1. Get armed
READ up on the facts. After deciding what type and location of flat you want to buy, go online to the Housing Board website - www.hdb.gov.sg - and follow the links under 'home seekers' to 'HDB housing market statistics' - to find out the median resale prices and average amount people paid above valuation for the flats.
If you are eyeing flats in a particular block, you could also call up agents marketing flats in nearby blocks to find out what kind of prices they are seeking, said Mr Albert Lu, managing director of C&H Realty.
Visit the location at different times of the day, to get a feel of what it's like to live there, suggested Mr Eugene Lim, an assistant vice-president of ERA Singapore. Some people, he said, buy a flat near MRT stations because it is convenient to get around, but realise too late that it comes at a price: The frequent rumbling audible from their flats as trains roll by.
2. Set the rules of the game
DECIDE if you want to hire a housing agent to help you with your purchase, or if you want to go it alone.
Although commission structures are not fixed under the law, buyers typically pay their housing agent a 1 per cent commission for HDB transactions.
If you are doing it yourself, check out the HDB website to find out the procedures involved, or attend its monthly resale seminar.
Most agents representing sellers charge buyers the 1 per cent fee if they are not represented by another broker. This practice has been called into question by the Consumers Association of Singapore because of the possible conflict of interest that may arise, when an agent represents both buyer and seller in the same transaction.
Some agents turn down requests from independent buyers to view the flats that they are marketing if the buyer says he will not be paying the 1 per cent fee.
These agents argue that there is a higher chance of an independent buyer tripping up a transaction if he does not use the services of a broker.
Whatever you decide to do, it is best to make it clear upfront if you are opting to go it alone.
A senior division director of PropNex, Mr Eric Cheng, advised independent buyers to state clearly when they first contact brokers marketing the flats they are considering, that they will not be paying them a fee.
3. Act the Sherlock
LIVING in high-rise, densely packed public apartments has its own quirks. You never know, for example, if an owner is selling the flat because he has been harassed for repayment by loansharks at his home. If you buy his flat, you may end up being harassed yourself even if you had nothing to do with the debt.
To avoid this, Mr Cheng suggests taking a walk down the staircase closest to that flat. If loansharks have left graffiti there ('0$P$' - which means 'owe money pay money') or at the void deck, it could indicate that the flat is being targeted.
Another problem, more common in older resale flats, is leaky ceilings. This happens when shoddy renovation upstairs or age creates kinks in the waterproofing layer in your ceiling.
To spare yourself the hassle of living with this or trying to fix the leak, look out for watermarks on the ceiling when viewing flats.
4. Be shameless
DON'T give up if one agent turns down the price you offer for a flat. You may get lucky with another agent marketing the same flat.
Some flat owners do not give exclusive marketing rights to one agent, preferring instead to pay a commission to whoever gets them a deal. This means that if Agent A thinks that your offer of $200,000 for the three-room flat you are looking at is too low, Agent B might find it a worthy offer to discuss with the owner.
Agents, however, are unlikely to disclose that they are marketing a flat which they have no exclusive rights over. C&H's Mr Lu suggests you suss that out by looking up property advertisements. If there are three or more ads for a unit in that particular block in one day, chances are, that flat you are eyeing is being peddled by more than one agent.
5. Keep your cool
IT IS common for agents to arrange viewings for as many as 10 to 20 interested parties within a half-hour slot, to heighten the sense of competition among buyers. Some agents will tell you they already have offers for the flat - when they don't - just to get you interested.
There's an easy way to call their bluff, according to Mr Chandran Pillay from Global Real Estate Services. If an agent tells you that someone has already offered $480,000 for a flat, make him an offer of, say, $460,000 on the spot. If he tries to negotiate with you, that $480,000 offer is most likely a fake. If it had been genuine, he would have turned your lower offer down immediately.
Some agents, said PropNex's Mr Cheng, arrange for potential buyers to view a unit, but cancel it at the very last minute on the pretext that the buyer has changed his mind about selling the flat. After a few days, they call buyers to say that the flat is back on the market, and tell them they will have 'first priority' at the viewing. This creates a sense of urgency by making the buyer feel that he had almost missed out on a good deal.
Whatever you are faced with, keep your sense of perspective - in this case, the prevailing market price of the flat you have in mind.
6. Watch out for upgrades
IF A flat you are interested in is being upgraded by the Housing Board, find out who is paying for the work. Upgrading could range from changing doors and toilets to adding lifts to every floor of a block. The HDB bills owners for upgrading after the work is done, and the owner of the flat at the point of billing is responsible for payment.
If the seller wants to factor the upgrading cost into the price, ask for a receipt to show that he has paid the upgrading bill, or check with the relevant HDB office, suggests Global Real Estate's Mr Pillay.
7. Take your time
BUYERS and sellers of HDB flats must use the standard HDB Option to Purchase form for the resale transaction. Under this arrangement, the buyer gets 14 days to consider his purchase after paying the seller a non-refundable option fee not exceeding $1,000.
Once a seller grants an option, he is not allowed to sell the flat to another person within that same period. If, after 14 days, the buyer decides not go ahead with the deal, he forfeits the option fee. If he goes ahead with it, he signs on the same form and pays another fee to the seller to exercise his option.
Do not feel pressured to exercise an option on the spot, unless you are very sure about your decision and your ability to finance it. If, for example, you abandon the purchase after exercising the option, the seller can claim damages from you.
8. Don't even think about it!
ABOUT two years ago, it was common for buyers and sellers to collude to artificially inflate the price of a flat, such that the buyer could get a bigger housing loan than he was allowed.
This illegal 'cashback' arrangement is no longer rampant, after the Government clamped down on the practice in April 2005.
Another under the table practice, however, still exists - 'cash down'. This usually involves someone who bought a flat at a high price during the property peak of the 1990s and is selling at a loss now because valuations since then have fallen.
If he had used a lot of his Central Provident Fund (CPF) savings to buy the flat, the sale proceeds from that flat would have to be refunded into that retirement savings account.
However, by underdeclaring its sale price, he can get some cash in hand.
For example, someone who bought a flat for $380,000 in the 1990s may find that it can be sold for only $300,000 now. He may offer to sell it to you at a discount - at, say $290,000.
In return, he will ask you to declare the sale price of $270,000 and pay him the difference of $20,000 in cash. This way, he gets some cash out of the sale, instead of having the entire sales proceeds end up in his CPF account.
Avoid getting entangled in such illegal arrangements. Under the Housing and Development Act, you can be fined up to $5,000 and jailed up to six months for giving such false information.
9. Be a busybody
DON'T be afraid to ask all the questions that you need to know about a flat before deciding on your purchase.
A housing agent acting for the seller may not voluntarily disclose information that may hurt the chances of the unit being sold, but he is obliged to tell the truth when asked, said Mr Cheng.
If, for example, you cannot bear the thought of living in a flat in which someone has died, be sure to ask the agent at point blank whether it happened in the flat you are inquiring about.
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