They always dreamt of staying in a bigger property but was still doubtful and unsure of what to do.
When we first met, they haven’t even started marketing his 3-room flat!
In this case, I gained their trust – I helped them sell their flat first before buying the EA.
It was a smooth transition to the EA as we planned the timeline very carefully to minimize any disruptions or inconveniences.
Selling their Executive Apartment Flat in 2017
After hitting the 5-year MOP on their EA, they wanted to make the next step of upgrading to a private property.
Being a very conservative couple, they wanted a less risky approach – so we decided to market the EA flat first before closing on the private property.
Now, we faced this challenge: Selling a bigger flat is actually much more difficult compared to smaller flat.
This is because of the higher price tag means there will always be a smaller pool of buyers available. We were also dealing with a slow market.
When they bought their EA back in 2012, they bought it at a price of $631K.
In 2017, the price that we sold it at was at $616K – it was sold at a loss of about $15K.
Now why was there a loss? Was I such a lousy agent? Or were they other bigger factors at play?
These were the factors that influenced the price:
- Older flat meant a shorter lease remaining. Buyers were getting very sensitive at the remaining lease of the HDB flat.
- HDB resale price index was declining
- Slow market with plenty of HDB flats available for sale
They also decided to not keep the flat due to
- Additional Buyers Stamp Duty (ABSD)
- Challenges to rent out the flat due to ethnic quota restrictions
Bought their Private Condo in 2017
After selling off their EA, they bought their next property – a 3-bedder condo at $900K in 2017.
It is interesting to take note of the private condo’s prices:
- In 2012 – it was selling at $1.01 million
- In 2017 – it was selling at $900K
- Now in 2019 – similar units has transacted at $936K
Had Mr Senthil immediately bought a condo back in 2012 after he sold off his 3-room HDB flat – it would have been too much of a financial stretch.
By doing a progressive upgrade from HDB to an EA first – it helped to lengthen his runway and ensured his finances were secured in a prudent manner.
At the same time, they now own a condo which:
- has appreciated better than their previous HDB flat
- free of ethnic quotas and restrictions
- not subjected to a 5-year Minimum Occupation Period
- able to be sold anytime if they wished to (but will be subjected to SSD that is applicable within the first 3 years)
Reflections & Learning Points
They have 2 young children in primary school so it was essential we guided the upgrading process in a way that will not burden his finances.
This process also positioned him to buy the resale condo of his dreams at a cheaper price.
The takeaway from this – your goals can be achieved with careful planning.
With proper financial guidance, you will be able to gradually upgrade progressively to grow your wealth and upgrade to a better standard of living.