28 March 2012

What is The Point of COV When There Already is Market Valuation?

This question was posted at REACH on 28 Mar 2012, 10.39AM

What does market valuation of a resale flat do? Surveyors determine the market price of a resale flat by factors such as location of the block, surrounding amenities, level of the flat, interior condition of the flat and special features inside/outside the flat.

Seller A asks for COV because he has renovated his flat and he has built a bar counter in his flat.

Have the above been covered by market valuation?

Seller B asks for COV because his flat location is good, near to MRT, near to bus interchange, schools, shopping malls and plenty of coffeeshops.

Have the above been covered by market valuation?

Seller C asks for COV because his flat is at the top floor of the block, with incredible view.

Have the above been covered by market valuation?

Then what is the point of market valuation if COV serves to do what it already is doing?

How can HDB allow such a contradiction?

This is one reason why HDB resale flat is becoming more expensive, and it will get worse if HDB still maintain the "willing buyer willing seller" attitude.

Response from HDB forwarded by REACH Administrator on 16 Apr 2012, 4.48PM

The valuation of HDB resale flats are conducted by professional private valuers who are licensed by the Inland Revenue of Singapore and members of the Singapore Institute of Surveyors and Valuers. The valuers conduct their valuations independently; according to established valuation principles applicable to both private properties and HDB flats. The value of the flat is derived based on recent resale transactions of comparable flats and adjustments are made for the flat’s attributes such as location, age of flat size, floor level, extent of renovations, etc.

For flats which the buyer has a personal preference and liking for, the buyer may be willing to pay a premium above the market value to purchase the flat. On the other hand, some flats may be sold below the market value for various other reasons.

Generally, sellers would ask for the highest price possible. Buyers, on their part, should negotiate with the sellers and offer a price within their means. It is not appropriate for HDB to intervene in the negotiation process between buyers and sellers. Such interventions contradict the fundamentals of property transactions, which are subject to prevailing market forces of demand and supply, and negotiation by the buyers and sellers.

There is a wide range of flats in the resale market in terms of flat type and location to suit the needs of different buyers. Buyers are advised to consider widening their search for a flat for more choices.

Housing & Development Board (HDB)

Will there come a day when only the rich can afford resale flat?

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