Solutions: Get In Principal Loan Approval
Cash-over-valuation (COV) figures will no longer be part of the negotiating process for Housing Board resale deals, as buyers and sellers will now have to agree upon a price first before getting an official valuation, National Development Minister Khaw Boon Wan said in Parliament on Monday.
Previously, sellers usually got valuations first, and then negotiated with buyers over how much more - or less - should be paid. But negotiations should "rightly" be based on recent transaction prices, not the additional cash premium or COV, said Mr Khaw.
So from 5 pm on Monday, a price must first be agreed upon and the Option to Purchase (OTP) granted, before buyers can request a valuation from the HDB. HDB will no longer give valuations to sellers, although existing OTPs and valuations will still be honoured until their expiry.
This move will "restore the original intention of valuation, which is to help buyers get a housing loan," said Mr Khaw.
He noted that with COVs now hitting zero or negative figures, this is a good time to make the move. There may still be a difference between the agreed price and the valuation, so COVs will still exist - but as a consequence, not as a standalone figure.
To help buyers and sellers in their negotiations, HDB will publish daily figures on recent resale transactions starting Monday, rather than fortnightly as was previously the case. "This way, buyers and sellers can refer to latest market information during their negotiations," said Mr Khaw.
"Negotiating on price rather than COV will take some getting used to," he added. "However, it is a useful move for long-term market stability."
TAGS: BUDGET 2014, COV
