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Published February 3, 2007

ERA to guarantee sellers at least 90% of valuation


(SINGAPORE) If anyone needs another excuse to jump into the property market, real estate consultancy ERA Singapore says it will buy your property if it fails to sell it within three months - for 90 per cent of the valuation price.

Mr Chua: The scheme may not attract speculators as they are savvy investors who don't want to lose even 10%

ERA Singapore president Jack Chua says the firm will soon implement a popular guaranteed sale programme first launched by ERA in the United States 25 years ago called Sellers Security Plan.

A seller lists a property with ERA for an exclusive period, then selects a valuer from a panel to do an open-market valuation.

ERA then makes an offer based on 90 per cent of the valuation price - and this is the guaranteed price ERA will pay at the end of the exclusive period.

In Singapore, the exclusive period is generally three months.

If the seller chooses to sell the property to ERA, ERA will sell the property at auction. If the price fetched is more than the 90 per cent, the difference after deducting costs goes back to the seller.

Details on how the scheme will work in Singapore, including terms and conditions, will be announced on Thursday at the ERA Asia Pacific Business Conference.

Mr Chua said the scheme would apply to completed and uncompleted properties.

'It applies to sub-sales too,' he added.

Sub-sales apply to new properties sold before they are officially completed, which is generally about the time a temporary occupation permit (TOP) is issued.

Sub-sales are also an indicator of speculative activity in the market.

Official data from the Urban Redevelopment Authority revealed that in Q4 2006 there were 426 sub-sales island-wide, or 5.4 per cent of the total number of private housing transactions.

Mr Chua said he does not expect ERA's scheme to attract speculators, because speculators tend to be savvy investors who do not intend to lose even 10 per cent on an investment.

Whether it attracts others to enter the property market will only be known after the scheme is launched next week.

As Mr Chua notes, the guarantee to buy your property back is quite a 'safety net'.

Still, he said the current buoyant market is 'not the sole reason' for launching the scheme.

'We like to offer something new every year. Previously we offered schemes like the Home Warranty Plan and the Deposit Guarantee Plan,' he pointed out.