When Jay and Lucy married in 2008, they bought a resale flat that was cosy enough for the two of them. They remembered paying about $15,000 in cash above the valuation price quoted in the valuation report for their first home. Still, they counted themselves among the fortunate ones as they had heard from friends that some buyers had paid much more for the Cash-Over-Valuation.

For a while, they were happy in their love nest but as time passed, they felt that a baby would complete their domestic bliss. They began looking around for a bigger flat but with a keen eye on their finances (smart couple), they did not dive in immediately.

When the revised resale procedures were announced in March 2014, Jay and Lucy thought it was good news indeed. But unsure of what to expect, Jay and Lucy looked up the procedures for buying a resale flat:

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No More Cash-Over-Valuation?

Jay and Lucy experienced a eureka moment when they discovered that the revised resale procedures meant negotiation would now be based on the total price of the resale flat – and with this change, comes the high possibility of not having to fork out an additional sum for Cash-Over-Valuation!

As the price is negotiated between a willing-buyer and willing-seller, they understood that it might not necessarily mean the removal of the cash component entirely; still, the revised resale procedures made a big difference in moving the focus away from Cash-Over-Valuation.

Is the Price Right?

As the negotiation is now based on recent transacted prices of similar flats in the vicinity, the seller will need to decide how much he or she is willing to sell the flat for. And buyers like Jay and Lucy will have to decide if the seller’s price is a fair one.

But how do they know that?

They can find out if the seller’s asking price is reasonable by looking up the resale transacted prices of the flats in the vicinity. They can also use HDB’s “Centralised Map Services” to narrow the search to within a 500-metre radius of the flat.

What Next?

Once the final price has been agreed on, the seller will need to grant Jay and Lucy with an Option to Purchase (OTP). In exchange, Jay and Lucy will need to pay the sellers the Option Fee which could range from $1 to $1,000.

They will then proceed to request a valuation on the flat. This valuation determines the housing loan amount and CPF monies they can use to fund their flat purchase. They can skip this step if they do not require a mortgage loan, and/or are not using CPF monies to finance the purchase.

Jay and Lucy have 21 days from the date the sellers grant the OTP to decide whether to proceed with the purchase. If they decide not to proceed with the flat purchase, they can let the OTP lapse and forfeit their Option Fee. The seller can then search for another buyer.

But if Jay and Lucy decide to proceed with the purchase, they will pay a deposit to the sellers (not more than $5,000 including the Option Fee paid earlier) and exercise the OTP accordingly.

Share the Information!

If you have more questions on the revised resale procedures, look up our advertorial.

If you’ve found this useful, then remember to share it with your families and friends who are looking to buy or sell a resale flat! We’ve also condensed the info into a poster – check it out here!

Last but not the least…

The revised resale procedures do not change the fact that that buying a flat – new or resale – is a long term financial commitment, and proper financial planning is needed before proceeding ahead. You may find this information useful 🙂


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