Option to purchase is different from Offer to purchase. An Offer to purchase is given from a Property Buyer to the Seller, most likely via Property agents to the property owner. (See how an Offer to Purchase looks like)

The Option to purchase is granted when both the owner and the property buyer agrees to a purchase price. The option to purchase is granted based on a deposit of usually 1% of the agreed purchase price for a period of generally 14 days to the property buyer. During this time, the seller is obliged to sell the property to the buyer as he/she has received a 1% deposit, while the buyer has the right, but is not bounded to purchase the property within the stipulated period, failing which, the property buyer forfeits the 1% deposit.

We normally prefer a more direct approach where a 1% is agreed and given to seller in exchange for the Option to purchase which the seller signs and passed onto the Buyer.

In any property transaction, three scenarios are likely to occur: -

Scenario 1: Property Buyer negotiates directly with Property Owner

Scenario 2: Property Buyer negotiates directly with Seller Property Agent (Most Likely scenario)

Scenario 3: Property Buyer, through buyer agents negotiates directly with Seller Property agent

The best scenario is the first scenario, because it is more likely amateur versus amateur in property transactions.

The Second scenario is not so ideal, it is amateur (usually) versus seasoned expert. Most property buyers are at a disadvantaged dealing with seasoned seller property agent. (Many have opted to use our services to guide them in dealing with Seller Agent)

The third scenario is quite common. The seller agent co-broke non exclusively with Buyer agent. The buyer agents gets their commission from taking a share from the seller agent. However this is also the most problematic.

If the property buyers pay a commission to the Buyer agent, it escalates transaction costs. (We are against escalating property transactional costs) Based on the current market practice, the property buyers do not pay the buyer agents.

Most Seller agent will by-pass the buyer agents and sometimes undercut or delay submitting an offer to the property owner and try to find his/her own walk-in buyer so as to earn the full agreed commission.

Hence, the life of a Buyer agent is really quite tough. And so far CEA or any organisation or regulating bodies have no solution.

Based on this fact, the buyer agents (out of no choice) will tend to rush you through the buying process.

Both in Scenario 1 and 2, The buyer agents and the Seller agents, some of them will cut corners, such as making you make an OFFER TO PURCHASE while not showing you the Option to purchase that corresponds to the offer.

As we all know, the Option to purchase comes in a variety, therefore if the Property Buyer rejects the terms in the Option to purchase after making an offer to purchase, his/her 1% deposit is likely not protected.

There is still a lot of uncertainty in the property business and murkiness, there is still much work to do. Therefore property buyers, you have to proceed with caution.

There are marked differences between an offer to purchase. Many Property Buyers that we encountered in our Property Loan financing cases told us, “Yes, we have paid a 1% for the Option to purchase”. Upon further probing and checking, they realized that they only paid the Offer to purchase.

Why is Offer to purchase different from Option to purchase?

Offer to purchase is NOT an option to purchase. When you make an OFFER, you unilaterally make an offer. However this offer binds the property buyer and not the property seller!

And we have been very unhappy with this clause, I think the CEA needs to act on this aspect, to make sure that all Offer to purchase to follow a standard clause and template to protect the property buyers rather than let anyone determine the terms of the offer to purchase.

Offer to purchase, is it fair?

If you look at their clause 3, it states that: -

“The sale of the above property is subject to the Option to purchase being approved by both the vendor and me/us.”

This above clause looks generally fine.

Clause 4 says: -

“Within three working days, by 4pm (25/04/2012), the vendor of the above property must either accept or reject this offer failing which, this offer shall lapse. If rejected, the option money will be returned to me/us without any interest thereon and thereafter neither party shall have any claim against the other. If accepted, the vendor shall  deliver  to me/us the option to purchase agreement duly signed by the vendor within the time stipulated above.”

Now what seems to be wrong with this Offer to purchase?

Clause 3 spoke about both vendor and property buyer agreeing on the Option to purchase (OTP), Clause 4 spoke about commitment from the seller, this looks fine too.

How about if the Singapore property buyer do NOT agree with the Option to purchase? Why not attach an Option to purchase together with this Offer to purchase and stipulate that this will be the terms and conditions of the option to purchase?

There seems to be a deliberate absence of mention about the Property Buyer rejecting the option to purchase. Will the property buyer get their option money back?

This clause puts the property buyer at risk of losing their 1% option to purchase deposit.

This is the typical type of unfair clauses in the Singapore property market which we hate to see.

This seems to want to quickly expedite the sale of the property, if not, make the buyer part with their 1% option money to tempt the seller into committing a sale. In the event that the seller agrees and the property buyer do not agree to the terms and conditions to the option to purchase, too bad, the property buyer will unlikely ever see their 1% hard earned money ever again. This 1% is usually split between the property seller and the property agent.

At Property Buyer Mortgage Consultants we help property buyers go through the proper property buying process and we help property buyers find the best fit home loan packages. SMS us at 9782 8606.

Contact Property Buyer Mortgage Consultants to analyze properties and financing options call telephone +65-9782-8606 or

Enquire about home loan mortgage in Singapore

loans@propertybuyer.com.sg

Contact Property Buyer Mortgage Consultants to analyze properties and financing options call telephone +65-9782-8606 or

Enquire about home loan mortgage in Singapore

loans@propertybuyer.com.sg

Property Buyer, a Singapore based property portal is pleased to announce a Mortgage Franchise Program for entrepreneurs. www.PropertyBuyer.com.sg/Mortgage/franchise

Over the years, Property Buyer has established strong relationship with banks which enable us to obtain better terms from the banks.

We have also developed a comprehensive Mortgage Brokering business framework which includes: -

• Process flow and control
• Proprietary in-house cloud based home loan reporting tools (probably the 1^st in Singapore) www.icompareloan.com/consultant
• Lead generation and pre-qualification
• On-going training
• IT support, maintenance and web presence

Our proven comprehensive framework allows any would be entrepreneur to earn a revenue stream at a low start-up cost without the hassle of trial and error. Hence, concentrate on generating sales.

The Managing Director of Property Buyer says, “We have been there, and figured all the difficult parts of running a mortgage business and have fine tuned it as we go along.  We are at the stage where we feel we can positively contribute to many would be entrepreneurs to join us and be successful in operating a mortgage broking business.”

About Property Buyer Mortgage Consultants

Property Buyer Mortgage Consultants is a research-focused mortgage advisory that helps property buyers look through hundreds of loan packages to find the best package that fits their financial circumstances, not simply some cheap loan packages. Property Buyer Mortgage Consultants (CoreConcept Systems Pte Ltd) is a registered mortgage broker in Singapore. www.PropertyBuyer.com.sg/mortgage and www.SingaporeHomeLoan.net (Business registration 200618162C) with it’s office at No. 8 Liang Seah Street, #02-01 Liang Seah Court, Singapore 189029. Property buyer is also probably the only mortgage consultant in Singapore that produces research, not simply FAQs.

Inquire about home loan mortgage in Singapore – Contact Property Buyer Mortgage Consultants to analyze properties and financing options.
Telephone +65 9782 8606

Enquire about home loan mortgage in Singapore

loans@propertybuyer.com.sg

Inquire about home loan mortgage in Singapore – Contact Property Buyer Mortgage Consultants to analyze properties and financing options.
Telephone +65 9782 8606

loans@propertybuyer.com.sg

posted 08 March 2012 (promo will last till funds fully taken up)

This promotion is quite unprecedented, the funds will likely be used up in 5 days. Sorry, first come first serve.

Home Loan Singapore offers ends in 5 days, latest submission 13th March 2012

Please hurry, order queue is building up now.

Promotion package one

Min 500k (for completed property)
2 Yrs lock in

yrs 1 3m Sibor or Sor + 0.55%
T/after 3M Sibor or Sor + 0.65%

Promotion package two

min 500k (for BUC building under construction)

2 Yrs lock in

yrs 1 3m sibor or Sor + 0.55%
T/after 3m Sibor or Sor 0.65%

If loan size below 500k need to open FD a/c deposit 10% of the loan amount
for 1 Year

Promotion Package three

1 yrs lock in (for completed and Buc)
min 600k loan size

yrs 1 3m Sibor or Sor + 0.75%
T/after 3m Sibro or Sor + 0.65%

Please call (best SMS) at 9782 8606 to find out.

or loans@propertybuyer.com.sg

Home Loan Documents required for submission

Here are the documents required. We are sorry we will have to reject incomplete submissions as there is no time to waste. (But we will help guide you if you are not sure.)

***Private and HDB new loan **
Documents required (both sets if joint applicants)

1.) Option to purchase (or sales and purchase agreement) (if have)
2.) Both Side of NRIC (for Citzens and PR) and Passport for foreigners
3.) CPF Latest statement
a) 15 month contribution history
b) Property withdrawal statement
c) Ordinany account balance
d) My HDB Page finance info (Log in with sing pass

http://www.hdb.gov.sg/MyHDBPage.)

4.) Notice of Assessment (Latest 2 years)
5.) Salary Slip (Latest 6 months)
6.) Rental Contract Stamped Certificate (from IRAS) – (if property is
rented out)(if have)

*** FOR Refinance Private and HDB ***

Documents required (both sets if joint applicants)

1.) Both Side of NRIC (for Citzens and PR) and Passport for foreigners
2.) CPF Latest statement
a) 15 month contribution history
b) Property withdrawal statement
c) Ordinany account balance
d) My HDB Page finance info (Log in with sing pass

http://www.hdb.gov.sg/MyHDBPage.)

3.) Notice of Assessment (Latest 2 years)
4.) Salary Slip (Latest 6 months)
5.) Rental Contract Stamped Certificate (from IRAS) – (if property is
rented out (if have)
6.) Current Bank loan statement (Latest 6 month) (HDB loan latest 12 month)
loans@propertybuyer.com.sg
or SMS 9782 8606

Urban redevelopment authority, a statutory board of Ministry of National Development – Singapore announced an additional Buyer’s stamp duty (ABSD) to curb speculation on the 7^th Dec 2011 and with effect from 8^th Dec 2011.

Currently the stamp duty for purchasing a residential property is:

• 1% of the selling price for the first $180,000

• 2% of the selling price for the next $180,000

• 3% of the selling price for the from $360,000 onwards.

Will Luxury Condominiums targeted at foreigners to be hit by new regulation?

Will this additional stamp duty cool the private residential market?

The Additional Property Buyer stamp duty (ABSD) from 08 Dec 2011 is:

Foreigners and Non-individuals (Corporate entities) buying Residential property will pay an ABSD of

10 percent

Permanent Residents (PRs) owning one and buying the second and subsequent residential property will pay an ABSD of

• 3%

Singapore citizens owning 2 and buying the third and subsequent residential property will pay an additional buyer stamp duty

• 3%

Permanent Residents (PRs) owning one and buying the second and subsequent residential property will pay an ABSD of

• 3%

Singapore citizens owning 2 and buying the 3^rd and more residential property will pay an additional buyer stamp duty of

• 3%

Foreign purchases account for 19% of all private residential property purchases in 2H 2011, up from 7% in 1H 2009. (URA)

For joint purchases where one or more party is a PR or Foreigner, the higher additional buyer stamp duty will apply.

However For HDB property buyers| HDB Property Buyers not affected| URA clarified that HDB property buyers are not affected

The purchase of HDB properties will not be affected by this measure. Only Singaporeans and Permanent Residents are eligible to be HDB flat lessees (i.e. own a flat). Existing residential property owners who buy an HDB flat or a new unit under the Design, Build and Sell Scheme (DBSS) or the Executive Condominium (EC) Housing Scheme will not be subject to the ABSD, since the existing flat/property will have to be disposed of as part of the conditions for the purchase of the HDB/DBSS flat or EC unit.

Buying property in singapore is becoming a complicated affair.

Likely Effects of Singapore’s Additional Buyer Stamp Duty|What is the effect of the Additional Buyer Stamp Duty (ABSD)?

URA’s cooling measures makes sense for cooling inflation and may be pre-emptive against inflation in view of the large supply of M2 and M3 money in the world. However the timing is questionable given the debt crisis in Europe.

All these money supply in the world is ample and an additional 10% of stamp duty may not entirely stop them. It may simply be re-directed into other segments.

Can it reduce inflation?

What affects inflation?

[MV = PQ] = (by Irving Fisher, 1911)

Where

• M is the total dollars in a Nation’s money supply (generally the M3 or M2)

• V is the number of times per year each dollar is spent (Velocity of money)

• P is the avg. price of all the goods and services sold during the year.

• Q is the quantity of Assets, goods and services sold during the year.

When M2 or M3 rises and where Velocity and Quantity stays the same, this will lead to price increases. The rate of increase of Price is inflation.

In recent years, money supply has grown largely faster than GDP growth. What this tells you is, the money velocity is slow. People are not spending. Even in Singapore, although inflation is 5.4% in 2011, it is still fairly stable and controllable in view of looming recession in Europe.

Once Velocity of money V picks up, in order to control price rise, Quantity will have to pick up dramatically as well. Not all quantity can be ramped up quickly enough.

[M2 or M3 increase] x [V] = [P] x [Q]

So by taking out Foreign M2, M3 as well as M2 in Singapore attributed to foreign ownership by imposing a 10% Additional buyer stamp duty, Singapore has effectively reduced the M2, M3 money supply from the property market.

This policy can reduce inflation for residential housing in the private sector. However it does nothing much for HDB, DBSS and EC housing as well as commercial properties.

Recession worries are real

Now, with the European debt crisis looming, we wonder whether this is the right time to impose such a regulatory measure. After all the property market has already cooled dramatically. Moreover, this policy hurts the mid tier private property markets and entry level luxury more.

Should the policy only target private properties and Not HDB?

In view of the massive under-supply of HDB’s physical stock given the massive mass increase in population, it will still take several years to balance the supply and demand. Currently demand far outstrip supply.

HDB price index is likely to continue rising into 2012 and maybe even into 2013 as long as European crisis is contained.

While DBSS is being added to the supply, these Design, Build and sell housing by private developers of HDB houses lead to a even more severe rise in HDB housing prices.

DBSS developers buy expensive land from the Singapore government, add on their profit and then pass on these costs to helpless Singaporeans and Permanent citizens.

Singapore government is the ultimate winner in terms of the good price for the land.

Spill over may soon be seen in Executive Condominium (EC) with some ECs approaching prices of Mass Market condominium prices. This supports the prices of mass market condominium to be launched in large volumes.

This latest additional Buyer stamp duty policy does not apply to HDB, DBSS and ECs. What this will do is crimp demand artificially for the private market while it still does nothing much for HDB affordability with the prime culprit being DBSS, leading the price increases.

Severe Demographic effects – Singapore’s Resident Population to dramatically increase?

More Permanent residents may become Singapore Citizens so as to qualify to buy a 3rd private property, adding to the already strained infrastructure.

Will this policy encourage more expatriates in Singapore to become Permanent residents so as to qualify for buying a HDB resale flat?

We are worried that this policy has an unintended effect of increasing the Permanent resident population, putting more Singaporeans out of reach of their first homes, especially those expatriates who are not genuinely considered Foreign Talent (FT).

Our Proposal for the regulatory changes:

If we cannot keep regulations simple, then perhaps this regulations could be considered.

To impose the following regulations on: – Proposal to Impose regulations on:

Housing Development Board Flats

• ·      HDB flat owner who own a Private resident property must stay in their HDB flat regardless of whether they meet the minimum occupation period (MOP) or not. (effective immediately, a grace period of 2 years will be given for HDB flat owners to move back into their HDB flats, else sell their HDBs in the open market.)

o (This frees up some vacant HDB houses and returns HDB to it’s roots of providing affordable housing and stop it from being a profit engine for some)

o No force to be applied to them to sell their HDB flats, but they cannot make money via renting out their HDB flats while owning other Private residential properties and staying in private residential properties.

• Permanent Residents must wait 5 years after attaining PR status before they can buy HDB resale flat.

o All PRs to pay additional buyer stamp duty of 10% on HDB resale flats.

Proposed regulation on Private Properties

• Corporate entities who buy residential properties will pay an additional buyer stamp duty of 10% (As URA proposed)

o This should be especially applied to landed properties where it is scarce.

• All New PRs must wait 5 years before being eligible to buy a landed property.

o PRs not meeting the 5 year waiting period shall be rejected by the Land Dealings Approval Unit (LDAU), else a 15% additional buyer’s stamp duty of 15% is applied.

For Foreigner purchase of private property

o NO additional buyer stamp duty, but

o Loan to value from Singapore banks to be reduced to 50%.

Regulation for Commercial Properties

• Apply the additional property buyer stamp duty of 10% on Foreigners buying commercial properties.

Summary of URA policy changes

The general direction of the URA policy is commendable as it recognizes the dangers of M2 money supply growth worldwide and can act as a pre-emptive strike against possible future hyper inflation. It also did the right thing in restricting Corporate entities and foreigners buying residential properties by imposing a 10% duty. However money velocity is very slow, and European debt crisis is still unfolding, the timing of this policy may not be right.

Possible side effects, this policy can encourage lower tier expatriates to become Permanent Residents (PR) to buy HDB resale flats as they cannot afford Private properties. A number of these people eventually become citizens and are thankful to the Singapore political ruling party. We cannot rule out that this policy has political implications for Singapore.

This additional buyer stamp duty should stop speculation in HDB instead and leave the private residential property market alone.

If it is the intention to cool the property market by additional buyer stamp duty, then our proposed policies will work better as it potentially frees up HDB flats into the market and at the same time blocks demand from PR for HDB resale flat in the short term, easing pressures on HDB flats prices.

Competitive prices, high-end lifestyle! Contact us at +65 9782-8606 (SMS) or

Enquire about home loan mortgage in Singapore

loans@propertybuyer.com.sg