Recalling how I struggled to find information for purchasing my first HDB Resale Flat, it was tough as information are scattered all over the place.
I hope this post that I am going to write will help many of you!
Here are the things you need to prepare since you do not have an agent:
I would like to elaborate further on 2 of the points above as it is more complicated:
Point 2 – Financial Plan As mentioned, you will have to know your budget well as it will not only help you to save time on viewing too many flats but it will also give you a better view when you are doing your price negotiation with the Seller/Agent.
Note: The only thing I have missed out during my purchase was the Fire Insurance. The basic package offered and usually taken up is really cheap. HDB Fire Insurance (Basic) This insurance covers only the basics which does not cover any renovation done to your flat incase of a fire incident. I would strongly recommend to get the package Homeowners Enhanced to have full coverage. AIA and other insurance companies do offer full coverage too!
Point 3 – DIY or Engage an Agent More Buyers are opting to DIY recently as it saves a huge sum of money which can put into better use (E.g Renovation). Currently the market rate to pay an agent is 1% for Buyers.
|Size||Estimated Price||1% Commission|
|2-Room HDB Flat||S$260,000||S$2,600|
|3-Room HDB Flat||S$320,000||S$3,200|
|4-Room HDB Flat||S$400,000||S$4,000|
|5-Room HDB Flat||S$500,000||S$5000|
(Apologise to agents out there) It is extremely simple to DIY as a Buyer for a HDB resale Flat. No complicated paperworks and if there are any issues, just call up HDB or drop them an email and you will have your answers almost immediately! Fret not as Seller’s Agent are often willing to assist or at least okay with you DIY purchase. Just be sure to give him a little red packet for token of appreciation if he/she did a great job assisting you! Seriously no offence to agents, but most of the questions I have for my Seller’s Agent, he does not even know and have to call up HDB to enquire. So I really have no idea why anyone would need a Buyer’s Agent
***Get Started*** A) Apply for a HLE Letter. – Application For HDB Loan Eligibility(HLE) Having a HLE Letter basically tells you how much you will be able to Loan from HDB. Typically it will take 7 Working Days for you to receive the approval. Note: Please have your HLE Application done & approved or else some Seller’s Agent may not even entertain you.
B) It is time to search for your dream house. For a start, you may visit Property Guru and you’ll find tons of postings there. (I found my resale flat there too!) Often, you will wish to know if there are any upgrading programs done the previous years. Here’s where to check: Enquire Status of HDB’s Upgrading/Estate Renewal Programmes (You may call up HDB to confirm if Seller had already paid up for these programs. Otherwise if the billing comes after handing over, you will be responsible of the payment). Remaining Leases shown in this website is often not accurate. I would suggest you to check on HDB website to confirm: HDB Centralised Map Services
C) Contact Seller’s Agent for Viewing Feel free to ask any questions you have pertaining to the flat you have shortlisted. One suggestion is to save the contact of the Agent in your phonebook with the flat info you’re interested it as you are most likely going to contact a few agents a day. Most importantly, it is important for you to let the Seller’s Agent know you will be DIY purchase and check if he/she is cool with it.
D) Viewing Day Do not be afraid to ask for permission to take photos of every single corner of the flat if you are genuinely interested. Many times after several viewings a day, you start to question yourself about the flat and it will be really handy if you have the photos to refer to. Take your time to look at the flat. Look and note what things you will need to rectify if you purchase this flat. One important point is to take note of the condition of the ceilings and pipes to see if there any extensive repair required. Questions like what was the last offer, Option Fee, Deposit Fee and if the Seller requires any extension will help you in your decision as well.
E) Negotiation without a Buyer’s Agent After confirming the unit that you like, it’s time to flaunt your bargaining skills! Haha! Note that the Seller’s agent may give you a real / fake last offer. Often they will jet up the last offer amount so that you will offer higher. Check the recent sales of the entire block and within that area in HDB website: HDB Centralised Map Services With this check, you will be able to gauge better on how much to offer.
Note: If you offer a lot higher than the recent transaction price, chances are you will have to top up in CASH for the differences when the Valuation report is out.
F) Seller Grant OTP – Option to Purchase Once price is agreed, make an appointment with the Seller’s Agent to get Seller to issue OTP (Option to Purchase). By now you should have discussed how much will the option and deposit fee be. Option Fee should not exceed S$1000. Clause 12 of the OTP is important if you are particular on the timeline of this resale purchase. You have 21 Days to review this purchase (Including Sat, Sun & PH). Take this time to consider and check your financial status again.
G) Buyers Submit Valuation Request – Submit Valuation Request Note that you only have 1 Working day to submit this request after being granted OTP! A valuer will be assigned by HDB to assess the Flat’s Value. This will be done within 4 working days and the valuer will arrange with the seller directly. You can check on your HDB page for the valuation report. It will usually be uploaded within 7 to 10 days from the valuation date.
Once Valuation Report is out, you will know if you will be paying for the agreed price or you need to top up up the differences in CASH if the Value of the unit is higher than the agreed price. (Due to the new regulation implemented from 10th March 2014 onwards, you will only know how much “COV” to pay after valuation report is out) – No more COV!
H) Exercising OTP Make an appointment with the Seller’s Agent to exercise OTP. Deposit should not exceed $5000 (Including Option Fee).
Resale checklist have to be done – Resale Checklist Ensure your HLE is still valid / Letter of offer from Bank
I) Submit Resale Application – Resale Application Both Seller/Seller’s Agent & Buyer have to decide when to submit the resale application as both application have to be submitted within 7days of each other. In addition, ensure that it is submitted within the stipulated days as agreed in the OTP Clause 12 as highlighted above. Also, note that you will have to decide a date with the Seller/Seller’s Agent on when is the 1st appointment. (Usually earliest is 6 weeks from the date of application) I would advise to inform the Seller’s Agent that you will submit your portion first and they will submit the 2nd portion and book the 1st Appointment.
J) First Appointment – First Appointment Info Finally after all the hassle, you have reached the first mile stone of First appointment! First, pray hard that Seller does not delay the first appointment. I wasn’t that lucky and got delayed. To my surprise, after checking all the rules & regulation there were no protection for HDB buyers no matter how urgent you need your house. Negotiate with the Seller/Seller’s Agent nicely if this arises and hope for the best.
K) Second Appointment Aka Resale Completion This will take about 6 – 8 weeks from the date of appointment. Similarly, the date has to be mutually agreed by both parties. If First appointment was being delayed, try to negotiate for a faster 2nd Appointment if you need your house fast. Remember you’ll have to do a final inspection of the flat before the appointment. Although it is not stated how many days before should you do this inspection but in usual case it will be about 1 or 2 days before. This inspection is especially important if previously the seller had agreed on keeping some furnitures etc. etc. for you as part of the price you’ve paid. Remember to check for defects one last time!!!
Just right before the appointment, head to Fire Insurance Counter 213 or 215 at the 2nd level to purchase your Fire Insurance for you flat. Do keep the receipt as you will have to show it to the officer during your appointment.
And that’s it! You have officially become a proud owner!!!
Just one addition item, since you are in HDB Hub.. You can proceed to SP Services at the same level. Let them know you just completed your second appointment and would like to open a new account. They will do the necessary checking for you including if the previous owner had already cut off the services. (In your first bill, S$70 will be collected as a deposit) Do take note if you need gas to be cut off during your renovation period, you should inform SP Services too.
Feel free to leave a comment if there are any doubts. I would be most happy if I could help you save some $$$ on your purchase too!
Do note that the information in this post is valid as of 27 Sep 2015. Please check if there are any new implementations after since our Government are actively changing policies. (No pun intended haha)