Resale Condo Checklist: Review these 4 Items Before Buying an Older Condo

For buyers looking for a resale condo, review this resale condo checklist before putting up your offer.

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     Table of Content

  • Land Owner & Lease Start Date
  • Check Sinking Fund
  • Any En Bloc Attempts?
  • Look Beyond Market Valuations

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📌1.  Land Owner & Lease Start Date

  • Lands in Singapore are sold as: Freehold, 999yrs and 99yrs lease
  • All land will be returned to the government when the lease expires
  • However, there are cases where developers sold their freehold land as leasehold projects
  • Shore Residences is originally a freehold land sold on a 103 years lease Tenure
  • Spring Grove is a 99yrs condo on a Freehold land plot, owned by the American Government
resale condo checklist
  • “Can these condos go through a successful collective sale like other condo?” is a very tough question to answer
  • Before offering for an older 99yrs resale condo, check who is the real land owner
  • Most condos in Singapore will be completed within 3- 5 years in normal circumstances
  • There are a number of condos in the Pasir Ris area that have a longer-than-normal gap between lease starts date and completion dates
  • For example, this gap for Coco Palms is 10 years
  • Therefore, it is important to check the tenure start date and not just focus on the TOP (Temporary Occupation Permit) date
resale condo checklist

📌2. Check Sinking Fund

  • Many buyers will ask about the condo maintenance fee before buying.
  • But many will forget to check how much sinking fund is available.
  • Condo owner will pay maintenance fees (or MCST fee) on a quarterly basis.
  • Part of this fee will go into a sinking fund, which is collected for future major repairs.
  • Older condos are expected to incur more repair expenses as they age.
  • Many years ago, I invested in a freehold 2-bedroom apartment that TOP in 2008.
  • I was shocked when I asked by the MCST to pay a special levy of $3,600 for a special repair.
  • When condos with low sinking funds face unexpected repairs or major equipment replacement, they may need to impose a special levy.
  • This levy will need the approval of the condo management council run by the residents.
  • Therefore, it is always better to have rich sinking fund
resale condo checklist

📌3. Any En Bloc Attempts?

  • Before buying, always ask if there were any previous en bloc attempts?
  • A recent study observed a price increase when condominiums reach 31 to 40 years old.
  • This is when the en bloc potential of properties grow.
  • While en bloc is not guaranteed, not many condos in Singapore survive beyond 40 years.
  • After the first failed attempt, that condo will attract more buyer investors who hope to end up with a collective sale (en bloc) one day
  • A veteran en bloc agent once shared with me that a collective sale usually needs 3 attempts to be successful.
  • The first two times usually fails because of owners’ unrealistic expectations or unfavorable market conditions.
  • Developers will pay 50 -100% higher than market rate to residents for an en bloc to happen.
  • Majority of residents will be happy but not these 2 groups of new owners.
  • (1) Those who bought within 3 years and are subject to Seller Stamp Duty
  • (2) New owners who renovated their home extensively recently
resale condo checklist

📌4. Look Beyond Market Valuations

  • Market valuations are average numbers based on recent months sales in the entire condo
  • They do not take into account the interior conditions of the unit unless you engage a professional valuer to do a physical evaluation
  • You may want to an in-depth search into the recent transactions that have similar attributes (e.g., stack/ facing) as your shortlisted unit
  • If you see higher than average prices for these “similar units”, you may want to find out the reasons
  • They may have been sold at higher prices because of premium renovations
  • Make an effort to check out these sold units
  • If the unit that you have wanted is in original condition, then you know you can bargain with the seller

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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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