How home buyers can avoid pitfalls

Source : Sunday Times – 14 Jun 2009

We refer to last Sunday’s article, ‘Beware of pitfalls in property deals’.

It appears that in all the three cases reported, huge cash upfront was requested prematurely.

The Singapore Accredited Estate Agencies Ltd (SAEA) would like to offer some pointers to buyers in addition to the opinions given by Mr Chris Koh, Mr Eugene Lim and Mr Mohamed Ismail, all of whom are SAEA’s advisory committee members, so that the pitfalls can be avoided.

~ As a general rule, buyers are advised against agreeing to cash advances to sellers prematurely.

The option to purchase provides for 1 per cent option money to be paid to the seller and, thereafter, an option period of usually 14 days will prevail before the buyer exercises the option and makes further payment of 4 per cent or 9 per cent to the seller’s solicitor.

The option period allows the buyer’s lawyer to do due diligence checks on the property, which may include writing to the management corporation to ascertain if the seller has any arrears of maintenance contributions or to discover the lodgement of a charge against the property because of the seller’s debts.

Buyers will be prudent to stick to the terms of the option in order to prevent future encumbrances.

~ When cash advances are suggested by any estate agent or seller, this may be a red alert to buyers that the seller could be in financial difficulty and further verification is required.

One way is to do an individual credit check online to ascertain if there are any existing lawsuits or bankruptcy petitions filed against the seller.

~ Buyers may consider appointing an accredited agent or salesperson to act in their interest and to negotiate with the seller’s agent.

This would have helped the Chias (in Case 2 in the article) to know there was a competitively higher offer when the seller’s agent was unable to divulge such information to them.

Information about accredited agents or salespersons is available on our website, www.saea.org.sg

Our accredited agents or salespersons adhere to a strict code of conduct and ethics, and in the event of any dispute, we have trained mediators to facilitate a settlement, such as the issue of commission refund in Case 1.

In a disciplinary breach, we have a disciplinary panel to adjudicate and require the agent concerned to answer.

Tan Tee Khoon (Dr)
Chief executive officer (Designate)
Singapore Accredited Estate Agencies