We should tread with caution in the move to make cash over valuations (COVs) take a back seat in Housing Board resale deals, and in the introduction of a new reverse mortgage scheme ("Deals not decided on COV under new HDB resale rules" and "Focus on meeting housing needs of seniors, needy folk"; both published on Tuesday).
Most flat sellers are lay people and will not know the market price of their flats without a valuation.
The HDB should set up a Web portal for buyers to bid for flats, like how some used cars are sold online.
Currently, COVs can take a back seat as they dip to an all-time low, but what if the market picks up again, or if the Government relaxes its cooling measures?
While it is reported that sellers can no longer get valuations from the HDB, it is unclear if they can get valuations from private companies - are such firms exempted from the policy?
Also, if the valuation does not meet the expectations of the buyer or seller, the deal may fall through. This would be a waste of time for the parties involved.
If the valuation is lower than the agreed-on price, can the seller ask the buyer to top up the difference with cash?
Can the buyer back out of the deal if this happens?
The new rule about COVs goes against the Government's policy of not interfering with market forces that determine resale flat prices.
As for the proposed new reverse mortgage scheme, we must remember that HDB flats are for long-term stay and are not a commodity to be traded with banks.
What will be the consequences if the elderly flat owners outlive the duration of their loan payouts, or if the seniors' children who inherit the flat cannot repay the loan?
Francis Cheng
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