From TODAY online - http://www.todayonline.com/Voices/ED...you-can-afford
I refer to the letters "The cash-over-valuation curse" by Ms Lim Eng Choo (Aug 27), "An HDB study into COV will help address issue" by David Soh Poh Huat (Sept 16), "When COV reaches $100K, it's time for HDB to act" by Ong Bee Lan (Sept 17), and "It's about supply and demand" by Yeo Shuan Chee (Sept 17).
Resale Housing and Development Board (HDB) flat transactions take place on a "willing buyer-willing seller" basis. HDB does not get involved in the transactions. Cash-over-valuation (COV) arises when buyers are willing to pay more than the market value of the HDB flat. This market value is determined by professional valuers. HDB and the banks will only provide a loan of up to 90 per cent of the market valuation. If a buyer is willing to pay more than the valuation, the excess will need to be paid in cash, thus the term cash-over-valuation. There is a wide range of COV for each flat type across different towns, including transactions at or below valuation.
We can expect a flat seller to ask for as high a price as possible. On their part, buyers should negotiate with flat sellers.
To help them make informed decisions, HDB provides information on recently transacted resale prices and COV on its website. In July this year, 31 per cent of resale transactions were conducted with no COV. The median COV level was $7,000. Given the wide range of flats in the resale market, flat buyers should look around and buy a flat that they can afford.
Did like the part about "Willing Buyer-Willing Seller"......