I refer to the article “Singapore Budget 2014: Agree price, then get valuation for HDB resale deals” (Straits Times, Mar 10).
Agree on price, no valuation?
It states that “Cash-over-valuation (COV) figures will no longer be part of the negotiating process for Housing Board resale deals, as buyers and sellers will now have to agree upon a price first before getting an official valuation, National Development Minister Khaw Boon Wan said in Parliament on Monday.
So from 5 pm on Monday, a price must first be agreed upon and the Option to Purchase (OTP) granted, before buyers can request a valuation from the HDB. HDB will no longer give valuations to sellers, although existing OTPs and valuations will still be honoured until their expiry.
Help buyers get a housing loan?
This move will “restore the original intention of valuation, which is to help buyers get a housing loan,” said Mr Khaw.”
– So, you agree to buy at an agreed price – only to discover later that your price is a lot more than the valuation – you may a big problem – how are you going to get a housing loan that is sufficient to pay for the HDB flat?
Got such thing as “negotiations should “rightly” be based on …” ?
As to “Previously, sellers usually got valuations first, and then negotiated with buyers over how much more – or less – should be paid. But negotiations should “rightly” be based on recent transaction prices, not the additional cash premium or COV, said Mr Khaw.”
– If only the property market is so simplistic as “negotiations should “rightly” be based on recent transaction prices, not the additional cash premium or COV”. “Recent transaction prices” are but just one of many subjective factors that may determine the price of a property, such as renovations, location, etc.
Useful move for long-term market stability?
With regard to “”Negotiating on price rather than COV will take some getting used to,” he added. “However, it is a useful move for long-term market stability” – only the future may tell as to whether this “Uniquely Singapore” policy change will lead to “long-term market stability”?
If history and past experience is anything to go by – the market may “freeze up” as some may adopt a wait-and-see attitude – which may cause an already weak and declining market to decline even faster?
By the way, has any country in the world ever implemented such a “no valuation – agreed price” policy?
Leong Sze Hian