Property News & Market Trends

Property News in a nutshell - May

Cash over Valuation dropping or Valuation going up?

The actual question is - how do valuers go about deciding a figure tagged to a home that may make both buyer & seller happy?

Valuers used the latest selling prices within the same vicinity, type, make, renovations to decide on a price they think its reasonable. Basically, a valuer follows the buyers' willingness to pay. Take for example, how could a Dover Crescent HDB 5Rm be worth more than $730,000 when 18 months before was worth only $430,000? That's an increase of 70%! Who decides the valuation? Buyers, of course. Simply put, valuers rely heavily on the latest transactions, which are normally only available 45 days after an option is signed for HDB and for private transactions, earliest 2 weeks after option is signed.

For such practices, you can expect valuers to continue pricing homes higher even when demand slows down as the effect is only registered months later. That's how indexes are programmed anyway. They are always late.

However, with valuations going up, its a blessing for both buyers & sellers. Buyers now can afford to cough out less cash over valuation whilst sellers still get a higher price. So, how long can this go on?

Already the private sector is showing signs of strain and asking prices for high-ends are sliding slightly faster than last month. Will this affect the HDB market? Very unlikely. HDB is a very different market.

You see, HDB transactions are ongoing activities. When a HDB dweller sells, he got to buy. When a buyer buys, he got to sell, unless its a new entry. Demand for HDB homes based on current report showed very high applications for new units. A big portion of these will be entering the resale market due to the low percentage of success; about 10%.

Unless our economy drops rapidly, HDB sales will remain strong. Since January 2007 till now, HDB transactions has always been above 2000 units per month. However, the private sector's transactions had dropped more than 80%!

To gauge a saturday's advertisements, the number of private sellers outweighed HDB resellers by 2.5 : 1. However, responses from HDB outweighed the private 9 : 1! That's a sombering fact.

The private battle now would be between buyers & sellers. The first group to blink loses. Hmm... don't expect developers to blink so soon, though.

Another Accreditation for agents?
In Singapore, you can find multitudes of them for a special breed of people - Property Agents.

Why are there so many complaints on agents? Are consumers complaining because they don't understand why agents are earning thousands of dollars just for a deal. In fact. to many of these buyers or sellers, especially in the HDB market, it could possibly mean a few months of their hard-earned salaries. It's a pain to part with the commissions if they don't feel that the agents "earn" them.

Then again, with more than 30,000 agents registered and 64,386 transactions last year, we can expect a small percentage of blacksheeps & complaints. Even lawyers complained that agents can earn more than their conveyancing work done! Property is perhaps the biggest transaction a family can experience and with little or no knowledge of the procedures and complications, there are bound to have misunderstandings and unhappiness. Sadly, agents always get the butt of it all. HDB residents can go to their MPs, private residents can threaten to sue. Agents had nowhere to turn to, except small claims.

What about the current IEA(Institute of Estate Agents)? And the newly set up Singapore Accredited Estate Agencies? Did the government felt the incapability of IEA and hope by setting up SAEA, complaints will be cut down? If both are ineffective, is there a reason to introduce another - the CaseTrust Accreditation Scheme? What exactly is the government thinking, or not thinking?

There is no simple solution. Its incredible to try to rein in control and expect only one standard. The agent population is made up of people coming from all walks of life. Many are finding it hard to make a living finding a job, thus have no choice but become an agent. I really pity them, especially the retrenched, the poorly educated and the seniors. These people have little or no chance in getting a job with reasonable pay based on their experience or education. The fact is, the government may ban people from being an agent without CEHA. Luckily, for those without hope of attaining CEHA, there is a simpler version of known as the Sales Accreditation with multiple choices. Cool.

Coming back to serious complaints, in the US, agents get sued for misrepresentation and mishandling. In Singapore, I had yet to come across more than 5 cases of agents being sued in a year. Not that I'm not hoping this would happen, since it only makes lawyers richer, and everyone else more miserable.

A out-of-court department, like the family dispute centre, can be set up to address serious complaints due to misrepresentation, mishandling of transactions, lack of fiduciary duty and unethical practices(though this is the most difficult to prove). However, consumers must be educated about their rights and be taken to task should they "felt" wrongly charged or try wringling out of a regrettable deal. Frankly, monetary punishment is the harshest for agents to bear. Once hurt, they will remember to abide by their rules of engagement.

To agents, good luck to you. To consumers, be educated to know your rights. However, I suppose only a small 1% will need to watch out. Why punish and burden the other 99% who are just trying to make a living?

Bingo! U got a Match!

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