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HugZ

Valuation For Pte Property

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Hello..

Can someone tell me, how do I check the valuation for a pte property such as a condo?

I have been viewing a few condos, but everytime I ask for the valuation, the agent will claim "not done yet" and then proceed to tell me the estimated valuation.

Can I take these agents word for it? I'm worried they will inflate the actual valuation so that they can sell their unit at high prices.

 

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Hello..

Can someone tell me, how do I check the valuation for a pte property such as a condo?

I have been viewing a few condos, but everytime I ask for the valuation, the agent will claim "not done yet" and then proceed to tell me the estimated valuation.

Can I take these agents word for it? I'm worried they will inflate the actual valuation so that they can sell their unit at high prices.

you can refer to previous txns as a reference...

http://spring.ura.gov.sg/lad/ore/real_estate/transaction.cfm

 

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Just to clarify...

a valuation report is only valid for 6 months, and banks only recognise reports from their own panel of valuers. Valuation reports are simply suporting documents for a bank loan. Valuation has little impact to the asking/selling prices. Thus, I would not think that a valuation report is all that important. Normally, is to check from recent transections of the same development.

 

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There are 3 types of valuations:-

a) Indicative valuation >> this is the verbal valuation that you can get from your banker. Call up the bank officer whom you're most likely to get a bank mortgage from, and ask him/her for the indicative valuation of the property that you're considering. You need to give information such as these for them to call their respective property valuers to check. Property valuers do not entertain enquiries from end customers.

- Condo name

- floor area

- Which floor, facing the pool or not

- renovated or original

It is this indicative valuation that you should use in deciding whether or not to buy the property in question. Mind you, these days, sellers and agents are alike. They want to sell above this valuation.

2) Formal valuation - this is when the home owner or yourself or the agent engages a property valuer to officially value the property. Cost is $500 as a minimum. This is of course, more accurate than the indicative one. The formal valuation can vary from the indicative, because it's an on site assessment

3) Desk top valuation - over time, after a formal valuation has been made by a property valuer, you can go back to the property valuer and ask for an update. They will have your file on record. Give them the reference number, and they can tell you what they think of its revised value

Hope this helps.

PS: Am a retired banker

Valuation reports has alot to do with getting a bank loan. Let me give an example.

Valuation: S$1m

Purchase Price: S$1.2m

The bank will only give a bank loan based on S$1m i.e. max 90% of $1m, and not 90% of $1.2m. The $200k difference must be cash outlay from the buyer.

 

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Hello,

Thank you everyone for the info you have provided.

I have another question...

What is the premium in % terms for these normally?

- High floor compared to low floor

- Unit faces the pool or not

- Renovated or original

Thanks in advance!! !!

Hi Chunky Monkey,

In your above example....

Valuation: S$1m

Purchase Price: S$1.2m

The bank will only give a bank loan based on S$1m i.e. max 90% of $1m, and not 90% of $1.2m. The $200k difference must be cash outlay from the buyer.

-----------------------------------------------------------------

That 200K can be paid by CPF too right? Or must it be in cash?

Edited by HugZ
 

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I believe the bank loan is based on the valuation price or the purchase price, whichever is lower.

E.g.

Valuation: $1.0 m

Purchase Price: $1.2m

Maximum loan (assuming 90%) = $0.9m

Valuation: $1.2m

Purchase Price: $1.0m

Maximum loan (assuming 90%) = $0.9m

And if I am not mistaken, you can use the CPF to pay the purchase price of the property after you have paid your first 5% of the purchase price in cash.

 

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Thanks Archer,

I understand a little better now. 5% in cash is ok for us.

I always thought that banks loan up to 80% only, didn't know it was 90%. So meaning, downpayment required is min. 10%?

Btw, will the new loan amount be affect if concurrently we have another property that is still servicing a loan? Or is the new loan amount granted to the new property based solely on that property only.

Hope you're not confused my my question. Hehe..

Edited by HugZ
 

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Thanks Archer,

I understand a little better now. 5% in cash is ok for us.

I always thought that banks loan up to 80% only, didn't know it was 90%. So meaning, downpayment required is min. 10%?

Btw, will the new loan amount be affect if concurrently we have another property that is still servicing a loan? Or is the new loan amount granted to the new property based solely on that property only.

Hope you're not confused my my question. Hehe..

hi there,

if you are getting a bank loan..note that the rates for up to 80% and up to 90% are different..i.e. you will be paying a higher interest rate if you take a bank loan up to 90%..cos the bank is assuming more credit risk..and you have to bear a higher interest rate to loan the additional 10%....personal experience speaking...

second, the bank will look at all your current obligations, such as amount of loan for old house that you are currently servicing, any other obligations such as car loan, credit overdrafts, etc and your current combined income (together with spouse if any)..to determine the no. of times of your annual income that they will lend..

eg: if your combined income is S$100k a year, the bank will take a multiple say 15 times (just an example) which is S$1.5m and deduct your current outstanding loan for old house (eg: S$400k outstanding) and all current obligations, so the remaining cushion of S$1.1m that bank is comfortable to lend you at the maximum..then compare to your proposed loan amount (eg: S$1.0m including interest), then they will probably agree to the loan....

just my 2 cents worth :unsure: hope i was useful for you ;)

Edited by blackmango_juice
 

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Yes, it IS the lower of the two. In your scenario, the loan amout is the same i.e. $0.9m. But for the first case, the min cash/CPF outlay is $200K (difference between PP and valuation price) + $120K = $320K.

In the second case, the min cash/CPF outlay is $100K.

Morale of the story, do not buy a property above valuation. The difference is the cash you need to top up yourself because the bank will not lend you this amount.

And yes, the 1st 5% is cash only. (1% option fee, 4% to excercise option). CPF can only be utilised towards the remaining 95% which is due at completion, typically 10 weeks from date of exercise of option.

I believe the bank loan is based on the valuation price or the purchase price, whichever is lower.

E.g.

Valuation: $1.0 m

Purchase Price: $1.2m

Maximum loan (assuming 90%) = $0.9m

Valuation: $1.2m

Purchase Price: $1.0m

Maximum loan (assuming 90%) = $0.9m

And if I am not mistaken, you can use the CPF to pay the purchase price of the property after you have paid your first 5% of the purchase price in cash.

 

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To know whether you have a good chance to get a bank loan, it's actually very easy to calculate. Banks always looks at your amortisation ratio. Conservative banks will use 0.6. Most banks will use 0.5.

How do you calculate this?

You need your NET combined salaries (A) + CPF contribution to Ordinary Account (B)

You need to add up all your monthly obligations ©:-

a) monthly car loan amount (take from car loan statement)

b) unsecured credit line. e.g. $10k line with 15% interest. Whether or not you use this line, the banks will assume the worse scenario where you have maxed out on this credit facility, and straight away, the bank will include $10,000 x 0.15 = $1.5k

c) credit card/s e.g. $10k x 5% (I think 5% is the min payment) = 500.

To calculate amortisation ratio,

Take C divide by (A) + (B) >> Add up your monthly obligations divide by your net monthly income + ordinary account contribution. If the answer is 0.6 and more, the bank will definitely lend it to you. If the answer is less than 0.6, then it's subject to deviation approval, and you'll need to fight your case to get a bank loan approved.

The bank will also check your credit worthiness. If you're a good paymaster, then no issue. If you'd been tardy in your credit card/credit line payment, your history will act against you.

Pointer - The more credit cards/OD/credit lines you have, or the higher the combined credit limit you have, the worse is your chance of getting a property bank loan.

 

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If the answer is 0.6 and more, the bank will definitely lend it to you. If the answer is less than 0.6, then it's subject to deviation approval, and you'll need to fight your case to get a bank loan approved.

Sorry, correction and i missed out an important part, the monthly installment of the loan under consideration.

( C ) + new monthly stallment amount / (A) + (B) must be 0.6 or less

 

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Hi Hi..

So basically, the lower the amortisation ratio, the better is it?

Slightly confused here!

The banks will also take other forms of income such as rental income into consideration to increase the NET income component , am I right?

Edited by HugZ
 

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Hi Hi..

So basically, the lower the amortisation ratio, the better is it?

Slightly confused here!

The banks will also take other forms of income such as rental income into consideration to increase the NET income component , am I right?

The simpler way of looking at the amortisiation ratio is this: how much of your income/salary do you have left after servicing all your financial obligations? An AR of 0.75 means that you have 75% of your income/salary left; an AR of 0.5 means you only have 50% left. So when you say lower is better, I don't know from what aspect you are looking at. Lower ARs means you have less income/salary left after servicing your financial obligations. So from the perspective of the bank, you are higher risk since you have less money remaining for emergencies and therefore likely default on the loan. But to someone wishing to buy a property that is just out of reach, a lower AR means you can borrow more.

And yes, other forms of income such as rental, interest income, dividend income etc. is taken into consideration.

 

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