Buying or selling a property is one of the most expensive, complicated events in your life. And the government makes it even more challenging with their ever changing regulations! Your eligibility for loan, a bewildering range of seller’s stamp duty depending on your occupation period… it can all snowball into one huge headache. So most of us shell out good money for a property agent hoping we can buy that dream home at a bargain or sell our property at a premium.
First, the good news: with the revised Resale HDB flat procedure, sellers of resale HDB flats can no longer command an outright Cash-Over-Valuation (COV) for their properties; instead, buyers have to offer one price beore the valuation of the flat can be done. (Of course, if what you offer turns out higher than the valuation price, you still have to pay the difference in cash. But at least that helps prevent sellers from charging outrageously high COV! (One HDB maisonette flat in Bishan actually sold at over $1million, with a COV of $275,000, during the peak. Crazy!) This means that those who thought they cannot afford to buy a resale HDB flat due to the COV and were queuing for a new flat to buy directly from HDB, can now start shopping again!
Here’s the bad news: That means you will have to hire a property agent, or at least work with the seller’s agent. And THAT can be the real headache. So, for the sake of my cousins who are now “of marriageable age” and are house-hunting, and for those of you who may be trying to sell your home, here’s my handy 4-tip guide to help you ask all the right questions and find the right guy.
#1: Do you even need to hire an agent?
Did you know that HDB does not require you to engage a property agent? Many first-timers may not know this, including my clueless husband and I. When we bought our first HDB flat back in 2000, we didn’t have an agent and the seller’s became ours by default, picking up an easy commission. We could have saved that if we were willing to handle the paperwork ourselves.
“That was the previous practice but since 1 Jan 2011, agents may only collect commission from one party even if he represents both. This prevents any conflict of interest,” says Kelvin Fong, a top-ranking Senior Group District Director at PropNex who leads over 1,200 real estate agents.
Generally, buyers can easily represent yourselves as long as you work closely with the seller’s agent to get all necessary documents prepared. But sellers who want to cut out the middle man may find it more daunting. Marketing the property, screening enquiries, organising viewings… even if you make a successful sale, there’s the complicated paperwork and various deadlines to deal with.
Marcia Lai, director of Faith Property Network, an associate company of international real estate company Re/max, explains: “Many may lack the technical know-how, especially about the new regulations that HDB introduced recently. They may also overlook requirements like ensuring the buyer has a HDB Loan Eligibility letter.” This may delay the transaction’s completion and affect the hand-over date. For some sellers, saving that few thousand dollars in commission is not worth the hassle.
What about buying a resale private property? Since buyers do not have to pay commission – your agent will collect a co-broking commission from the seller’s agent – and you get someone looking out for your interest, why not? When we bought our condominium apartment, our agent Marcia helped us shave $40,000 off the asking price!
#2: Should you sign an exclusive deal with your agent to sell your home?
Exclusive contracts last three months and the commission for selling a HDB or private property is usually two per cent of the selling price. Marcia says that sellers usually fare better when they work with a trusted exclusive agent. As he will handle all enquiries, he is in a better position to secure the highest possible price. “When too many agents are marketing the same unit, some may to close the deal quickly by persuading you to grab the first offer instead of waiting for a better price,” she says.
According to Kelvin, an exclusive agent should provide all forms of media exposure such as classified ads in newspapers, online or printing brochures. He should also be part of a network of agents who often help one another’s clients find the right buyers, and be open to co-broke with agents who can fetch a good price. If you suspect that your agent is not performing, ask to see proof of his marketing effort; you may break the contract if he can’t back up his promises.
#3: Is your agent using your property as a “show flat”?
Some agents claim to be “specialist of Jurong East” or “King of Simei” because they focus on these areas. It’s good that they’re familiar with the grounds, but sometimes, hiring a “specialist” may not always work to your advantage anyway.
He is probably also marketing several units in the neighbourhood – and they’re all your competitors. Your home may be used as a “show flat”, as we discovered when we wanted to sell our condo at Upper Bukit Timah. Weekend after weekend, one pushy agent brought a stream of people to speed-visit our apartment and leave within minutes. She didn’t even try to promote our apartment. It felt like we were just one of the many tour stops for her clients!
Kelvin says other agents could also make use of your agent’s listings. “If your pricing is on the high side, these agents may use your home to convince their buyers why they should buy another apartment.” To counter this, Kelvin says it is crucial for your agent to offer a current market analysis before putting up your home for sale. “This helps you price your property correctly and realistically.”
#4: Hole in your new home’s wall? Broken toilet? Sorry, your agent can’t do much
There’s a common misconception that because you’ve paid the agent good $$, he/she is expected to fix all the wrongs — even when it’s out of their hands.
For example, you only realise that the aircon isn’t working when you move into your new flat. Or the toilet bowl is clogged and you need to replace it. Can your agent negotiate with the seller to pay for the repairs?
Sorry, his hands are tied. Once you put down the one per cent option fee to hold down a private property, you have to accept it as it is when you move in – broken aircon, jammed toilet and all. HDB flat buyers do have one last safety net. “There is a final inspection of the property two days before the completion of the transaction. If the aircon is faulty, you can request that the seller repair it,” says Kelvin.
What happens if your seller backs out of the sale and refuses to return your deposit? Marcia shares a horrifying tale that happened to a friend. During the second appointment at HDB, he learned that the seller had not paid up his monthly installments and Town Council fees for over a year and the transaction could not be completed. “Although my friend offered to clear his Town Council arrears, the seller changed his mind and said he’d rather let HDB re-possess his home. He had also spent the $5,000 deposit and blatantly admitted that my friend could sue him but he’s too broke to pay anyway,” recalls Marcia.
Unfortunately, agents do not have the authority to check on a seller’s records with HDB or the Town Council, which might help to flag such potential high-risk cases. Often, they are as much a victim of the unscrupulous seller as the buyer is. In this case, both the seller’s and buyer’s agents could not collect any commission as the sale did not go through.
So here you go, 4 handy tips to help you suss out the right property agent! Or if you’re still game to go agent-less, pick up tips at the ‘Resale Seminar for Buyers and Sellers’ organised by HDB. It costs $25 per person and sessions are conducted in English, Chinese or Malay. The next English sessions are on 5 Jul, 2 Aug and 6 Sep 2014.
Happy house shopping/selling!
* All pics from Google Images.