11 March 2014

Changes for Resale Procedure


I was very surprised by the change, the best part is I only know about it today, and they announced it only yesterday, the change also went into effect yesterday at 5PM! I thought this kind of change they should announce earlier?

Anyway the part that seems to affect me is as at 10 Mar 2014 5PM, seller can no longer apply for valuation report, what will happen is buyer and seller will negotiate the price based on the latest transacted price, which means no more COV in play, but don't go ahead and think that no more cash top-up is required, you are so wrong, will explain later, and somehow they will agree on XXX amount, then seller will grant the buyer the Option to Purchase (OTP), range between $1 to $1000, then buyer will pay money to "buy" the OPT and then proceed to apply for valuation report. See what I'm saying now? It is only after buyer pay OTP then he will know how much the flat is "worth", the key thing is HDB or bank will only loan based on the valuation price or negotiated price, whichever is lower, so if the negotiated price is $300K, end up the valuation price is $250K, the buyer will need to top-up the difference of $50K in cash OR he can choose to forgo the OTP, so one thing for sure is the practice of $1000 option fee will be changed, buyer will be more wary, seriously which buyer will want to risk $1000 to end up having to cough up more cash than he can afford.

Technically they did remove COV but it's still there, it's just that you used to know the price first and then you decide whether you want to commit, now you have to commit before you decide whether you want to commit?!? Confusing huh.

So how it may affect me is because currently I'm trying to purchase a resale unit and I have not paid for the option yet, and the seller's valuation report is going to expire in 2 weeks time, we had originally planned to meet the seller and his agent this coming Saturday to purchase and exercise the option i.e. pay $1000+$4000, then today I saw the news, damn shocked, quickly called my agent, he assured me that as long as the existing valuation report is valid, we can still proceed with the purchase, but to be very sure, I called HDB to confirm and they told me the same thing, it doesn't matter whether you have paid for the option or not, as long as the report is valid, you can use it, phew, I just hope everything will go smoothly this Saturday, hope the seller won't decide to do something funny because of the new ruling. But the HDB staff sounds a bit unsure, that made me feel weird, and so to be ultra safe, I emailed them my doubts, it's always good to have black and white, will update once they reply.

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