Is HDB cash over valuation (COV) making a comeback?

Is HDB Cash Over Valuation making a comeback?

📌 Is HDB Cash Over Valuation (COV) Making ComeBack?

COV is the cash component you would have to pay when the valuation does not match the purchase price of the property. For instance, if you were to buy a property at $450k and the valuation of the property is only $425k, then the COV is $25k. This COV portion has to be paid in cash as the loan amount will be based only on the valuation amount.

YES – HDB Cash Over Valuation is making a comeback as the number of transactions and the prices of property has been on the rise. This trend has also captured the attention of the media and public. This is quite incredible given that COVID is still rampant around the world.

HDB Cash Over Valuation

The current system of only being able to get a valuation from HDB after a deal is done is to encourage prudence when buying. After 2014 cooling measures, COV has become a non-issue but now, as demand for resale HDB flats grow stronger, many transactions are done with COV.

One main reason for resale HDB flats being so in demand is the because of the waiting time for BTOs have been lengthened due to shortage of manpower in construction as the result of the COVID pandemic. Also, if you want a BTO in a matured estate, you would have to go through balloting and chances are not that high given the demand for these flats.

HDB Cash Over Valuation

That is why there are those who do not mind paying COV just to get the location that they want. Not having to wait a couple of years for the flat is also an important factor.

With the uncertainty of waiting time and the huge demand for BTO flats, many have no choice but to turn to resale HDB. Lately, it is not uncommon see $20k to $40k COV for 3 or 4 room HDB resale flat. For bigger units, $50k COV is not uncommon.

covid delay BTO constructioncovid delay BTO construction

📌 Be Wary of FOMO (Fear of Missing Out)

However, you need to be calm and not be overly affected when making decisions during purchase. Be wary of FOMO factor. Always do your homework, make educated and informed decisions.

Check the nearby transactions of the property that you are about to purchase from the HDB portal and you will be able to get a fair range on what the valuation of the property would be.

We cannot stop HDB cash over valuation but we can do our due diligence and make an informed bid during negotiation by checking the latest HDB transactions via the HDB portal. Try finding units that are similar to yours and you will get a valuation range. Exercise caution, do your homework and all will go well

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Check out more insights for HDB Upgraders here

📌 HDB Top 10 Questions

  • Where are the Million dollar HDB?
  • Which are Hottest HDB towns in 2021?
  • Is Cash Over Valuation (COV) making comeback?
  • How to Unlock the Value of Our HDB?
  • Upgraders Dilemma: Sell First or Buy First?
  • Should I buy an older Resale HDB?
  • BTO or Resale or EC: 3 Test Qns
  • HDB or Bank Loans? What is Repricing?
  • 3 Important Questions to Ask Before Buying
  • 5 Commonly Asked HDB Rules or Terms

Check out all HDB Top 10 Questions here

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Dennis Lim

Dennis has more than a decade of experience investing in real estate. Like many fellow Singaporeans, he grew up in a HDB flat with dreams to live in a condominium. Through careful financial planning & hardwork, this became a reality when he was 30. He now owns 3 private properties in Singapore and has helped hundreds of Singaporeans to achieve their goal of upgrading their homes in land-scarce Singapore.

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