Thursday, March 20, 2008

Cash over valuation - Adventure of the magical deal

The following story is protected material under the copyright act. All rights reserved. No part of the material may be re-produced in any form by any means without the written permission of the author – me lar (fclim). In case you are wondering, figures and names are quoted are fictitious...

Cash over valuation
- Adventure of the magical deal

1. Deciding to sell
My name is Frank and I am in my mid-30s. Like most typical locals, I stay in a HDB flat, which has an outstanding loan that would require me to work and pay off the loan for almost the next 30 years.
The fact that I need the job for the next 30 years has always been on my mind, especially having gone through some recent uncertainties, like the burst, 9-11 incident and the SARS outbreak…
Nevertheless, in early 2005, the economy seemed better and several of my ‘richer” associates started talks of investing in the local property. I am the least interested, because investing in another property (especially a private one) is beyond my means. Furthermore, I do not want to “have-to” work for another 30 years!
Then, the opportunity came, in the form of lots of flyers in my letterbox. Wow! Units in my humble hdb area is going for more than half a million. It is crazy…
The only sane decision is to sell my unit as well, there is no other better time, for me to get out of the “have-to-work-for-the-next-30-years” trap….

2. Doing the “homework”
Now, the flyers looks fantastic, too good to be true. But is it the real situation? Being a skeptical cynic, I had to check the story direct from the source – HDB. The HDB website ( does maintain an e-service to check out recent resale transactions, including the transacted prices. To my pleasant surprise, prices > $500,000 is real and soon the papers starting running sensational stories of breaking the record and pushing the price higher and higher.

How about the current expectations? It is still valid and sane? I started to look out for Saturday papers, where there are tons of advertisement, sometimes stating the (absurd!) expectations.

Another source where I gathered from the HDB website was the Nation Property website (

From the above sources, I know where I stay now. It looks like my dream of getting out the “trap” may be possible afterall…

3. Agent or maybe not?
Soon, I started sharing with my family and close friends that I’m keen to “get rid” unit. Almost everybody have reference that can “help” me! How nice… Before I know it, I was convinced by one of the “nice” friend’s friend to sign an exclusive contract, to “market” my unit. After all, the “friend” would be my best partner and “defend” my desired selling price. Nothing less and all other agents’ enquires will be “managed” by my “new found best friend”.
By the way, the exclusive contract was 3 months and it’s a “standard” term as printed on the contract.
Time passes quickly and seems like my unit is not that great after all, its on the 5th floor and not really boast a ‘fantastic panoramic view”.
In the 3 months, there were less than 5 viewings and only 1 offer, of $15k above valuation.
Maybe my dream is just a dream afterall…

4. Marketing on my own
As soon as the contract ended, I decided to take things into my own hand. Being the miser as always, I decided to find as many “free” advertisement as possible! Ha! The following “free” channels were discovered:
• ST701 (
• Mocca (
• Nation property
The free advertisement proved to be very much useful. Just on the 2nd day, I got a call from an agent. Sounding very professional and enthusiastic, we arranged for a viewing immediately!
The professional agent came, saw and offered me a deal on the spot – the exclusive contract again. Being “fresh from the pain”, I politely declined.
Subsequently, several other agents called. My observation is that it seems like the trainer for the agents are all the same. They all want me to sign the exclusive contract and all for the same reasons!
At the end of 3rd agent, I already made up my mind – no exclusive contract. My standard response to all agents was: “Bring the potential buyer to view, if the deal is closed, you get 1% comms. No need to view, if you do not have ready buyer. Thank you!”

5. Welcome to view my place
Without any exclusive agent, I find myself dealing with lots more phone calls. Also, I realize that some “buyers” are really “agents-in-disguise”! I now also have to sieve the ‘real’ buyers from the ‘fake’ buyers.
Nevertheless, marketing my unit became a hobby that I enjoyed as time goes by. I get to see a lot more tricks, for e.g. nobody really knows how the property market is doing. The agent will tell the buyer – “It is a seller’s market, you can’t be too picky!”. At the same time, the exact same agent will tell the seller – “Lots of enquires but little transactions, it’s still the buyer’s market”.
As time goes by, I realized that there are only 3 agents that brought “real” potential buyers to my unit. I gave them priority information and would try to adjust to their timings whenever it is possible.
However, there was an interesting agent that was not on the list of the 3 short listed agents…

6. Signs of interests
This agent was very nice and polite on the phone. However, the first viewing arranged was tricky; it had to be during office hours. Fortunately, it just happened that somebody was home on the viewing date.
So, came the agent, with the potential buyer. The potential buyer came alone and I was told he was “head-over-heels” with my unit. However, he needed to consult his spouse and son. I was skeptical, probably another one of those tricks.
Then, there was the second viewing. On a particular Thursday afternoon, I received a call from the agent, asking for an “urgent” viewing. Unfortunately, I had to attend to a “free” seminar and could not be at home. Nevertheless, I arranged someone to be home and they came, they saw and they left.
On both occasions, I did not see the agent, nor the buyer.
Finally, the 3rd call came, and the 3rd viewing was arranged on a Sunday. For the first time, I saw the agent and the buyer with the wife and the son. Well, they do look like decent people and I supposed the wife is picky just to be sure the unit is what they want.

7. Sold! Done deal!
Not wanting to appear desperate, I left the agent and the buyer alone for 3 days. Finally, I called up the agent. She said they are keen, but its too expensive. My reply was that if they are really keen, it will just get more expensive in the near future! Furthermore, if they stay out for a long time (e.g. 30 years), the average cost is just a little more…
After several phone calls and haggling (which I am very poor at), the deal was done! It was a $15k discount from what I asked for. Well, its definitely much better than the $15k above valuation that was first offered. The deal was closed at $65K above the valuation.
I can “feel” my dream coming true now…

8. Next, the replacement place
Once the option paper was signed, I launched part 2 of the project, to look for a replacement place.
To my shock, the asking price of the specific area we are keen, have gone through roof. Very run-down units with no shopping malls nearby were asking $80k to $100k above valuation.
I did not bow to the price, just like I did not accept the $15k above valuation.
We re-org and decided to go further away from the City. It’s just a couple more train stations away…
We went to areas where the asking prices were more reasonable, in the range of $30k - $50k above valuation.
We must have combed through the whole town! There were just simply too little choices with our constraints:
• Corner unit
• Walking distance to train station
• Lift landing
• More than 5th storey (in case we wanna sell again…)
• No afternoon sun facing
• Little renovation required
At some point in time, I was quite convinced we are just not being realistic…

9. No more viewing please, putting down the option fee
It is sometimes fate or destiny... After viewing at least 8 – 10 units, we decided to actually go back to the very first one that we visited.
It seems like we have been using the very first unit for all the benchmarking. And well, it seems only the first unit holds up, all the others does not seemed to match it…
Not much negotiation was done (something which I regretted later), as it was within our budget and well, we are just too tired to ask for more…

10. Dream realized!
With all the paperwork done, we have finally gotten out of the trap. But wait, I just realized that it seemed we are not totally out…
My financial planner called me up and told me that I’m not saving enough for my retirement. That is, if retirement, is possible at all…

Well, on second thoughts, retiring totally may not be a fantastic idea. I just came across an article that states there are “proof” that once people retire, they actually die sooner, rather than later…

Oh well, retirement would be another story altogether….

========= THE END ========

Copyright of Lim Fu Chin. All Rights reserved.


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