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

Like this Article or Video

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

Posted in

Your Property?

This is a big decision that will likely require additional financial commitments. Sit down and discuss with our Property Den experts to assess if this course of action is suitable for you.

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.

Leave a Comment





Insight Topics

Connect With Us

Recent
Upgrader Insights

HDB to condo without ABSD

How to Upgrade from HDB to Condo without ABSD (Proven Hybrid Method!)   

30 August 2022

This article will elaborate on the hybrid method, which will help you upgrade from HDB to condo without ABSD and the hassle of having to move twice

Read More
CPF accrued interest

What is CPF Accrued Interest? Who should use less CPF for property mortgage?

29 August 2022

There are different views regarding the use of CPF for property mortgage because of CPF accrued interest. When is it better to use more CPF and when is it not?

Read More
keep HDB and pay ABSD (05)

Should you keep HDB and buy condo when upgrading (i.e. Pay ABSD)?

29 August 2022

Should you keep HDB and buy condo? A common dilemma for HDB upgraders who wants the passive rental income from renting out their flat but do not wish to pay ABSD

Read More
HDB to condo

Avoid these 4 Common Mistakes when upgrading from HDB to Condo

28 August 2022

Many HDB owners share the common aspirations to upgrade from HDB to condo after completing their Minimum Occupation Period (MOP). Below are 4 common mistakes to avoid when upgrading

Read More

Hottest HDB Towns in 2021

24 July 2021

Which are the hottest HDB towns in 2021? HDB prices have been rising for the past year and prices are near the 2013 peak. Watch this video to find out more.

Read More

Testimonials

testimonial-01a

"Dennis came with strong recommendations from a dear friend. He helped me with the purchase of my first property. He was very patient and never once tried to hard sell me to buy a property. Dennis is a trustworthy and knowledgeable professional who I highly recommend with confidence to everyone I know!"

HaoTing

Buyer

Rivervale-Cresta

"Dennis was very helpful and has guided us throughout on the process. He managed to get good number of clients for viewing of our unit. He is very responsive and always readily available when needed. He has excellent negotiation skills as well when required for the deal"

Tarun

Seller