Thursday, 14 March 2013

DIY Resale of your HDB Flat?

I am writing this post from my personal experience of DIY transacting of my own HDB resale flat.

9 Steps to DIY sale of flat:
1. Confirm your eligibility to sell:  
In most cases, you have to confirm whether your MOP(Minimum Occupation Period) has been fulfilled. Basically, you can log into your HDB Portal via SingPass and check your effective date of purchase of your unit in the past. At the present moment, you will be eligible to sell as long as you have fulfilled the 5 year occupation quota. (This is aside from special cases where one might have obtained special permission to sublet their entire unit within the 5 years)
2. Do your Seller Checklist:  
This is a standard requirement where sellers have to visit HDB portal, log in via their Singpass, complete their HDB Resale Seller Checklist online and do an electronic submission. Do note that each checklist document bears a unique running number which you have to use later for your HDB resale submission.
Some important items within the checklist are financial planning and sales proceeds calculations. If you were to follow the HDB e-service calculators, you can be pretty assured of your financial standings. You will also be able to determine what subsequent housing options you can go for with the estimated sales proceeds.
IMPORTANT: You can only grant any potential buyers the OTP 7 days after depositing your checklist. Upon deposition into HDB repository, the validity of the checklist will be 6 months.

3. Plan your marketing:  
To be truthfully honest, there are seasonal periods throughout the year when transactions or even viewings get typically low. Such periods within Singapore are likely Lunar Seventh Month, June/Dec school holiday periods.

It would be more effective doing marketing if you can avoid those months.

Also, you will have to consider the most effective way for you reach out to potential buyers. Typically within Singapore, the most effective way is still via Straits Times classified ads. To get the most of your money, try to run a 3 liner over the weekends where you can certainly get more visibility. You may also try the STProperty portal but I reserve my comments if it might ultimately be really successful. PropertyGuru accounts are only held by realtors such as myself so there isn't really any point trying.

4. Plan your viewing:  
It will be best to hold viewings over weekends where there is a higher chance of bringing in the crowd. Try to set your viewing timing to a certain date and time frame such as between 2- 5pm. Some realtors call this an open house strategy.

When calls start coming in, it would be highly possible for 90% of the calls to be made by real estate agents enquiring for their buyers. Do tell them honestly and upfront that you are doing selling on your own to avoid future unnecessary misunderstandings.

When conducting viewings, keep your flat clean, tidy and airy. Send the kids away if possible as noise are distracting and first impression counts. Space the viewings at least 15 minutes away from each other in order to avoid overcrowding. 

5. Pricing Your Property:
How would you price your property? You will be in a dilemma to advertise your wish price without scaring away potential buyers at first sight. For a start, HDB portal is now very transparent in sharing past transactions within any estates. You may very well gauge your sellable range from the statistics from HDB portal. Also from experience, when the marketing is still fresh, try to secure as many viewings as possible as every viewing might be an opportunity. A common strategy to advertise your pricing will be putting it as VTO (View to offer). Basically, you can use this method to let interested parties put in their offers and for you to get honest feedbacks how the market is responding to your property. At this point of time, it will be also interesting to know that every property will sell but it will be the market the sells the property. Pricing yourself out from the market will only facilitate your neighbors to sell easier. *Do check the HDB past Resale Transactions for a honest review of your neighbourhood market.

Also, it would be important for you to understand who are eligible to purchase your flat in case you are dealing with direct buyers. Read up on Buyers eligibility under the Ethnic Integration Policy and SPR Quota.

6. Accepting an Offer:  
After much negotiation,you have finally received an irresistible and fantastic offer. So what's next?

The next procedure in line will be to do up the Option To Purchase with your buyer.
Sellers and buyers of resale flats must use the HDB standard Option to Purchase (OTP) as the form of
contract in resale transactions. No party is allowed to enter into any other agreement pertaining to the sale and purchase of the flat as it is null and void pursuant to the Housing and Development Act. Go through the HDB OTP in details, especially the pages where there are open fields for filling in. (Pages 1,2,4,8)

Now I shall run through some some important fields within the OTP.

First of all, the final purchase price which will include the COV.
Next, the prescribed Option Fee, Deposit and Option Period :
Option Fee-
An amount not exceeding $1,000 
An amount not exceeding $5,000 
(Option Fee + Option Exercise Fee = Deposit) 
Option Period-
14  calendar  days  (including  Sat/Sun  &  public  holidays)  from  the  date  of  granting Option. [E.g. If the seller grants an Option to the buyer on 1 May 2012 (Tuesday), the Option will expire on 15
 May 2012 (Tuesday)]. The Option expiry time is standardised at 4pm. 

Next, name and NRIC Number of buyers and sellers as per their Identity Card.

Next, the number of calendar days for which both parties have to submit the application in to HDB for their approval from the date of exercise of Option. This is important as both buyers and sellers will have to submit their portion electronically to HDB within the stipulated timeframe.

Finally the sellers will have to sign on page 8 which is the granting of option to the buyers. Buyers can only sign this portion only after they have obtained the necessary bank loan Letter of Approval/HDB HLE and upon payment of Option Exercise Fee to the seller. within the 21 days option period. (As part of the process, any buyers who require to take loan will make use of these 21 days to apply for a valuation. Ultimately if the valuation price falls below the actual selling price, there will still be Cash Above Valuation liable for your buyer) Note: Once you have granted the option to a buyer, you are legally binded not to offer option to any other buyers within the option period.

7. Submission:  
After exercising of the OTP, the next step in line will be doing your submission to HDB. Via HDB portal e-services, you will be able to check the earliest first appointment dates and come to an agreement with your buyer on a common first appointment date and timing.  

All resale applications will have to be submitted online either via the ResaleNet system(Realtors only) or the e-Resale system. Buyers and sellers (or their salesperson) will also have to submit their respective portions of the resale application separately.

Either the buyer or the seller may submit his portion of the resale application first. Once the first party has submitted his portion, the second party will have to do so within 7 days. If not, the submission by the first party will lapse and they have to re-start the process and repay the submission fees ($60 for DIY)  
Therefore, it is always important for you to make sure you do the correct data entry of information. Any error done on the first party's part will cause problems for the second party. This is because the information will simply not match on both applications  and the process will simply halt. A simple example would be the for first party to miskey the sale price and when the second party will not be able to do submission if he/she tries to input the correct sale price for submission.  

A resale application is deemed complete only when HDB receives both portions of the resale application. The second or last party(in the event of contra) in this transaction can then book the First Appointment. Upon receiving the complete set of resale application, HDB will assess the buyer's eligibility to buy and the seller's eligibility to sell the flat as at the date of submission by the second party.

Note: If your current loan is being covered by a bank, you will also need to engage a private conveyancing lawyer to assist with the conveyancing. 

8. First Appointment:  
Do remember a few key items to bring along for your first appointment as a seller - Identity Card, first appointment letter, original OTP forms, originally signed seller checklist, declaration form for casement window and etc.

Be early if possible, in order to meet your buyer and scan your first appointment letter for a queue number.

Upon calling of your queue number, you will then proceed to check your documents at the counters outside the Resale Officers room before meeting the officers subsequently.

If you will be engaging a HDB lawyer to process conveyancing for property, do remember to bring a couple of hundred dollars for payment at HDB's payment counters after the first appointment session.

If you are engaging a private lawyer to act for your conveyancing, you would have likely preset an appointment to meet your lawyer after the first appointment.

9. Completion:  
The completion date is typically 6-8 weeks after the first appointment. Few days prior to the completion, the buyer will also arrange for a final inspection of the premises to check that you deliver the property with vacant possession.

Note: You will not have to make the 2nd trip to HDB for the completion if your are represented by a private solicitor. Your lawyers will subsequently issue a cheque for your sales proceeds separately. 

Note: Do remember to cancel your existing utilities account for your property or do a transfer to your buyer on the date of completion.

Do note if you will opting for the second concessionary HDB loan subsequently:

Flat buyers can keep the greater of $25,000 or half of the cash proceeds (including the cash deposit received), HDB will take into account the remaining part of cash proceeds when determining the quantum of the second loan to be granted.   

The above 9 key steps are the basic procedures to follow for the selling of your unit. However, there might be more complicated scenarios with extra documentations required for sale cases involving divorce dispute and bankruptcy. Also, there are much more items you have to take note when qualifying and negotiating with your buyers. This is the reason why professional consultancy from qualified realtors are actually worthwhile to safeguard your interests.

I'll be happy to share more and offer my professional assistance if required. Do drop me an email for further discussions.