These sellers are not seriousGurmit is wrong. In the current market, sellers who constantly seek revaluations are not only serious, but savvy.
Flat owners re-valuing flats for profits
Letter from Gurmit Singh Kullar
THE latest cooling measures have admittedly had some effect in curbing the cash over valuation (COV) for resale HDB flats but we are still unlikely to see any decrease in valuations.
I have come across some sellers who have had their flats re-valued even before their current valuations expired so as to lock in a further gain.
A flat owner who rejected my offer did exactly that because he was convinced by property agents that his flat was "too cheap".
In another case, a property agent tried to convince me to buy a particular flat because the valuation had increased by $10,000 since the last assessment two months earlier.
Is this practice of multiple valuations for a HDB flat across such a short period condoned? Can the value of a flat really increase so rapidly?
Since valuation prices are based partly on previous assessments, frivolous seller behaviour causes unjustified increases in baseline prices.
In addition to focusing on buyers, I feel that the HDB also should introduce steps to weed out non-serious sellers ....
Property valuation is not a science. We should think of it more as an art. Or even better, just as an opinion. Supposedly an independent, educated and informed opinion - but in any event, still just an opinion.
So for instance, let's say that we simultaneously ask for three property valuations of the same HDB flat. Even though all valuations are done at the same time, the first valuer might say "$500,000"; the second valuer might say "$520,000"; and the third valuer might say "$540,000".
In all three cases, the respective valuer will support his opinion by citing a list of relevant factors in his report. For example, he would look at the recent sale prices of similar properties in the same neighbourhood. He would consider the nearby amenities (is there an MRT station nearby? Or any top school? Or a good shopping area?). He would also take note of the physical state of the apartment itself (for example, whether it has a good view, or has been renovated nicely).
But all these factors have subjective elements. For example, what is a "good" view? Which schools are "top"? How faraway can an MRT station be, and still be considered "near"? Since the answers to these questions are merely opinions, it should be obvious that the valuation figure itself is also merely an opinion.
Particularly in a rising market, a savvy seller may seek revaluations. Why? Because, as I mentioned earlier, property valuers will consider the recent actual sale prices of similar properties in the same neighbourhood. If market prices are generally on an uptrend, the valuation you get in January is likely to rise by April. That's because the April valuation would have taken into consideration data on sale prices that had become available only in February and March.
Although property valuations are merely opinions, they have a lot of practical significance. Among other things, they determine the maximum amount that a bank would be willing to lend to the buyer. In turn, this influences the price that the buyer is willing to offer to the seller.
So Gurmit is both wrong and right. He is wrong to say that the sellers are not serious. He is right to say that they are out to make money. The sellers are serious. They are serious about making money.