2014 is already winding down to a close, and indeed, it has been quite a roller coaster year. As I was figuring out what to write for this week, I thought it wold be fun to reflect back on some of the lessons that I have learned in 2014, mainly about Malaysia real estate, and also about running an online property startup. 🙂
Lesson 1: Blanket statements like “the property market is slowing down” is meaningless.
We are an industry which is obsessed with “market conditions” and “industry outlook”. The problem with having too broad of a view is that we often get hung up on “averages” and “totals” – e.g. average value of transactions have gone up, total volume of transactions have come down, etc.
The thing about averages is that they don’t tell us anything about the actual situation. For example, NAPIC reported rather gloomy numbers for the past three quarters which probably drove a good number of negotiators out of the door (I know some of them, and they had told me that they were quitting to become insurance salesmen and seminar peddlers). Sad, sad mistake. And here’s why…
The dip in transactional volume is averaged out and therefore completely skewed by some areas in the Klang Valley which have gone completely stagnant in the sub sale market. Looking at the DealMatcher requests that we have been getting, we notice a good number of areas are picking up in terms of buyer interest, and it’s no surprise that the savvier agents are now focusing more on these areas. (I can’t tell you where these areas are – my agents’ livelihood is at stake here. Sorry.)
And here’s the bottom line if you’re a home buyer: turn a blind eye to what the “market” says. Industry averages probably won’t affect your decision of whether you should plonk down the cash for that nice terrace home in Puchong or that upscale condo in KLCC that much. “Experts” don’t necessarily know more than you do. Don’t outsource your thinking to other people (to me, or God forbid, to Gurus).
Lesson 2: Nobody knows what effect GST will have on properties.
Despite all the articles you read in the papers and the weekend seminars on GST nobody knows jack about how GST is going to affect property prices come April 1st. The general consensus is that everything will be more expensive, but nobody knows how much more expensive things are going to be.
There is already a spike in some areas as many are trying to beat the GST deadline, but I suspect that there will be huge doses of buyer’s remorse which will kick in soon enough. Don’t base your buying decisions on an “unknown” like GST. Instead, do your proper homework.
Lesson 3: Agents get desperate.
Competition has never been so stiff in years, and indeed, sources of home buyer leads from both property portals and newspapers are drying up quickly. As expected, whenever agents are desperate they will resort in doing these things:-
- Send out spam: email, Facebook, SMS, Whatsapp
- Buy owner lists from developers to spam / cold call
- Post fake listings on property portals
- Spam property portals with credit blasts
- All of the above
Alas, the better agents do more savvy things like servicing their existing clientele to get more referrals, or to tie up with, well, people like me. Note that I am not even advertising my services here because frankly, I’m already super tied up with the 100+ agents who have already signed up. As much as I love working on GoodPlace, I’d like to still have some free time to play with my six month old son, thank you very much.
Also, I have been getting waaaay too many “YOUR SERVICE IS FREE, RIGHT!??@111?!” emails from still-wet-behind-the-ears negotiators (and sometimes even principals of large agencies – believe it or not) that it’s not even funny anymore.
Buyers: you hold the upper hand now, and as long as you’re legitimate and serious, agents will bend over backwards for you. You can work them extra hard, but please, please don’t take them for a ride.
Lesson 4: Gurus are making more money than before.
I’ve bitched enough about the loathsome Guru industry already, but the fact that negotiators are fleeing the industry to start seminar businesses means that it’s easier to make money being a Guru than a negotiator. 🙁
Lesson 5: Sellers and agents want buyers to know as little as possible.
The biggest dirty little secret about the Malaysia property industry is that it’s opaque by design. Sellers (and their agents) want “information asymmetry” in their favour simply because they make the most money that way. In fact, I had a couple of brickbats thrown my way (from sellers and agents) for suggesting to home buyers that they should do transaction searches at JPPH in order to get an estimation of a property’s fair market value.
When a home buyer submits a request through the DealMatcher, I try my best to find a suitable agent (whom I have interviewed personally) with proven track record in the area of choice. I had to terminate an arrangement with a property agency recently because the principal had told me, “Khai Yin, your buyers know too much. My negotiators are struggling.” True story!
Indeed, some agencies want me to provide them with ill-informed buyers with money to burn. That’s just stomach-churningly offensive, not to mention deeply unethical.
Buyers: know as much as possible about the property that you’re considering to buy. You will be in a stronger bargaining position if you know more than the other guy.
Lesson 6: There’s no shortage of people trying to give out unsolicited advice.
If you’ve made a name for yourself as a serious investor then you be sure of one thing – lots of people will turn up at your door offering you “joint venture opportunities”, or even worse – unsolicited advice about where to put your money (and how to live your life in general). In fact, I can only imagine how many solicitations that my mentor gets every day given his stature as a successful businessman.
I feel like poking my eyes with a large fork every time I receive a 3,000-word email offering me ‘advice’ on how to run GoodPlace:-
- “You should have a Facebook page. Everyone is on Facebook now!“
- “You should have taken up that funding offer!”
- “You should start building a team!”
- “You should start doing seminars!”
- “You should do what Guru/Expert/My Father-In-Law says!”
The truth is that you’ll very rarely (read: never) receive good advice from successful people – unless you explicitly ask for it. It makes sense if you think about it: those who are killing it are far too busy to go around nosing into other people’s business. 😉
In short: be super selective about who you choose to listen to. Get your BS detector up!
Lesson 7: The Malaysia property market doesn’t reward innovation.
I am a big fan of the top two property portals – iProperty and Property Guru. Collectively they command a good chunk of property-related traffic, and they provide a legitimate service to both sellers (or agents) and buyers alike.
I am huge proponent of free market economics, and I believe that competition brings out the best in businesses (in theory, they are motivated to produce innovate products for the consumer in order to win). However, watching iProperty and Property Guru “competing” with each other is like watching a bunch of toddlers at a kindie karate meet –
Apart from iProperty’s Buyer’s Club and Property Guru’s design refresh, I don’t recall seeing anything particularly new (and innovative) from these two behemoths of Malaysia online property. I sometimes look at foreign property portals with great envy because they could boast of really nifty (and genuinely useful) features like pricing heat maps, historical records of transacted deals and agent ratings.
I don’t want to trash iProperty and Property Guru because like it or not, collectively they have the most comprehensive set of listings around, and to top that, I know for a fact that they are manned by good, hardworking, salt-of-the-earth kind of people. Having said that, the conclusion is fairly obvious: being profit-driven entities, the property portals are not innovating simply because it’s not financially rewarding to be innovative. I’d love, love, love to be proven wrong about this because eventually if the industry doesn’t innovate, consumers are on the losing end (not businesses).
Bring On 2015… And A Note Of Thanks
Closer to home, 2014 had been good for GoodPlace in terms of throughput – we have spent a productive year laying down the groundwork for us to launch the Big Offensive in (as early as) end January 2015 (hint, hint).
And as we head into 2015, it’s a good time to pause, reflect and be grateful to the people who have helped GoodPlace one way or the other. As such, I’d like to say big thank you’s to the following:-
The GoodPlace team: Cheah YL for being a spectacularly awesome developer with the patience of the Gods; my writers and researchers extraordinaire: Hannah, Joanne, Divine and Sophia.
My partners and friends in the industry who inspire me with their amazing work in pushing the Malaysia property industry forward and upwards: Amanda Andrew, Nicholas Ng, Jennifer Saw, Victor Yu, Noel Lee, Dr Gerard Khoo, Farah Wahida, Shen Yi Loh-Lim, Jennifer Adams, Jesslyn Yee, Samantha Ooi, Mervyn Liow, Zuhaila Sedek -De Booij.
Mark Chang, for his continued mentorship, moral guidance (what would Mark do?) and boundless generosity.
Suresh Thiru, for taking my lunch meetings, and never failing to dispense his trademark hard-hitting advice that I need to hear.
Der Shing, for his kindness and generosity, and perhaps most importantly helping me sidestep the biggest mistake that I could have made in 2014. 😉
Previndran Singhe, for giving me a head start in this industry.
My peers in the startup world who motivate me to put my best entrepreneurial foot forward every single day: Iskandar Ezzahuddin, John Lim, Edward Lee, Jared Lim, Ching Wei, Khailee Ng, Daniel Cerventus, Tim Marbach, Kenny Cheow, Aznin Abdullah, Danny Tan, Adam Leow, Hanson Toh.
How was 2014 for you? Share with us your stories below.