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4 Keys things You Should Know When You Buy First and Sell Later


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Buy Then Sell a Flat


Introduction

It is actually quite different if you buy a HDB first and then sell the current flat, as compared to selling the current flat first and then buying the next flat. The latter is of course much more straightforward. Therefore, our article will focus on the fine details that you want to take note if you decide to buy a flat first before selling your current one.


#1 Selling First, Buy Later

This is actually quite straightforward. You sell the flat first, you have the sale proceeds and cash to pay for the next flat. The only problem that you will have is during the time between when your flat is sold and the time when you get your next flat, you may not have a home to live in. It will help greatly if you have family members that can take you in for the time being.


#2 Buy First, Sell Later

If you want to buy a flat first and sell later, there will be a few things that you will be worried about. Firstly, you will worry about the cash flow problem. You may not get the sale proceeds on time to pay for the new flat. However, if you are taking a HDB loan, HDB can give you another loan at prevailing market/commercial interest rate to tide you over once you used your CPF savings. Once you get the sale proceeds and CPF refunds, you will redeem the temporary loan and its interest. Upon redemption of the loan, the HDB loan interest rate will apply. This is not available for people taking the bank loan. You will need to ask if the bank is willing to give you another temporary loan based on their terms and conditions.

Secondly, you will have a strict timeline to follow. You are now urgent to sell because you will need to dispose off your old flat by 6 months from the date of exercising the next flat Option to Purchase (OTP) or signing of Sale and Purchase Agreement (S&P Agreement). If you are unable to sell the flat on time because there are no suitable buyers, you can get another 6 months extension, but you will also need to prove that you made genuine effort to sell the flat. In an event if the owners are unable to meet the deadline, HDB can compulsorily acquire back the flat if the evidence to sell is no longer valid. With an urgency to sell, the price is usually pushed downwards in the resale market to attract buyers.


#3 ABSD

There is no ABSD payable even if the BTO/SBF unit is bought first. The older flat will eventually need to be sold. Since BTO/SBF units are also only for SC household, they will most likey be eligible for the ABSD remission.

When we say SC household, it does not just mean any SC household, it has to be married couples. It has to fit into the ABSD remission criterias, and it can be found in our other article here. Our referral of SC household in this case is only specifically for ABSD remission cases. In other article, our definition of SC household will be a household with at least 1 SC as the owner.


#4 Contra Facility

If you are able to time it well to buy and sell at the same time, and the conditions are met and are just right, then you can also do a contra. A contra is to buy and sell a HDB flat at the same time. If you want more information on Contra Payment Facility, you can click here.


Conclusion

The order of the transactions has different challenges. Generally, if there is a place for you to stay temporarily, then selling first will be a better option as there is no pressure to sell and hence fetch a better price. However, if you do not have a place to take you in at the moment, then there is not much choice but to buy first and sell later. Furthermore, most HDB flats can be sold within 3 months.



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Buy Then Sell a Flat


Introduction

It is actually quite different if you buy a HDB first and then sell the current flat, as compared to selling the current flat first and then buying the next flat. The latter is of course much more straightforward. Therefore, our article will focus on the fine details that you want to take note if you decide to buy a flat first before selling your current one.


Selling First, Buy Later

This is actually quite straightforward, and we will just briefly touch on it. You sell the flat first, you have the sale proceeds and cash to pay for the next flat. That is all it is concerned. The only problem that you will have is during the time between when your flat is sold and the time when you get your next flat, you may not have a home to live in.

It will help greatly if you have family members that can take you in for the time being.


Buy First, Sell Later

If you want to buy a flat first and sell later, there will be a few things that you will be worried about. Firstly, you will worry about the cash flow problem. You may not get the sale proceeds on time to pay for the new flat. However, if you are taking a HDB loan, HDB can give you another loan at prevailing market/commercial interest rate to tide you over once you used your CPF savings. Once you get the sale proceeds and CPF refunds, you will redeem the temporary loan and its interest. Upon redemption of the loan, the HDB loan interest rate will apply. This is not available for people taking the bank loan. You will need to ask if the bank is willing to give you another temporary loan based on their terms and conditions.

Secondly, you will have a strict timeline to follow. You are now urgent to sell because you will need to dispose off your old flat by 6 months from the date of taking possession of the new flat. If you are unable to sell the flat on time because there are no suitable buyers, you can get another 6 months extension, but you will also need to prove that you made genuine effort to sell the flat. These proofs include showing the advertisements that you have put up, as well as the frequency of the advertisement etc. It is also entirely up to HDB discretion in granting the extension after the 6 months. In an event if the owners are unable to meet the deadline, HDB can compulsorily acquire back the flat if the evidence to sell is no longer valid. This is usually not the best case if the owner is going to maximise the profit. With an urgency to sell, the price is usually pushed downwards in the resale market to attract buyers. Some Real Estate Salesperson (RES) have the relevant experience in dealing with this type of cases.


ABSD

There is no ABSD payable even if the BTO/SBF unit is bought first. The older flat will eventually need to be sold. Since BTO/SBF units are also only for SC household, they will most likey be eligible for the ABSD remission.

When we say SC household, it does not just mean any SC household, it has to be married couples. It has to fit into the ABSD remission criterias, and it can be found in our other article here. Our referral of SC household in this case is only specifically for ABSD remission cases. In other article, our definition of SC household will be a household with at least 1 SC as the owner.


Contra Facility

If you are able to time it well to buy and sell at the same time, and the conditions are met and are just right, then you can also do a contra. A contra is to buy and sell a HDB flat at the same time. If you want more information on Contra Payment Facility, you can click here.


Conclusion

The order of the transactions has different challenges. Generally, if there is a place for you to stay temporarily, then selling first will be a better option as there is no pressure to sell and hence fetch a better price. However, if you do not have a place to take you in at the moment, then there is not much choice but to buy first and sell later. Furthermore, most HDB flats can be sold within 3 months.



Date first posted on 18 June 2019; Last Edited on 18 June 2019

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