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Thread: Some sellers 'may exploit loophole'

  1. #1
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    Default Some sellers 'may exploit loophole'

    WITH few comparable transactions to go by, anxious sellers of rare units may try to exploit a loophole in new Housing Board rules, several property agents said.
    The Straits Times - March 14, 2014
    By: Rachel Au-Yong

    WITH few comparable transactions to go by, anxious sellers of rare units may try to exploit a loophole in new Housing Board rules, several property agents said.

    New rules dictate that only the buyer or his agent can apply for HDB-approved valuations after a price has been agreed with the seller. Sellers no longer get a copy as they do not need it in theory, unlike buyers who need it to apply for bank loans.

    But while sellers of typical flats have plenty of transactions to take reference from, those selling rarer units may feel like they are fumbling in the dark without a valuation to guide asking prices.

    "If a seller really wants to find out how HDB values his flat, he could just get a friend to pose as a buyer, get the valuation, then let the option lapse after 21 days," said ERA Realty agent J.A. Goh.

    This may happen for unique flats such as the discontinued Design, Build and Sell Scheme flats, or the Pinnacle@Duxton, which will see its minimum occupancy period expire at the end of this year. "The Pinnacle is public housing but it's so unique that you can't exactly base prices on nearby HDB flats," Mr Goh said.

    "Sellers may want peace of mind and find out what is reasonable from the HDB," he added.

    Getting a friend or relative to pose as a buyer and getting an HDB-approved valuation is cheaper than going through private valuers. An HDB-approved valuation costs $191.90 for a three-room flat or larger, while private valuations can cost thousands of dollars. However, most are unlikely to resort to getting friends or family members to pass off as buyers.

    "The prices of a typical unit are pretty standard," said Dennis Wee Realty agent Dennis Foo. "If you get a valuation just to 'be sure', you'll lock yourself out from a potential deal for the next 21 days. There's no point."

    http://www.stproperty.sg/articles-pr...phole/a/156914

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    Default I want my market value not control valuation.

    To further promote the resale public housing market, the “Mortgage Loan
    Financing Scheme” was revised in April 1993. This scheme allows resale
    public housing purchasers to obtain mortgage loans of up to 80% of the
    purchase price or the market value of a housing unit, whichever is lower.
    Before this policy revision, the amounts of mortgages available for resale
    public housing were pegged at the HDB’s “posted prices,” which were fixed
    at historical values and priced very much below transacted prices. This
    change in mortgage loan financing has therefore provided a great boost to
    the public housing resale market, as purchasers are now able to obtain much
    larger mortgage amounts.

    https://www.dropbox.com/s/qz4lkgmr5x...%20Housing.pdf

  3. #3
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    Default Buyers and sellers starting to go by past transactions

    Few plan to get private valuations as they may be different from HDB's
    The Straits Times - March 14, 2014
    By: Janice Heng And Rachel Au-Yong

    DESPITE uncertainty over the new Housing Board resale process, buyers and sellers are adapting to the practice of looking at past transactions rather than valuations, said property agents.

    Few intend to get private valuations ahead of the official HDB valuation, they added.

    Negotiations used to begin with the HDB valuation report, before buyers and sellers haggled over a premium or cash over valuation (COV).

    Now, buyers can get that report only after a price has been agreed. The fear is that the valuation may be lower than expected, meaning a surprisingly high COV.

    Backing out comes with a price, as buyers must pay both for the option to purchase - which can cost up to $1,000 - as well as the valuation, noted Dennis Wee Realty agent Thomas Hee.

    Sellers, meanwhile, fear selling themselves short, said Dennis Wee Realty agent Kelly Lin.

    "They are very realistic now, but some are wondering if they are being 'too realistic' and settling for less than they could get."

    Yet few buyers or sellers are considering unofficial valuations as a substitute, said agents.

    One reason might be ignorance of that option. Mr Francis Cheng, for instance, wrote in to The Straits Times Forum to ask if buyers or sellers can still get a private valuation before deciding a price.

    The answer is yes. Still, this may not be worth it, said agents.

    Private valuations may inadvertently give sellers and buyers false hope, said ERA Realty agent J.A. Goh. "If the private valuation turns out to be very different from the HDB's, there can be a lot of disappointment," he said.

    Why pay thousands of dollars for private valuations when you can rely on past transactions and your agent for an estimate, asked PropNex agent Marcus Luah.

    "In mature estates, we'll always be within $5,000 range of the final valuation. It's about $20,000 in non-mature ones, depending on the unit's characteristics," he said.

    Furthermore, buyers looking at non-mature estates have little to worry about, as prices there are now often close to valuations.

    If HDB valuations follow the trend in the private property market, even buyers of choice units may not have to fear being surprised by a high COV, said agents.

    PropNex Realty agent Abdul Aziz Aziz is handling units in Telok Blangah, where COVs were hitting $50,000 to $60,000.

    But he has told his sellers that they cannot expect a high premium now. "The valuation will probably be closer to the last transacted prices," he said.

    If valuations take a cue from past prices, previous high COVs will, in effect, be incorporated.

    Meanwhile, some agents are hoping that HDB-approved valuers will be flexible.

    "I hope that as long as the agreed price comes within 10 per cent to 20 per cent of the valuer's initial estimate, they will try to match the agreed price," said Dennis Wee Realty agent Dennis Foo.

    "Otherwise, if they give a low valuation, things could be difficult. We'll probably see a lot more people forfeiting their options."

  4. #4
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    Default Buyers and sellers starting to go by past transactions

    Few plan to get private valuations as they may be different from HDB's
    The Straits Times - March 14, 2014
    By: Janice Heng And Rachel Au-Yong

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    Quote Originally Posted by Arcachon View Post
    Few plan to get private valuations as they may be different from HDB's
    The Straits Times - March 14, 2014
    By: Janice Heng And Rachel Au-Yong

    DESPITE uncertainty over the new Housing Board resale process, buyers and sellers are adapting to the practice of looking at past transactions rather than valuations, said property agents.

    Few intend to get private valuations ahead of the official HDB valuation, they added.

    Negotiations used to begin with the HDB valuation report, before buyers and sellers haggled over a premium or cash over valuation (COV).

    Now, buyers can get that report only after a price has been agreed. The fear is that the valuation may be lower than expected, meaning a surprisingly high COV.

    Backing out comes with a price, as buyers must pay both for the option to purchase - which can cost up to $1,000 - as well as the valuation, noted Dennis Wee Realty agent Thomas Hee.

    Sellers, meanwhile, fear selling themselves short, said Dennis Wee Realty agent Kelly Lin.

    "They are very realistic now, but some are wondering if they are being 'too realistic' and settling for less than they could get."

    Yet few buyers or sellers are considering unofficial valuations as a substitute, said agents.

    One reason might be ignorance of that option. Mr Francis Cheng, for instance, wrote in to The Straits Times Forum to ask if buyers or sellers can still get a private valuation before deciding a price.

    The answer is yes. Still, this may not be worth it, said agents.

    Private valuations may inadvertently give sellers and buyers false hope, said ERA Realty agent J.A. Goh. "If the private valuation turns out to be very different from the HDB's, there can be a lot of disappointment," he said.

    Why pay thousands of dollars for private valuations when you can rely on past transactions and your agent for an estimate, asked PropNex agent Marcus Luah.

    "In mature estates, we'll always be within $5,000 range of the final valuation. It's about $20,000 in non-mature ones, depending on the unit's characteristics," he said.

    Furthermore, buyers looking at non-mature estates have little to worry about, as prices there are now often close to valuations.

    If HDB valuations follow the trend in the private property market, even buyers of choice units may not have to fear being surprised by a high COV, said agents.

    PropNex Realty agent Abdul Aziz Aziz is handling units in Telok Blangah, where COVs were hitting $50,000 to $60,000.

    But he has told his sellers that they cannot expect a high premium now. "The valuation will probably be closer to the last transacted prices," he said.

    If valuations take a cue from past prices, previous high COVs will, in effect, be incorporated.

    Meanwhile, some agents are hoping that HDB-approved valuers will be flexible.

    "I hope that as long as the agreed price comes within 10 per cent to 20 per cent of the valuer's initial estimate, they will try to match the agreed price," said Dennis Wee Realty agent Dennis Foo.

    "Otherwise, if they give a low valuation, things could be difficult. We'll probably see a lot more people forfeiting their options."
    Herewith are some questions to ponder, based on the above article:

    1) Will the new ruling force more genuine buyers to opt for $1 option money to seek out a valuation in order to ensure their financings do not get messed up. Are the sellers likely to give $1 options, given the dearth of buyers in today's market, and they fear of losing the buyer, and thus may succumb to other arrangements with the buyers.

    2) If more $1 options are presented, would it not pose a headache to HDB, as multiple valuations may have to given for the same property over each 21 day cycle. If these valuations are not the same, would it lead to a public backlash towards HDB. Does this mean, to avoid this problem, HDB may start mandating a minimum OPT money for each sale (ie, $1000).

    3) How will the disappearance of COVs play into the sellers' finances henceforth, after all sellers have benefited with these cash portions as a means to take hard cash from their appreciated HDB properties

    4) Will HDB entertain appeals for revaluations in case the valuation that comes out is too low for a property and puts OTPs into jeopardy.

    5) Will all of the above force buyers to be further cautious, thus forcing buyers to sit out for a while, or make ultra conservative bids.

  6. #6
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    Default

    Herewith are some questions to ponder, based on the above article:

    1) Will the new ruling force more genuine buyers to opt for $1 option money to seek out a valuation in order to ensure their financings do not get messed up. Are the sellers likely to give $1 options, given the dearth of buyers in today's market, and they fear of losing the buyer, and thus may succumb to other arrangements with the buyers.

    Happy to know someone buy the idea of SGD 1 OTP fee. I know I can't change what other will do, but I sure know I can change One man at a time.

    2) If more $1 options are presented, would it not pose a headache to HDB, as multiple valuations may have to given for the same property over each 21 day cycle. If these valuations are not the same, would it lead to a public backlash towards HDB. Does this mean, to avoid this problem, HDB may start mandating a minimum OPT money for each sale (ie, $1000).

    HDB is able to handle more than 30,000 transaction a year, they can also get their staff to do O/T means more pay to the staff (Happy HDB staff). They can mandate minimum SGD 1000 or higher and the Buyer and seller will find other loophole.


    3) How will the disappearance of COVs play into the sellers' finances henceforth, after all sellers have benefited with these cash portions as a means to take hard cash from their appreciated HDB properties

    Valuation since 1993 is controlled by HDB, they need the resale to go up so as to do other social program, somebody have to pay. Resale are now de link from BTO, cannot buy resale buy BTO, if you sell too bad already warn you by LKY

    4) Will HDB entertain appeals for revaluations in case the valuation that comes out is too low for a property and puts OTPs into jeopardy.

    HDB careless what valuation it comes out, it is CPF that care.

    5) Will all of the above force buyers to be further cautious, thus forcing buyers to sit out for a while, or make ultra conservative bids.

    Buyer who know resale is going to shot through the roof should buy while they can, otherwise buy BTO.

    http://www.channelnewsasia.com/news/...ew/937898.html

    By Olivia Siong
    POSTED: 30 Dec 2013 17:22

    SINGAPORE: The Housing and Development Board (HDB) will reduce the supply of three-room and bigger flats by 18 per cent in 2014.

    At the same time, it will almost double the number of two-room Build-To-Order (BTO) flats in non-mature estates.

    The move marks a transition from HDB's three-year ramped-up building programme to what it calls a more "sustainable phase".

    A block of BTO flats in Sembawang is the last to be completed for 2013, marking a total of 13,600 flats completed this year.

    In all, there will be 24,300 flats on offer in 2014, three per cent less than this year's 25,100 units.

    For new three-room and larger flats, there will be 18,600 units on offer, compared to 22,600 this year.

    And to meet the demand from singles, the supply of two-room flats in non-mature estates will go up to 5,000 units, from 2,600 this year.

    HDB said the move is timely as the supply and demand from families have achieved a better balance.

    Nine in 10 families buy their first home from the HDB.

    While the demand for HDB resale flats has shrunk, some property analysts think with fewer larger flats being built in the year ahead, some second-time home buyers may look to the HDB resale market instead.(Good Luck)

    Associate Professor Sing Tien Foo from the Department of Real Estate at the National University of Singapore said: "By reducing the supply without adjusting the quota, the probability of second-timers getting the flat will be smaller.(more Demand for resale)

    “Given that resale market prices have come down, the demand has been weakened by the change in policy by restricting new PRs (permanent residents) from applying for resale flat, as well as the drop in COV (cash-over-valuation). The resale flat will be more attractive for these second-timer families who are thinking of upgrading or thinking of moving to a bigger flat."(Agree better act fast)

    But analysts added the supply of two-room flats will spell good news for singles.

    Lim Yong Hock, key executive officer at PropNex, said: "The singles scheme only came about this year in July. The subscription rates in some locations are actually above 10 times oversubscribed. So I believe this increase in the numbers will help to reduce the demand in the next one year."

    And for seniors who are looking to right-size their flats, about 700 studio apartments will be on offer in 2014.

    - CNA/gn
    Last edited by Arcachon; 14-03-14 at 20:36.

  7. #7
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    Default How to get HDB valuation for SGD 1 OTP (Option Fee).

    Just get TOM, DICK or Harry to sign the option, after valuation just let it expire.

    Purchase Price $ 1,000,000 ("Purchase Price") (for HDB 2 Room)

    Option Fee (Up to a maximum of $1,000) $ 1 ("Option Fee")

    https://www.dropbox.com/s/0haztkflrmclfri/1.pdf

    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 OTP (Option Fee); and

    (b) neither party will have any claim against the other.

    http://www.skyscrapercity.com/showth...#post112184089

  8. #8
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    08 June 2013

    Why Do We Have Cash-Over-Valuation (COV)?
    Because prior to the introduction of COV, sellers must sell according to valuation price, and this makes them unhappy when the valuation price doesn't match their expectation, so they resort to taking under-table money i.e. whoever willing to pay extra gets the deal. But such practice distorts data, it doesn't reflect actual selling price correctly so our government cannot tax correctly, or you can also say that they will earn lesser. Then some smart person decided to implement COV to stop all the under-table deals and as we know now, it works as intended.

    COV has been around for a long time now, long enough to drastically bring up the prices of resale flats in Singapore, countless people have been buying and selling, so many change of hands, and with every change of hands, the price goes up, but some people may argue that there were also cases where flats were sold below or at valuation i.e. no COV. But how many such cases? Obviously it doesn't matter, just look at the current resale flat prices.

    And speaking of buying and selling, people who bought at high prices naturally wish for the COV to stay, but don't be surprised when the same people start asking to remove COV because they sold their flat and wish to buy again. It's just a matter of which side your standing on, if your the buyer, of course you say scrap COV, but if your the seller, of course you say COV should stay, but while in the midst of doing business, people forget that public housing was meant to give citizens a place to call home.

    Notice that I referred to buying and selling of HDB flat as doing business, because nowadays, a HDB flat is being called an asset. According to Robert Kiyosaki, an asset is something that brings money into your pocket, selling a flat fits the description but provided you have enough money to set aside for your CPF minimum sum, and you don't need to purchase housing while the market is hot, and even more so if you decide to rent it out instead.

    For the government, it used to be easy for them to manage since they can simply say "willing buyer willing seller", and then pat their backside and walk away, but unfortunately for them, this laissez-faire style of management no longer works. More and more citizens are unhappy because of housing price, especially the younger generations, and these younger people are more daring to speak up thanks to their education, specifically their ability to access more information than the older generation. And also looking at the last election results, and the government actions that followed, they know that they cannot continue to turn a blind eye.

    So the question is, what can the government do? If they scrap COV, they risk angering flat owners, and there sure are plenty of flat owners in Singapore, so this is definitely not workable. But if they leave it as it is, citizens will find it difficult to cough up the cash, especially younger people who wish to settle down, and young people generally have lesser cash savings. And those who have no choice but to go for resale, they will probably stretch their necks to pay for the COV, by borrowing from family, taking personal loans from banks, or worse, borrow from money-lenders.

    I'm thinking why don't HDB offer a special loan, a COV Loan, at say 3% interest per annum, payable only in cash, with installment option, this will give people one more option to work with, and it gives HDB an extra stream of income.

    http://marrythaigirlsingapore.blogsp...&by-date=false

  9. #9
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    Private valuation costs few thousands to valuate hdb flat? This is probably the case for landed and bungalows but definitely not for hdb. Can get for under $500.

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    Its seems like there are more urgent sellers than buyers for hdb. When buyer offer lesser, prices will only go lower.

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