A buyer is willing to pay you $95,000. Would you sell?
A couple asked that amount for their four-room Housing and Development Board (HDB) flat, and a potential buyer offered $5,000 less than the amount they wanted.
But the sellers said no.
"$100,000 is $100,000. Because we are not in urgent need to sell," said Michelle, who is in her 30's.
The owners - who declined to give their full names - run a food and beverage business.
The Bishan flat - which had recently been put up for sale - has been valued at $460,000 by an independent valuer appointed by HDB.
The flat owners are not alone in asking for increasingly higher COV figures. According to the HDB, four out of 13,000 four-room flats sold last year had premiums higher than $70,000.
Housing analysts say it is a sellers' market right now, with resale flats being a hot commodity.
The Bishan flat owners said they have received three offers so far - including the $95,000 bid - all of which they rejected. The others were between $50,000 to $60,000.
"In one way, it's to test the market," said Michelle. "If we sell, we sell. If we don't sell, we will just continue to stay."
HDB figures show that 79 per cent of home sales transacted in the third quarter of last year were above valuation. In the second quarter, it was 57 per cent.
The median COV is also on the rise - jumping from $3,000 in the second quarter to $12,000 in the quarter after that.
Housing agents say most flats now command at least $20,000 to $30,000 COV. Throw in a good location, close proximity to an MRT station and good renovation, and the price can go up to between $50,000 and $70,000.
Analysts caution against jumping into deals that require high cash premiums.
COV is a premium, and five years down the line, the renovation will deteriorate. And there's no guarantee that you can sell at the same COV (that you had paid) above the then value, said Mr Mohamed Ismail, the chief executive officer of PropNex.
"Buyers should exercise discretion as far as how high you want to pay," he said.
The HDB does not control resale flat prices as they are the result of negotiations between willing buyers and sellers.
Intervening in COV means forcing people to buy and sell at fixed prices, it said.
It has urged buyers to exercise caution and to do their homework to determine if a flat is truly worth its asking price. Buyers should offer a price within their means, said the HDB.
Source: TODAY, 19 January 2010
