The property market seems to be extremely healthy. Buying sentiment is extremely positive as buyers throng show flats almost every weekend. With every record-breaking en bloc sale comes along a group of cash-rich buyers. Coupled with the fact that buying sentiment was extremely weak for the better part of the last five years, this pent-up demand seems to be unrelenting. For many buyers, this may be their first foray into buying a new project from a developer. Here is a short guide as to what to expect.
In a hot property market, developers of popular projects may choose to survey interest from their marketing agencies. They will usually get feedback from their marketing agencies to ascertain the level of interest for their project. If interest is strong, and it usually is in a hot property market, then they will choose to have a preview period and cheque collection which will cumulate with a balloting event on the launch day.
The Preview Period:
Usually, this is around two weeks before the launch day. This allows potential buyers to come into the show flat to take a look at the sales model and mock-up units. There will usually be cheque collection done during this period. However, prices will not be released. Instead, buyers will fill in a cheque with the developer account and an authorisation form which will allow the salesperson to submit the cheque on his or her behalf to the developer. This cheque allows the buyer the chance to obtain a balloting queue number on the launch day. If the buyer does not wish to purchase a unit eventually, this cheque will be returned. They may have to select a few units and fill in these choices on the authorisation form. This does not mean that they cannot select other units outside their selection on balloting day.
The Launch Day:
This is usually done on a Saturday. There will be a huge tentage set up where buyers will be held with their sales agents. The buyers will be allocated a ballot number. Usually, this ballot number will be issued a few days before the launch day. The buyer has to be present on the launch day as once their ballot number is called, they will proceed to select a unit to purchase. Usually, there is a queue and by the time it gets to your turn, your unit may not be available. There is usually an area whereby buyers can go to and decide on an alternative unit or if they want to reconsider their purchase. This is usually at the head of the queue and once they have decided, they go back to the head of the queue to select a unit. At this point in time, they will be issued with the corresponding Option To Purchase (OTP) for the unit they have selected with the cheque which they had previously submitted. They then have to fill in the amount on the cheque which they had previously issued as well as sign on the relevant portions of the OTP. The amount to be filled in on the cheque is 5% of the purchase price. These will then be submitted to the developer.
Within 2 weeks:
The developer will send the Sales and Purchase (S&P) agreement to the buyer’s mailing address.
Within 3 weeks from the delivery of the S&P:
The buyer is to sign and exercise the S&P at the appointed law firm. If the buyer does not wish to exercise the option, i.e. he chooses not to proceed with the purchase, 75% of the booking fee will be refunded to him.
Within 2 weeks from the signing and exercise of the S&P:
The buyer will need to pay the stamp duty.
Within 8 weeks from the Option To Purchase:
The buyer will need to pay the remaining downpayment of 15% with cash, CPF monies or a combination of both depending on the circumstances.
The entire process must be completed within 8 weeks from the date of the Option To Purchase. If there is a delay and an extension is required, a request can be submitted to the developer who will submit a request to the Controller of Housing. This extension will be subject to approval.
Depending on the amount of loan taken, the disbursement from the bank will start at varying stages of the progressive payment. It would be good to note that the buyer will only be servicing the loan on the amount of monies that are disbursed and not on the whole amount of the 80%. This is perhaps one of the reasons why some buyers choose to purchase a new project from a developer rather than purchase in the resale market.
The progressive payment for the remaining 80% will follow this schedule:
10%: Completion of foundation work
10%: Completion of reinforced concrete framework
5%: Completion of brick walls
5%: Completion of roofing and ceilings
5%: Completion of electrical wiring, internal plastering, plumbing works, installation of door and window frames
5%: Completion of carparks, roads and drains serving the development
25%: Upon obtaining the Temporary Occupation Permit (T.O.P.) and Architect’s Certificate of Completion. May be referred to as Notice of Vacant Possession.
15%: Upon obtaining the Certificate of Statutory Completion (C.S.C.). May be referred to as Legal Completion Date.
I have always maintained that if you are looking to purchase a new project launch from a developer, do consider your options wisely. During times of heightened market exuberance, buyers may be rushed into making a decision. Consider carefully the reasons and factors of why you are buying into a certain development before making a purchase. Always ask yourself questions like whether the property is well located, close to an MRT station and whether there will be tenants in the future if you are looking to rent out the property. When in doubt, do contact an experienced real estate agent for advice.