It all comes down to price

Condo sellers taking a realistic approach

NINA SUEBSUKCHAROEN

Condominium sellers should not lose heart even though market sentiment has taken a hit what with bombings, political uncertainty, the Bank of Thailand's currency restrictions and imminent foreign business ownership curbs weighing on the market.

Ian Soo, managing director of Hamptons Property, says these recent developments have rocked a market that was already suffering from an oversupply. And while they have not changed people's desire to own or sell property, it is becoming apparent that an increasing number are more willing to sell at realistic prices.

Although only a few weeks of this year have passed, Hamptons has noted an increase in the number of serious sellers who are more willing to listen to an agent's advice rather than try to sell their properties at a predetermined price.

There a few key steps that a condo owner should take to ensure that his or her unit gets sold with Mr Soo singling out presentation as vital.

"The whole thing is about presentation. When someone goes into a place they are thinking, 'I want this to be my home or I want to rent it out.' What is the tenant going to feel when he or she walks in?"

The most basic thing is to give the place a good cleaning. "Now that sounds totally obvious, right? But there are a large number of units on the market that have been left empty and dusty.

"One thing that will kill any interest, especially if a woman is present, are dead cockroaches lying somewhere in one of the bedrooms. That is definitely a no-no. Make sure there aren't any insects _ get it sprayed every couple of months."

While new or recently built condominiums usually have attractive decoration with good furniture and flat-screen TV. Some of the older units have really ancient furniture. Mr Soo's advice is to take worn-out pieces out rather than leave them in because they are more of a negative than a positive point. "Just take it out, people aren't prepared to pay for that sort of a thing anyway _ best to sell without it."

What can help an older unit is the placing of a couple of attractive pieces of furniture because this will make a big difference. "'It's an older building but, okay, maybe I can create a nice feeling if I put a nice rug in there and a couple of nice pieces of furniture. These things help."

If the unit has a good balcony, sellers could put plants there, which doesn't cost much at all.

That done, one moves to the most important issue, which is pricing. Mr Soo pointed out that realistically, in order to sell something quickly, it would have to be at the market price or below.

Some might wonder what the market price is and on this Mr Soo cautioned that one should not work it out by looking at the classified section of a newspaper or base it on what a friend of a friend sold a similar unit for.

"The advertised prices are not the selling prices, so just because you see unit A advertised for a certain amount and you have a similar unit, it doesn't mean that you can ask the same amount.

"Sometimes there's chronic overpricing in certain places where properties are advertised. For me personally, it's immensely frustrating because it makes our job really difficult."

The best way is to take an agent's advice on this because obviously buyers have a lot of choice.

There are also basically three taxes for such transactions with the first being the transfer fee, which is 2% of the land appraisal value. Then if the property has been held for less than five years, a specific business tax applies, at 3.3% of the higher of the appraisal value or the selling price, but basically it is always the selling price.

"Now if they have held it for more than five years they have to pay stamp duty which is 0.5% of the higher of the appraisal value or the selling price."

Finally there is withholding tax. Mr Soo says the formula is a little complicated but it typically works out to be between 1% and 1.5% of the selling price.

The buyer and seller normally split the transfer fee with the seller paying the rest including the agent's commission.

The role of the agent is also extremely important because most agents expect sole agency rights over properties. Selection is basically by word of mouth or recommendation by friends or family members.

"A good agent will have a good website or strong marketing in the Bangkok Post or other media.

"A good agent will also have a large client base, clients in hand to whom they can introduce a property immediately, and they should be able to show you a marketing plan."

Mr Soo added that the key issue is how much an agent is going to spend on marketing a unit. As there are so many properties on the market, agents are typically choosy about what they spend money on, so units that are sensibly priced will top the list.

"Most important of all, a good agent will be able to value the property accurately," he says. "Ask them how they came up with the valuation. Some agents just take a figure out of the air and there is no basis or rationale for that price. Ask the agent how they came up with that price.

"And a good agent will also keep in touch with you regularly, let you know what has been done, what's the feedback, what the future course of action should be if it hasn't been sold already."

Once a unit has been sold, the focus turns to the documents that have to be presented to the Lands Department before the property can be transferred.

Aside from a copy of the title deed or the original if it is in your possession, sellers have to get a debt-free letter from the office of the condominium building. Foreign sellers are also required to produce a document ascertaining that the unit is within the 49% allowed for foreign ownership.

"If I had to put in order which are the most important, a good agent of course is very important, but price will ultimately determine the time-frame," says Mr Soo.

"There will be a price _ either you will get a certain amount of interest or a lot of interest _ and there will be a price above which you won't get any interest."

Bangkok Post
Wednesday January 31, 2007