Cash Over Valuation (COV) was a term that was actively used back in 2012.

During that period of high demand and low supply, I remembered the insane 6-figures COV buyers were willing to pay to secure their dream HDB flat in the resale market.

It was so bad that HDB stopped publishing COV data on their website in 2014 and it disappeared almost overnight in a single government ruling.

Now more than 7 years later – the term COV is making a comeback.

COV Is A Boon For Sellers, A Bane For Buyers

In 2021, COV is the hottest number in a HDB transaction.

Even as an agent representing sellers, I am very scared of this number actually.

You know that I will always do my best to help my readers-turned-clients secure the best price for their property.

But I really hope that valuation is higher – so buyer doesn’t have to pay too much COV that it makes them think twice about the deal.

This is because the price is already fixed when the buyer makes the offer.

After offer has been made, then valuation is done.

So the process is usually as follows:

• The buyer offers $500K
• Seller accepts
• Valuation report is then done. Valuation turns out to be $470K.
• COV in this case is $30K

Having COV will not really benefit the owner – other than making the seller feel good and so can boast about how good their agent is to be able to sell at $30k or $50k above valuation.

COV is really the number that appears at the very last stage – hence making buyers either become comfortable to proceed or become very uncomfortable to proceed.

It can make the deal. It can also break the deal especially if the COV is too high.

That is why I am someone who is uncomfortable with this idea.

I want my sellers to get a good price and some returns from their home.

But I also want buyers to also happily buy without too much fear and anxiety.

“What if I offered too high above valuation?”
“What if I have to fork out more cash than expected?”

I represent buyers as well in this current hot market – so I know the jittery feeling waiting for the valuation report to be generated.

So I share your concerns about COV becoming beyond your affordability.

Hence, I will always do my best to make the valuer fall in love with the unit like how the buyers did.

Hoping that we will get the best valuation even though my duty is done in the selling of the unit.

To me – this is a very important process as well.

Why Is COV Making A Comeback?

It is really due to pent-up demand and the kiasu mentality.

• Anyone who wants to purchase a home will be in the market.
• Anyone who does NOT need a home but is worried that they can’t afford 1 in future – will also come into the market.
• Anyone who does not have intention to sell but now they see the opportunity to fetch a good price – starts making plans to sell.
• And after they sell, they will need to buy another home. And here it comes – more demand for a home.
• Certain couples who sell their home – starts to buy 2 homes instead of 1. That doubles up the demand too.

All these behaviour in place have created very strong demand in the overall market.

There Is Increased Demand In Every Property Segment

We can see the increased demand across all segments. HDB, Condo and Landed.

One of my sellers – they have been in negative sales status for the longest time.

They finally decide to take this opportunity to exit at a positive sale and reset the CPF usage.

So this is the time that I apply my real skills to put in place and make sure my clients get the best deal possible in this current property market.

Selling Is No Longer Just About Viewings But About Negotiation

Recently what I did for my sellers was really this:

• a lot of pre-qualifying
• doing filtering to determine serious buyers and not-so-serious buyers
• plenty of phone interviewing with buyers BEFORE they even turn up for viewings

This is to understand their needs and wants better – so I can package a deal to give to them.

The truth is during the transaction process – buyers and sellers will have different priorities.

They will have different wants and needs.

For example, a buyer might be willing to pay an additional $25K in order to move in immediately and avoid the 3-month completion.

Another example – a seller might be willing to accept a lower price if the buyer allows for a longer completion rate of the sales transaction.  Seller might request for this as their next home might not be ready on time.

It all depends on what is important for the buyers and sellers – at that particular point of time.

Imagine if you can get a deal that allows you to move in immediately after you moved out from your current place.

Or even give you enough time to renovate the place before you move in.

Will you be very willing to pay?

Imagine if you are selling a $3-million landed home and are now moving into a $700k HDB flat..

Will you paying another $50k-80k to enjoy this seamless move?

This is how I come into the picture to understand the buyers better and give them what they want as much as possible.

And this is also why you see high COVs along the way.

The numbers might be spectacular but there are some give and take in the negotiation process.

Now selling is no longer about bringing the benefit of the unit to the buyers…

Instead, I also try to understand what are the buyers’ priorities and design a “package” just for their needs so they can give you the price that you want.

I will do my best for whoever engages me to represent them – whether buyer or seller – to ensure my clients get the best deal possible.

How do I do this? By observing what is important in that deal for both parties and find an overlap that benefits my clients.

Different People Have Different Priorities At Different Life Stages

When we meet people with different priorities in life at their various life stages – you can see their own unique situations they are in.

Maybe they been waiting for this bounce in the market for the longest time – in order to let go of their landed property.

Now they can finally downsize for that retirement life.

Of course, this is not always possible. But I will sure do my best to make it happens.

It works both ways.

If seller side need all this additional concessions or incentives to make them move seamlessly… then we need to filter who can can support the seller as well.

This is what I am regularly seeing in the market currently.

Whether you are a buyer or seller – having me on your side will ensure that you are not just protected but get the best upside possible.

For example, I recently negotiated for my seller to get a higher offer of an additional $42K so the buyer can move in immediately.

This $42K is more than enough to cover at least 1 year worth of rent even at a private condo for my sellers if they wish to do so.

Recent Cases Closed In 2021

How hot is the market today?

This was for a 5-room HDB flat located in XXXX – which was optioned on 5 Apr 2021.

The last transaction in that block was $590K just a few weeks before.

Another transaction was at this Blk 8XX which was optioned on 1 Apr 2021 – which was another record price for that block.

The last recent transactions can be seen below:

In Feb 2021, this 5-room HDB flat was optioned and eventually sold at $595K.

You can see it was reflected below as a new transaction record – $100K higher than the most recent 2020 transaction prices.

Why am I sharing all this to you?

Simple. If you are planning to sell this year in 2021 – now is a great time to let go of your HDB flat.

As I mentioned in my previous blog post – Dear Sellers, Time To Increase Your Expectations – you should take advantage of this uptrend if you been thinking about selling your home for awhile.

This added margin and additional gains can help you in your purchase of your next home.

Conclusion

For every new sales listing I put up, I can easily get 20-30 enquiries for that home.

You might think that this makes my job far easier. But actually it makes it far harder – because I want to do my best for my sellers.

What I noticed is that I am spending alot more time interviewing and qualifying the buyers in order to select who “deserves” a timeslot for the viewings.

Thanks to the strict COVID-19 measures – only 8 people are allowed to enter a home for viewings in a 24-hour period. Excluding the agent, this means I can allow only 7 pax to enter.

7 pax means a maximum of only 3 couples to enter a home for viewing.

Imagine how many people I have to disappoint and buyers I have to let go – in order to accomodate this restriction in viewings.

That is why the sales process begins immediately after I receive the first enquiry for viewings.

That is when I have to pre-qualify and make a decision on whether they deserve to be allocated a viewing slot.

And if it all goes to plan – the unit will be sold by the first viewing.

This is no longer about doing slick marketing videos but more on getting a feel on the seriousness of the buyers.

If you are keen to sell your home this year – I invite you to contact me for a no-obligation discussion so we can explore your financial numbers and your plans.

Selling is a big step and I understand it might not be suitable for everyone.