July 7, 2007
HDB resale: Sellers' market or agents'?
RECENT newspaper articles have highlighted the sky-high prices of some HDB resale flats, especially those around Tiong Bahru.
When my friends learnt that a five-room flat had been sold for $720,000, their first reaction was: 'What a lucky seller!'.
My response was: 'What a lucky agent!'
The seller's agent usually gets 2 per cent of the price of the flat, while the buyer's agent pockets 1 per cent.
So why did I envy the agent? Anyone who has responded to a property ad in the classifieds knows that, invariably, the first question asked is: 'Are you buying for yourself?'
Agents, not unlike taxi drivers, pick their customers. And it is understandable because a seller's agent who acts for the buyer gets 1 per cent more. In the case of the lucky Tiong Bahru agent, $7,200 more!
The question is, what if there was another buyer willing to pay $750,000 but had his own agent, or refused to use the seller's agent? Between getting $21,600 in commissions by selling at $720,000 and $15,000 by selling at $750,000, the choice is obvious.
I urge flat sellers to attend HDB's monthly resale seminar, where they will learn that they do not need an agent to handle the paperwork. HDB will help. Save thousands on commission and get better furniture for the new home.
Recently, my fiancee and I went to view a flat. As our combined income was slightly above the income ceiling for getting a concessionary loan, we told the agent we would appeal. She suggested that we declare only one party's income, saying that she knew others who had got away with this.
We went on to the topic of price. The agent told us the valuation of the flat was $260,000 and the last offer was $320,000. We bid $290,000 and went home, thinking that was the end of it.
That night, the agent called and informed us that the valuation was actually $255,000 and the last offer was $295,000. '$300,000 will seal the deal,' she enthused.
Luckily we were not flush with cash from selling a private property en bloc. What if we had bid $325,000?
That said, there are property agents with a conscience.
My point is, anyone can handle an HDB resale transaction, and HDB will help you every step of the way.
Chia Kok Chin