5 Jun 2016
Many Singaporeans buy and sell their properties. While most usually engage a real estate salesperson to save the hassle, some of them are actually planning to handle the property transactions on their own.
Here are Some Tips for DIY buyers & sellers for HDB resale flats:
- Resale Levy – The resale levy amount is fixed based on the first subsidied property, but you only need to pay when you purchase a second subsidied property. It is applicable to buyers who:
- Dispose of their subsidised flats and then buy a second subsidised flat from HDB
- Dispose of their subsidised flats and then buy an EC from a developer where the land sale was launched on or after 9 December 2013, including those where tenders were not closed, e.g. Westwood Avenue, Canberra Drive and Anchorvale Crescent
- Usage of Central Provident Fund (CPF) Savings – The Public Housing Scheme (PHS) enables CPF members to use their CPF Ordinary Account savings to buy new or resale HDB flats. Buyers can use their CPF Ordinary Account (OA) savings to buy an HDB flat (new or resale) to:
- finance all or part of the purchase price;
- service monthly housing loan instalments taken to buy the HDB flat; and
- pay the stamp duty, legal fees and other related cost such as flat upgrading cost.
Nevertheless, you are not eligible if you are:
- buying an HDB flat with a remaining lease of less than 30 years; or
- buying an HDB flat with a remaining lease of less than 60 but at least 30 years and your age plus the remaining lease of the HDB flat is less than 80 years.
- Checking of various grants – DIY buyers should check and fully utilise the various CPF Housing Grants for HDB flats catered to different categories of buyers, such as first-time applicants, second-time applicants, first-time and second-time couple applicants, non-citizen spouse and more.
There are the potential pitfalls associated with do-it-yourself (DIY) property transactions such as:
- Emotional attachment – Sellers have an emotional attachment to their properties. Thus, they expect a higher selling price without really understanding the market conditions and transactions. This will usually lead to an unsuccessful transaction.
- Qualification of buyers – Unlike agents who have a vast network and marketing expertise to reach out to qualified and interested buyers, DIY sellers may have less access to qualified buyers. Engaging a non-qualified buyer not only causes a loss of time but also unnecessary incurred cost.
- Psychological dilemma – On average, the selling process of a property will take more than three months. DIY sellers may lose patience and become desperate. As such, they may choose to sell their homes at a lower price. Alternatively, a real estate salesperson engaged by the seller may advise him otherwise.
- Procedures of transactions – A DIY seller and a direct buyer may not be familiar with procedures such as the contra facility and may mess up the timing arrangements for submission, first appointment and completion. Changes of appointments require a resubmission to Housing and Development Board (HDB) and will thus incur costs and create inconvenience.
- Legal redress support – If a buyer is to default on the deal, for example, he withdraws on the first appointment, HDB will treat the case as cancelled. There is no support for legal redress from HDB. The seller would need to hire his own lawyer to seek compensation from the buyer. If the seller has bought a property and needs the money from the sale to facilitate his purchase, he will need to convince the ex-buyer to close the deal or search for a new buyer within a limited timeframe.
- Minimum Occupation Period – The three-month extension for seller to stay will delay the MOP for the buyer by three months. Both parties need to negotiate on cost such as the property tax and conservancy charges.
Many sellers opt to handle the property transactions on their own to save on the commission. Nevertheless, these are some of the pitfalls that they should look out for to prevent from losing more in the long run.
