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  • Writer's pictureAaron Lin

The Secret to Comparing Property VS Property. Are You Comparing Property Correctly?

Summary


Comparing properties with vastly different characteristics is a common mistake among potential buyers.


A fair comparison can only be made between properties that are roughly equivalent in terms of their broad features, as in the case of comparing a resale flat with another resale flat of a similar age.


Considering the relative features of properties helps us to determine the fair value of a property.


Article

Many buyers tend to make unfair comparisons between properties. Let us take the example of a newly launched property that costs S$1600 psf and a resale property that costs S$1300 psf. While it might be tempting to conclude that the resale property is more affordable, such a conclusion is invalid because they were two different types of properties, to begin with.


Before analysing properties, we should level the playing field between them and determine their respective fair values. A fair value takes into account the different features of properties, such as their ages and locations.


Sellers are less likely to make unfair comparisons between properties since they would usually refer to the market price of similar properties within their area. On the other hand, buyers are inclined to question how reasonable property prices are albeit without taking note of the features that distinguish them from one another. Hence, it is important to determine the fair value of properties correctly.





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