TNP : En bloc flipping - 20 Jul 07
1 view
Skip to first unread message
Dan @ 94 777 977
Jul 21, 2007, 5:42:33 PM7/21/07
to News - Orchard
En bloc flipping
Owners of en bloc properties sell for quick payout before deal is completed
THIS ad in The Straits Times Classifieds sounded too good to be true.
By Desmond Ng
20 July 2007
THIS ad in The Straits Times Classifieds sounded too good to be true.
Appearing three weeks ago, it said: Farrer Court 3+1 bedroom unit for sale,
confirmed en bloc price of $2.12 million.
Asking $1.88 million.
Two things stand out:
1. Why is this someone selling lower than the en bloc price?
2. The buyer stands to make an easy $270,000 when the en bloc sale goes
through.
Farrer Court was sold for a record $1.34 billion last month to CapitaLand -
the highest ever paid for a collective sale here.
Write Realty property agent Tom Kong, who is handling this transaction, said
that the seller wants the cash now to purchase another property, instead of
waiting for the payout.
The seller didn't want to be interviewed for this article.
The unit is 1,465 sq ft in size.
Said Mr Kong: 'I've never handled this kind of transaction before. But it
sounds like a win-win situation for the seller and the buyer.
'For the buyer, it's best not to take any bank loan because you'll have to
pay bank interest. And he can also rent out the unit instead of living in
it.'
He estimated that the monthly rental would be about $2,500.
APPROVAL
The unit has already found a buyer for $1.85 million and buyer and seller
will be writing to CapitaLand for approval since the project has already
been sold to the property giant.
Both the buyer and seller are Singaporeans.
Mr Kong said that the seller is an investor who bought the unit for just
under $1 million earlier this year.
A similar-sized unit was sold for $660,000 last September.
If this deal is successful, the seller will stand to gain a gross profit of
at least $800,000.
The buyer, on the other hand, will gain about $270,000 once he gets the en
bloc payout.
Even with the three per cent stamp duty factored in (3 per cent X $1.85
million = $55,500) and other miscellaneous fees, the buyer's profit will
still be pretty substantial.
Added Mr Kong: 'Both the seller and buyer are investors who've no intention
of living there. They don't mind taking the risk to make a quick buck here.'
He said that the buyer will be paying cash for this property because he's
unlikely to get a bank loan for this place.
Said Mr Kong: 'Which bank will lend him $1.85 million for a unit here? The
last transaction done here was about $900,000, so it's unlikely the buyer
will get a loan of $1.85 million. You need at least a million in cash to
take part in this kind of deal.'
En bloc speculator Mark Chow, who has so far made about $1 million in his
collective sale deals, warned about the risks in such transactions.
RISK
The 44-year-old oil and gas engineer is now sitting on two sales committees
- at Pearl Bank Apartments and Tulip Garden where a collective sale now
could earn him at least $2.1 million, almost double what he paid for in
2001.
He said: 'We're aware of such transactions where people who want to make a
quick buck will pay a premium over the market value for such en bloc
properties.
'But it's a risk. If the en bloc doesn't happen for some reason, these
people would have paid a big premium for their units. And they will not be
able to sell it at the price they bought it for.'
ERA's assistant vice-president Eugene Lim, who said such en bloc
transactions are rare, also warned about unhappy home owners who may appeal
to the Strata Titles Board and potentially delay or even scupper the en bloc
deal.
But that risk is quite minimal, since the place has already been sold en
bloc.
He said: 'For the seller, time is money and he probably needs the money now
to re-invest. Sometimes the payout isn't fast, and you'll have to wait.
'It's more or less a done deal since the majority have already signed. '
Owners of en bloc properties sell for quick payout before deal is completed
THIS ad in The Straits Times Classifieds sounded too good to be true.
By Desmond Ng
20 July 2007
THIS ad in The Straits Times Classifieds sounded too good to be true.
Appearing three weeks ago, it said: Farrer Court 3+1 bedroom unit for sale,
confirmed en bloc price of $2.12 million.
Asking $1.88 million.
Two things stand out:
1. Why is this someone selling lower than the en bloc price?
2. The buyer stands to make an easy $270,000 when the en bloc sale goes
through.
Farrer Court was sold for a record $1.34 billion last month to CapitaLand -
the highest ever paid for a collective sale here.
Write Realty property agent Tom Kong, who is handling this transaction, said
that the seller wants the cash now to purchase another property, instead of
waiting for the payout.
The seller didn't want to be interviewed for this article.
The unit is 1,465 sq ft in size.
Said Mr Kong: 'I've never handled this kind of transaction before. But it
sounds like a win-win situation for the seller and the buyer.
'For the buyer, it's best not to take any bank loan because you'll have to
pay bank interest. And he can also rent out the unit instead of living in
it.'
He estimated that the monthly rental would be about $2,500.
APPROVAL
The unit has already found a buyer for $1.85 million and buyer and seller
will be writing to CapitaLand for approval since the project has already
been sold to the property giant.
Both the buyer and seller are Singaporeans.
Mr Kong said that the seller is an investor who bought the unit for just
under $1 million earlier this year.
A similar-sized unit was sold for $660,000 last September.
If this deal is successful, the seller will stand to gain a gross profit of
at least $800,000.
The buyer, on the other hand, will gain about $270,000 once he gets the en
bloc payout.
Even with the three per cent stamp duty factored in (3 per cent X $1.85
million = $55,500) and other miscellaneous fees, the buyer's profit will
still be pretty substantial.
Added Mr Kong: 'Both the seller and buyer are investors who've no intention
of living there. They don't mind taking the risk to make a quick buck here.'
He said that the buyer will be paying cash for this property because he's
unlikely to get a bank loan for this place.
Said Mr Kong: 'Which bank will lend him $1.85 million for a unit here? The
last transaction done here was about $900,000, so it's unlikely the buyer
will get a loan of $1.85 million. You need at least a million in cash to
take part in this kind of deal.'
En bloc speculator Mark Chow, who has so far made about $1 million in his
collective sale deals, warned about the risks in such transactions.
RISK
The 44-year-old oil and gas engineer is now sitting on two sales committees
- at Pearl Bank Apartments and Tulip Garden where a collective sale now
could earn him at least $2.1 million, almost double what he paid for in
2001.
He said: 'We're aware of such transactions where people who want to make a
quick buck will pay a premium over the market value for such en bloc
properties.
'But it's a risk. If the en bloc doesn't happen for some reason, these
people would have paid a big premium for their units. And they will not be
able to sell it at the price they bought it for.'
ERA's assistant vice-president Eugene Lim, who said such en bloc
transactions are rare, also warned about unhappy home owners who may appeal
to the Strata Titles Board and potentially delay or even scupper the en bloc
deal.
But that risk is quite minimal, since the place has already been sold en
bloc.
He said: 'For the seller, time is money and he probably needs the money now
to re-invest. Sometimes the payout isn't fast, and you'll have to wait.
'It's more or less a done deal since the majority have already signed. '
Reply all
Reply to author
Forward
0 new messages