pmet
12-03-14, 01:35
Taken from: http://www.condosingapore.com/forums/showpost.php?p=467388&postcount=147
Quote:
Originally Posted by pmet http://www.condosingapore.com/forums/images/buttons/viewpost.gif (http://www.condosingapore.com/forums/showthread.php?p=467147#post467147)
In event of a valuation mismatch buyers can opt out and just forfeit $1k downpayment, whereas sellers have to LPPL and take it as it's a fair deal even as with private properties. This is what the OTP was originally planned for, to protect buyers as they have the most to loose. The sellers are obliged to exercise SNP and if he fails to do so, the buyer may seek legal mediation (sue the seller). This question brings up the revelation that many ppl on this thread have had no experience in buying/selling properties. I've been through many transactions in my experience in property investments and I can tell you that the rules are meant to bring down the valuation, which was originally meant to hold prices, at a faster pace.
Ask yourself why was valuation implemented, and for HDB who's in control? You might think that a private company is doing the valuation but after searching you would be shock to know that all valuations eventually come from or are approved by HDB. Yes, HDB has been holding up resale prices for so long as sellers can use this tool to influence their buyers which will result in stable prices accross the HDB segment. Why does HDB always falls or increases after PTD properties (PTE properties always take the lead)? This is because HDB is controlling the valuation and that acts as a pillar for sellers and affects the offers made by buyers.
You might think that PTE properties have valuations too right? Yes but it's difference and assigned by the banks which explains why some banks give you a higher valuation while some lower. It's also illegally possible to bribe the valuator giving your home a higher valuation (ahem!).
Now, let me come back to the new HDB rule:
1. This will bring about faster devaluation because in a dropping market, the sellers have no clue how much their flats are valued at. The previous transaction could already be sold at under valuation (CUV) and if it's based on that, the seller having no clue whatsoever, would base his at the same or around the same. The buyer, knowing that it's a falling market, would base it lower. Hence, without a controlling valuation set by HDB, the buyer could be paying CUV on top of an already undervalued figure. All else equal, the revse could be true for a booming market but read my next point below.
2. Now you might think that it might help boost the current market right? Wrong. Firstly, the market is in a decline. Secondly, even in a booming market, buyers will be able to back out in event that the valuation is much lower than his offer (COV offered is too high). The shroud around the valuation in this case should not accelerate an already booming market. Buyer makes offer, and back out (forfeit $1k) if valuation is too low. The COV will never be as exaggerated as CUV as in my first point above (#1). Now you see why I said this rule is meant to punish sellers and not buyers?
Of course, there may eventually be rules to protect sellers as well in the future but definitely not now when all other CMs are still in place. This should be the last CM to go IMO.
Quote:
Originally Posted by Arcachon http://www.condosingapore.com/forums/images/buttons/viewpost.gif (http://www.condosingapore.com/forums/showthread.php?p=467259#post467259)
How to get HDB valuation for SGD 1.
Just get TOM, DICK or Harry to sign the option, after valuation just let it expire.
Purchase Price $ 1,000,000 ("Purchase Price")
Option Fee (Up to a maximum of $1,000) $ 1 ("Option Fee")
http://services2.hdb.gov.sg/webapp/B...4SPdfConverter
7. Non-Exercise of Option
If the Buyer does not exercise this Option in the manner stated in this Option, and provided the Seller has met the requirement in Clause 3.1 ----
(a) the Seller is entitled to retain the Option Fee SGD 1; and
(b) neither party will have any claim against the other.
Techically possible but that's not the objective of this rule. See why at the bottom of this post.
Quote:
Originally Posted by proud owner http://www.condosingapore.com/forums/images/buttons/viewpost.gif (http://www.condosingapore.com/forums/showthread.php?p=467380#post467380)
but with $ 1 option .... hahha
like many here said ... try 100 units ...only cost you $100... tikam tikam
imagine 10 agents, each serving you 10 units ... that's a lot of paper work and running up and down HDB office .... and possibly all 10 units return cos buyer don't exercise
Techically possible but that's not the objective of this rule. See why at the bottom of this post.
Quote:
Originally Posted by buckwheat http://www.condosingapore.com/forums/images/buttons/viewpost.gif (http://www.condosingapore.com/forums/showthread.php?p=467381#post467381)
But the agent can tell the next 10 potential buyers/sellers how much the valuation is since he already know, isn't it? even if it is not the exact figures, the range would be closed enough, and he can still make the deal with the next sets of buyer/seller, or other buyer/seller around the same block/area.
Not true for a declining market. Especially with 24hr transactions update from HDB, valuations can change pretty rapidly. Buyers won't be so stupid to accept the last valuation as the latest and even if he does, he will find out if there's a mismatch after submitting the OTP and depending on the price he can decide to call off the deal.
Quote:
Originally Posted by rook http://www.condosingapore.com/forums/images/buttons/viewpost.gif (http://www.condosingapore.com/forums/showthread.php?p=467303#post467303)
I agree...all these 'tricks' being discussed need not necessarily hold true for the following reasons:
- Valuation is not a perfect science, ie, valuers can also make some arbitrary judgements in arriving at a final valuation price. In fact, we always see this in the pte condo market, different valuers from diff banks can value the same condo differently, sometimes as much as 50k apart.
- buyers are aware that the only valuation that matters to them is that which HDB gives them, not a previous potential purchaser.
- Valuers and HDB wil also take into account the submitted agreed price in arriving at a valuation...so they will have no problem in offering a different value for the same property, even if the previous valuation is done just 30 days ago....'Market situation has changed, dah!!'
Agreed!
Quote:
Originally Posted by taggy http://www.condosingapore.com/forums/images/buttons/viewpost.gif (http://www.condosingapore.com/forums/showthread.php?p=467311#post467311)
this is not a free market where buyer and seller agrees to a price liao, because third party (hdb valuer) can throw surprise.
buyer really will be very stress and switch off...
when he offer a price, he is like tikam tikam, hoping it is not higher (or not much higher) than the coming valuation....
ok dun buy hdb resale la, go buy private better lah (smaller also never mind lah)
Precisely why buyers will be more conservative going forward.
________________________________________________________________
If you read all the posts I quoted above, you will see that the real motive of this rule is to quicken the pace of price correction in the HDB market. In the past, buyers used to look for valuation from the owner as a setting price which may incorrectly reflect the true value of the property (due to price adjustments in that area). In a declining market, an outdated valuation report, which the owner holds, could be the key to stubbornly high prices of recent HDB transactions. Despite multiple rounds of CMs, why are HDB prices not correcting fast enough? The key lies in the valuation.
With the new rules, transactions are reported every 24hrs and the buyer is basically forced to do a valuation check on the property in real-time after the OTP is signed. This means that the buyer can decide if the price he's paying matches the valuation of the property, in real-time. In a mismatch situation, a buyer can OPT out by forfeiting his downpayment whereas the seller can't OPT out (assuming the valuation done at OTP time increases from the last $1-valuation done by the agent).
Net effect: This will cause a rapid decline in HDB valuation but the reverse order will be slower.
Quote:
Originally Posted by pmet http://www.condosingapore.com/forums/images/buttons/viewpost.gif (http://www.condosingapore.com/forums/showthread.php?p=467147#post467147)
In event of a valuation mismatch buyers can opt out and just forfeit $1k downpayment, whereas sellers have to LPPL and take it as it's a fair deal even as with private properties. This is what the OTP was originally planned for, to protect buyers as they have the most to loose. The sellers are obliged to exercise SNP and if he fails to do so, the buyer may seek legal mediation (sue the seller). This question brings up the revelation that many ppl on this thread have had no experience in buying/selling properties. I've been through many transactions in my experience in property investments and I can tell you that the rules are meant to bring down the valuation, which was originally meant to hold prices, at a faster pace.
Ask yourself why was valuation implemented, and for HDB who's in control? You might think that a private company is doing the valuation but after searching you would be shock to know that all valuations eventually come from or are approved by HDB. Yes, HDB has been holding up resale prices for so long as sellers can use this tool to influence their buyers which will result in stable prices accross the HDB segment. Why does HDB always falls or increases after PTD properties (PTE properties always take the lead)? This is because HDB is controlling the valuation and that acts as a pillar for sellers and affects the offers made by buyers.
You might think that PTE properties have valuations too right? Yes but it's difference and assigned by the banks which explains why some banks give you a higher valuation while some lower. It's also illegally possible to bribe the valuator giving your home a higher valuation (ahem!).
Now, let me come back to the new HDB rule:
1. This will bring about faster devaluation because in a dropping market, the sellers have no clue how much their flats are valued at. The previous transaction could already be sold at under valuation (CUV) and if it's based on that, the seller having no clue whatsoever, would base his at the same or around the same. The buyer, knowing that it's a falling market, would base it lower. Hence, without a controlling valuation set by HDB, the buyer could be paying CUV on top of an already undervalued figure. All else equal, the revse could be true for a booming market but read my next point below.
2. Now you might think that it might help boost the current market right? Wrong. Firstly, the market is in a decline. Secondly, even in a booming market, buyers will be able to back out in event that the valuation is much lower than his offer (COV offered is too high). The shroud around the valuation in this case should not accelerate an already booming market. Buyer makes offer, and back out (forfeit $1k) if valuation is too low. The COV will never be as exaggerated as CUV as in my first point above (#1). Now you see why I said this rule is meant to punish sellers and not buyers?
Of course, there may eventually be rules to protect sellers as well in the future but definitely not now when all other CMs are still in place. This should be the last CM to go IMO.
Quote:
Originally Posted by Arcachon http://www.condosingapore.com/forums/images/buttons/viewpost.gif (http://www.condosingapore.com/forums/showthread.php?p=467259#post467259)
How to get HDB valuation for SGD 1.
Just get TOM, DICK or Harry to sign the option, after valuation just let it expire.
Purchase Price $ 1,000,000 ("Purchase Price")
Option Fee (Up to a maximum of $1,000) $ 1 ("Option Fee")
http://services2.hdb.gov.sg/webapp/B...4SPdfConverter
7. Non-Exercise of Option
If the Buyer does not exercise this Option in the manner stated in this Option, and provided the Seller has met the requirement in Clause 3.1 ----
(a) the Seller is entitled to retain the Option Fee SGD 1; and
(b) neither party will have any claim against the other.
Techically possible but that's not the objective of this rule. See why at the bottom of this post.
Quote:
Originally Posted by proud owner http://www.condosingapore.com/forums/images/buttons/viewpost.gif (http://www.condosingapore.com/forums/showthread.php?p=467380#post467380)
but with $ 1 option .... hahha
like many here said ... try 100 units ...only cost you $100... tikam tikam
imagine 10 agents, each serving you 10 units ... that's a lot of paper work and running up and down HDB office .... and possibly all 10 units return cos buyer don't exercise
Techically possible but that's not the objective of this rule. See why at the bottom of this post.
Quote:
Originally Posted by buckwheat http://www.condosingapore.com/forums/images/buttons/viewpost.gif (http://www.condosingapore.com/forums/showthread.php?p=467381#post467381)
But the agent can tell the next 10 potential buyers/sellers how much the valuation is since he already know, isn't it? even if it is not the exact figures, the range would be closed enough, and he can still make the deal with the next sets of buyer/seller, or other buyer/seller around the same block/area.
Not true for a declining market. Especially with 24hr transactions update from HDB, valuations can change pretty rapidly. Buyers won't be so stupid to accept the last valuation as the latest and even if he does, he will find out if there's a mismatch after submitting the OTP and depending on the price he can decide to call off the deal.
Quote:
Originally Posted by rook http://www.condosingapore.com/forums/images/buttons/viewpost.gif (http://www.condosingapore.com/forums/showthread.php?p=467303#post467303)
I agree...all these 'tricks' being discussed need not necessarily hold true for the following reasons:
- Valuation is not a perfect science, ie, valuers can also make some arbitrary judgements in arriving at a final valuation price. In fact, we always see this in the pte condo market, different valuers from diff banks can value the same condo differently, sometimes as much as 50k apart.
- buyers are aware that the only valuation that matters to them is that which HDB gives them, not a previous potential purchaser.
- Valuers and HDB wil also take into account the submitted agreed price in arriving at a valuation...so they will have no problem in offering a different value for the same property, even if the previous valuation is done just 30 days ago....'Market situation has changed, dah!!'
Agreed!
Quote:
Originally Posted by taggy http://www.condosingapore.com/forums/images/buttons/viewpost.gif (http://www.condosingapore.com/forums/showthread.php?p=467311#post467311)
this is not a free market where buyer and seller agrees to a price liao, because third party (hdb valuer) can throw surprise.
buyer really will be very stress and switch off...
when he offer a price, he is like tikam tikam, hoping it is not higher (or not much higher) than the coming valuation....
ok dun buy hdb resale la, go buy private better lah (smaller also never mind lah)
Precisely why buyers will be more conservative going forward.
________________________________________________________________
If you read all the posts I quoted above, you will see that the real motive of this rule is to quicken the pace of price correction in the HDB market. In the past, buyers used to look for valuation from the owner as a setting price which may incorrectly reflect the true value of the property (due to price adjustments in that area). In a declining market, an outdated valuation report, which the owner holds, could be the key to stubbornly high prices of recent HDB transactions. Despite multiple rounds of CMs, why are HDB prices not correcting fast enough? The key lies in the valuation.
With the new rules, transactions are reported every 24hrs and the buyer is basically forced to do a valuation check on the property in real-time after the OTP is signed. This means that the buyer can decide if the price he's paying matches the valuation of the property, in real-time. In a mismatch situation, a buyer can OPT out by forfeiting his downpayment whereas the seller can't OPT out (assuming the valuation done at OTP time increases from the last $1-valuation done by the agent).
Net effect: This will cause a rapid decline in HDB valuation but the reverse order will be slower.