FAQ: Changes to HDB’s Cash Over Valuation Policy



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Since the 10th of March 2014, the HDB will provide valuation only after a purchase decision has been made.

The intention is to reduce focus on Cash-Over-Valuations (COVs) during resale transactions and improve the long-term stability of the resale market.

Currently, many sellers have been using the valuation report as a “base price”, and negotiating prices based on COV. This is a behaviour unique only to the HDB resale market in Singapore.

In the private market, negotiations are based on recent transaction prices, and are typically carried out before buyers request for valuations.

But what does it mean to us?

FSaaM consulted a few property professionals and cut through Government lingo to give you fast facts. Here we present what you need to know about the latest COV changes:


What if the valuation is lower than the agreed price?

The buyer must then review if this is a good purchase. If not, he can walk away from the deal and forfeit the option fee. This can range from between $1 – $1000 (paid to the flat seller).


Is there going to be an increased number of cancellations due to the new policies?

OTP cancellations should not go up.

Buyers usually make an informed decisions before they sign. HDB is now publishing the latest transacted prices daily. This is similar to real-time price updates in private markets.

The practice in the market now is for buyers to approach the banks or HDB for their loan eligibility before they start hunting.

Buyers now have information – how much they can loan and how much the market value is, there is little reason for them to cancel.


Buyers only get a valuation report after agreeing on a price. What if the valuation he gets is much lower than expected, and he has to top-up a large amount in cash?

Latest transacted prices act as a benchmark for valuation.

The valuations should not be significantly lower. For this reason, it is important to get an agent who knows what he/she is doing and is familiar with the type of property you are selling/buying.


Why are the measures so complicated? Why not just remove COV and force buyers and sellers to transact at valuation.

The new measures are not meant to remove COV. It is to encourage buyers and sellers to negotiate based on recent transaction prices.

Simply forcing buyers and sellers to transact at valuation, would lead to illegal cash payments under the table.


Would this result in the return of “star” flats, ie. Those transacted at a million dollars?

If sellers set a price much higher than recently transacted prices in the vicinity, buyers can walk away from the deal. Unless of course they really, really want the apartment.

It depends on how they value the house. It could happen yes. Would it be widespread? Unlikely.


What if there isn’t a substantial number of transactions in an area to give a proper gauge of the market prices?

The advice then would be to widen the radius of search, or to consider the prices of a location in the last two years. This can be done within HDB InfoWEB or you can consult a professional property agent.


COV was cash to the seller. With the new policy, would any amount over the valuation be considered cash to seller also?

COV simply refers to the difference between the resale price and valuation of the flat, which has to be paid in cash. With the new policy, this could still occur.


If a sale does not go through, can the seller re-use the earlier buyer’s valuation report?

No – the seller cannot reuse it. The valuation is prepared solely for buyers to obtain a loan. It is not transferable. This would not be fair to the buyer who paid for the valuation.


In the course of hunting a flat, there may be instances where a buyer has to keep paying valuation fees – why not lower the fees?

The buyer is adviced to use a good property agent and to refer to the latest transacted price. A professional agent would be able to help you negotiate a deal very close to valuation.


Why now? What is the trigger?

The resale market is stabilising and COVs are hitting zero and even turning negative.

This is a good time to make this adjustment. These measures will improve long-term stability of the resale market.


Would there be any party that would be worse off from this policy?

Negotiating based on price, rather than COV, will take some getting used to.

But in the longer term, both buyers and sellers will benefit from a more stable resale market.


What do you think about the latest changes to COV? Email us at: [email protected]





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