Recently HDB announced a new rule that changed the landscape of seller of HDB. That now only buyer can put up request for valuation after the seller has issued option to purchase (OTP). This is reverse of what seller and buyer does all these years.
Benefits to Seller:
1) No more concern for seller or seller’s agent worrying about the validity of valuation report. In the past, once valuation expires a new request has to be put up and cost of the 1st valuation will goes down the drain.
2) HDB updates the sales prices almost within the day as compare with the long practice of updating only after 1st appointment.
Benefits to Buyer:
1) Buyer no need to worry about the validity of the valuation report
2) Buyers are given more time to excise the option including the time taken to get the valuation report.
Disadvantage to Seller:
1) Now it’s harder to judge how much Cash Over Valuation (COV) to ask when there is no valuation done. However, real estate salesperson still able to find out information on the last sold valuation as a guide. There is a new system developed to give estimated valuation value
2) If the block has just reached 5 years Minimum Occupational Period (MOP), there wouldn’t be any record to compare as reference.
3) Seller has to wait for 21 days for buyers to excise instead of the 14 days previously.
Disadvantage to Buyer:
1) Now it is so much harder for the buyer to judge now much COV he/she has to pay. This is the cash portion where neither HDB nor Bank loan will loan. Worse case, if this is going to be a bank loan, they have to consider the minimum of 20% down payment they have to come up with. This have made financial planning more challenging than in the past, buyers used to be able to determine the cash portion before committing now not possible. Buyers will have to engage in the guess game.
2) In the event that the valuation amount doesn’t match the approved loan amount or outside their budget on the cash portion, buyers will leaps the option and loses the option fee.
3) Now it is the buyer or their salesperson responsibility to put up the request for valuation after option is being granted. It takes about a week for the report to come out and buyer have to push their bankers to process their application that takes much longer in view of the TDSR screening requirements. Any delay in any of the process, likelihood is that the buyer will not meet with the deadline.
In my opinion, this wouldn’t change the fact that there will be still COV for resale units sold despite report of records units sold below valuation. As a matter of fact, it might in a way create unexpected surprise to buyers if the valuation happens to turn out to be lower than expected.
It is not possible to make everyone happy regardless how well the idea is being sold to the public. Even by removing COV by totally also might have its sets of concerns as well. Since resale units has been set all these years can be sold in open market with willing buyers and sellers with demand there it wouldn’t change much.
Hope that the long term issue on upgrader can be addressed since all HDB owners can own only one unit, the transition period has always been a concern.