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19-05-14, 11:13
http://www.straitstimes.com/archive/monday/premium/top-the-news/story/ads-must-not-refer-hdb-flats-valuation-agents-reminded-20140512
Ads must not refer to HDB flat's valuation, agents reminded
Published on May 12, 2014 1:32 AM
By Cheryl Ong
PROPERTY agents have been issued a reminder about proper marketing procedures for Housing Board resale flats, after new rules were introduced in March.
The Council for Estate Agencies (CEA) recently advised the heads of property firms here that advertising efforts must not refer to the actual valuation of the flat. Only references to the seller's asking price should be mentioned.
The CEA said in a licensing circular on April 23: "As a salesperson would not know the valuation of an HDB flat when he is marketing it for the seller, he is not allowed to use phrases such as '$0 COV', '$0 Cash', 'Low COV', 'Low Cash', 'Below Valuation', and any other phrases with similar effect in advertisements."
This comes after the Government said on March 10 that HDB will accept valuation requests for a flat only after the buyer and seller have agreed on a price.
Previously, sellers first obtained an official valuation for their flat and used it as a basis for negotiation. This led to a focus on cash-over-valuation (COV) amounts: the cash a buyer has to pay above the flat's valuation.
The CEA told The Straits Times that its licensing circular was "not a new rule". Its existing guidelines on ethical advertising already disallow claims by agents that guarantee a COV or a selling price above a flat's market value.
But this guideline has become more pertinent in the light of the new rules for selling flats.
Agents said they have changed the way they market units, but many buyers and sellers are still unaware of the new rules.
"Agents are not able to give any indication to buyers or sellers (about) whether the price could be below or above the expected valuation," said PropNex Realty's key executive officer Lim Yong Hock.
In the past, agents could refer to both the property's valuation and the seller's asking price before advising their clients on a reasonable offer. Now, the only reference point is the asking price, said Mr Michael Tan, key executive officer at OrangeTee.
This has led agents to err on the side of caution by advising buyers to propose lower offers. "You don't want to be caught in a situation where the valuation is actually very low, and they might have to fork out more cash than expected," said agent Edwin Wee.
To offset some of this uncertainty, agents are using HDB's InfoWeb website to look up recent sale prices of nearby flats, said Mr Chris Koh, director of property agency Chris International. The site is updated daily.
But there is no way to tell if the prices lodged reflect a flat's actual valuation, or are higher or lower due to unique circumstances.
Mr Tan also said it is harder to estimate the market value of flats located in small housing estates where there are fewer transactions. But some agencies have valuation departments that can give indicative valuations.
Tuition teacher Yew Kai Ling, 26, who has been looking for a resale flat for two months, said the process has become "more like a game of chance".
"But it is more beneficial for the buyer since there is less focus on COVs, so the sellers don't bargain with a cash profit in mind."
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Ads must not refer to HDB flat's valuation, agents reminded
Published on May 12, 2014 1:32 AM
By Cheryl Ong
PROPERTY agents have been issued a reminder about proper marketing procedures for Housing Board resale flats, after new rules were introduced in March.
The Council for Estate Agencies (CEA) recently advised the heads of property firms here that advertising efforts must not refer to the actual valuation of the flat. Only references to the seller's asking price should be mentioned.
The CEA said in a licensing circular on April 23: "As a salesperson would not know the valuation of an HDB flat when he is marketing it for the seller, he is not allowed to use phrases such as '$0 COV', '$0 Cash', 'Low COV', 'Low Cash', 'Below Valuation', and any other phrases with similar effect in advertisements."
This comes after the Government said on March 10 that HDB will accept valuation requests for a flat only after the buyer and seller have agreed on a price.
Previously, sellers first obtained an official valuation for their flat and used it as a basis for negotiation. This led to a focus on cash-over-valuation (COV) amounts: the cash a buyer has to pay above the flat's valuation.
The CEA told The Straits Times that its licensing circular was "not a new rule". Its existing guidelines on ethical advertising already disallow claims by agents that guarantee a COV or a selling price above a flat's market value.
But this guideline has become more pertinent in the light of the new rules for selling flats.
Agents said they have changed the way they market units, but many buyers and sellers are still unaware of the new rules.
"Agents are not able to give any indication to buyers or sellers (about) whether the price could be below or above the expected valuation," said PropNex Realty's key executive officer Lim Yong Hock.
In the past, agents could refer to both the property's valuation and the seller's asking price before advising their clients on a reasonable offer. Now, the only reference point is the asking price, said Mr Michael Tan, key executive officer at OrangeTee.
This has led agents to err on the side of caution by advising buyers to propose lower offers. "You don't want to be caught in a situation where the valuation is actually very low, and they might have to fork out more cash than expected," said agent Edwin Wee.
To offset some of this uncertainty, agents are using HDB's InfoWeb website to look up recent sale prices of nearby flats, said Mr Chris Koh, director of property agency Chris International. The site is updated daily.
But there is no way to tell if the prices lodged reflect a flat's actual valuation, or are higher or lower due to unique circumstances.
Mr Tan also said it is harder to estimate the market value of flats located in small housing estates where there are fewer transactions. But some agencies have valuation departments that can give indicative valuations.
Tuition teacher Yew Kai Ling, 26, who has been looking for a resale flat for two months, said the process has become "more like a game of chance".
"But it is more beneficial for the buyer since there is less focus on COVs, so the sellers don't bargain with a cash profit in mind."
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