Questions to consider when buying resale for your 1st home - Making an informed offer

Buying Property Guide

Once you have decided on the unit, remember to do a quick check on the latest ethnic integration policy (EIP) quota in the area via HDB's eService online, before you made an offer to the seller.

It is important to note that currently only potential resale HDB buyers or their representatives can submit a request for valuation after the sellers have granted them the Option to Purchase (OTP). In other words, both seller and buyer will now have to negotiate on the sales price of the resale flat based on recent transacted prices.

After which, the buyer will have to pay an option fee of between $1 to $1000 (decided between buyer and seller) to secure the OTP with the sellers. The option period is 21 calendar days including Saturday, Sunday and public holidays. If the buyer intends to use CPF for payments, or take up a HDB or bank loan to finance the purchase, the buyer need to request for the valuation report from HDB during this period. Do note that it is a requirement for all potential HDB buyers to obtain a valid HLE or a Letter of Offer from the bank before they exercise the OTP.

To assist potential resale sellers and buyers in making an informed decision despite the lack of a valuation report, HDB has been updating the transacted prices of resale units daily as soon as they are registered. It is extremely important for potentially buyers to make use of the Resale Flat Prices e-Service available on HDB website, to check the transacted prices for resale flats over the past two years, as both HDB and banks will only grant loans based on the lower of sales price or valuation. In other words, if your valuation is lower than the sales price, you will have to fork out the "balance" in cash.

In the event that the buyer does not wish to exercise the OTP and complete the purchase, the option fee will be forfeited. This only applies to resale HDB. For private housing, an option fee of typically 1% of the agreed resale price is to be paid to the seller as part of the offer for the OTP. Likewise, this amount will be forfeited if the buyer chooses not to exercise the OTP. Hence, you should only request an OTP from the seller after you have done a thorough homework and are agreeable with the final negotiated resale price, so as to avoid having your option fee forfeited.

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