Today, the cost of living continues to rise across the globe. Meanwhile, salaries often stay exactly the same. This leaves many young millennials stressed about their financial future. Because of this, hearing about a discounted house makes some of you instantly excited. But wait, do not rush into purchasing a property just because a flyer […]
Today, the cost of living continues to rise across the globe. Meanwhile, salaries often stay exactly the same. This leaves many young millennials stressed about their financial future. Because of this, hearing about a discounted house makes some of you instantly excited.
But wait, do not rush into purchasing a property just because a flyer says it is “cheap.” Many young buyers make huge mistakes because they are too eager to secure a deal. Eventually, they get trapped buying a house that is actually overpriced!
If your ultimate goal is to buy below market value property, you have landed in the perfect place. In this article, we will share premium knowledge in a very simple, relaxed way. We will dissect how to know if a house is a true bargain or just a clever marketing trick. Sit back, grab your notebook, and let us begin this exciting journey!
Before we dive deeper, you must first understand what this popular term actually means. To simply put it, when you buy below market value property, you are purchasing a house at a price lower than its official bank valuation.
The valuation is an official estimate made by a licensed valuer or a commercial bank. They look at current market trends to determine what the property is truly worth. Let us look at a simple example to make this super clear. Imagine the current market value for a nice apartment in Johor is RM400,000.
However, the owner wants to sell it to you for only RM330,000. They are giving this discount because they desperately need cash right now. In this scenario, you successfully buy below market value property. You have instantly saved RM70,000 on paper! For a smart buyer, this situation is an absolute goldmine. You do not just get an asset at a massive discount.
You also have the potential to get a “cashback” scheme when you apply for your bank loan. This extra cash can be used for amazing home renovations.
You might be wondering why anyone in their right mind would sell their asset for less than it is worth. The answer usually comes down to personal distress. Sometimes, owners face sudden and severe financial problems. They might have lost their jobs or business income unexpectedly.
Other times, the owner might be relocating to another country for work. They simply do not have the time to wait for a standard buyer. Divorce cases are also a very common reason for cheap property sales. Both parties just want to liquidate the asset quickly and split the cash.
Finally, the house might be facing an auction because the owner stopped paying the bank. If you find these motivated sellers, your chances to buy below market value property skyrocket.
How do you confidently know a house is priced below the market? The method of checking is completely different depending on the type of unit you want to buy. We have divided this into three main categories. This will ensure you do not get a headache while doing your research.
This is the easiest category for you to find cheap and discounted units. Why is that?
Because the seller is an individual human being (the original owner). Human beings have all sorts of unpredictable behaviors and life problems. When you want to buy below market value property in the subsale market, look at actual transaction prices. Do not blindly believe what the friendly neighbor tells you about property prices.
You need to check the real sales data from the past few months. You can refer to official government data portals to see the most accurate transaction prices in that area.
Always contact a bank valuer before you pay any booking fees. Ask your real estate agent or directly ask a bank officer to do a pre-valuation check. Give them the full address of the unit. The bank will then tell you the maximum value they can lend you.
Sometimes, there are housing projects that are fully built but still have unsold units. The property developer hates keeping old stock. This is because their holding costs and maintenance fees are very high.
Look out for massive clearance sale campaigns by these developers. Developers will offer huge price cuts, high cash rebates, or free furniture packages to clear their remaining balance.
Compare these prices with the launch prices of their next building phases. If Phase 1 (newly completed) is sold at RM450,000, while Phase 2 (under construction) starts from RM550,000, you have found a winner.
This means the Phase 1 unit is considered cheap and highly worth it. This is a great strategy to buy below market value property straight from a developer.
Buying a house that is not yet built carries some risks. However, if you use the right strategy, you can grab an amazing early price. This price will be very rewarding before the market value naturally increases upon completion. Always try to buy during the “Early Bird” phase.
Developers usually give the cheapest possible prices during their soft launch day. This is the absolute best time to book a unit. You must also analyze the prices of surrounding competitors. If a new project offers a price of RM500 per square foot (PSF), but a similar completed project next door is hitting RM650 PSF, that is a huge signal. You have just found a highly potential project.
You must never be lazy when it comes to basic mathematics. If you are lazy, you will easily get scammed by bad agents. The most powerful way to know the fair price of an area is to find the Median Price. The median is the middle value after you arrange all the price data in ascending order.
Why do we use the median instead of the average? Because the average is easily distorted if there are one or two houses priced extremely high. The median reflects the true reality of the property market much better. Let us do a very simple math simulation together.
Imagine there are 5 single-storey terrace houses sold in your local town last year:
If we use the average formula, you will get RM334,000. But if you look closely, the majority of the houses are sold around the early RM300k mark.
House E makes the average super high just because it is a corner lot. Therefore, we take the middle value (Median), which is RM310,000.
If an owner wants to sell House F (same type as A, B, C, and D) for RM260,000, that is confirmed to be a great deal. You can now confidently prepare your booking money to buy below market value property!
In this modern era, everything is at your fingertips. You no longer need to wander the streets under the hot sun just to find “House For Sale” banners. You can simply use major online platforms to conduct your deep market research. The basic steps are very straightforward.
First, open the property portal. Next, filter the location and the property type. Then, sort by the lowest price and calculate the average PSF. Here is how you can optimize your search on different portals to buy below market value property.
PropertyGuru has a market analysis function that is very user-friendly for newbie millennials. Look at their ‘Price Insights’ section. This platform will show you a graph indicating whether the prices in that area are currently going up or down.
Compare several listings from different agents for the exact same unit. Sometimes, a specific agent puts a cheaper price because their client truly wants to let it go immediately.
iProperty is fantastic for you to look at historical price trends and past transaction data. Use their transaction data feature to see the actual selling prices of real estate. Filter your search by tenure type (Freehold or Leasehold).
This is crucial because these two types have a very significant price gap. Look at the price per square foot (PSF) carefully. Always look for the unit that lists the lowest PSF price within the same building or neighborhood.
Mudah.my is famously known as a goldmine for direct owners, rather than just property agents. Set your search filter directly to ‘Private Seller’ or ‘Owner’. Direct owners usually do not know how to mark up prices as high as professional agents do.
They mostly just want to settle their bank debts or sell fast to get cash. You need to be hardworking and check this site every single day. Cheap units sell like hotcakes. If you blink, someone else will grab the deal!
Finding a cheap house online is only the first step of your journey. The next critical step to buy below market value property is mastering negotiation. Agents are professional negotiators, so you must be well-prepared before you speak to them. Never show your excitement too much when viewing a house.
Keep your emotions strictly neutral. If the agent sees that you are desperately in love with the house, they will absolutely refuse to lower the price. Politely point out the flaws of the property. Mention the leaking roof, the old peeling paint, or the broken floor tiles.
Use these defects as solid leverage to request a massive price reduction. Tell them you need extra cash to fix all these damages. Always make your first offer significantly lower than your actual maximum budget. This gives you plenty of comfortable room to negotiate upwards.
By staying calm and logical, you will effortlessly buy below market value property.
While getting a massive discount is thrilling, you must remain incredibly cautious. Sometimes, a property is cheap for a very terrible reason. You must protect yourself from buying a totally useless asset. Always inspect the physical condition of the building thoroughly.
If the foundation is cracked or the house has severe termite damage, the repair costs will destroy your bank account. In this case, it is not a bargain at all.
Furthermore, investigate the surrounding neighborhood during different times of the day. A house might be cheap because it is located directly next to a noisy, polluting factory. It might also be in an area with extremely high crime rates. You will struggle to find a tenant if the location is unsafe or unpleasant.
Lastly, check for any hidden legal issues with the land title. Ensure the owner is not bankrupt and the property is not tied in a messy family dispute.
Always hire a trusted and competent lawyer to double-check all these legal matters for you. Protecting your capital is just as important as trying to buy below market value property.
Congratulations on making it to the end of this guide! You are now equipped with the fundamental knowledge needed to succeed. Remember, patience is your absolute best friend in property investment. Do not rush into signing any documents until you have done all the math.
Use the median calculation method, utilize online property portals daily, and negotiate like a true professional. If you consistently follow these proven secrets, you will definitely buy below market value property safely and securely.
