Can you sell properties like that?

i am referring to private properties

My brother and I walked into a property showroom in Geylang. He got interested in a unit and so I lent my ears to the fantastic arrangement of buying a property.

I thought the arrangement should be - I like what I see at the price that I like, I sign the option to purchase and pay the 5% down payment first.

But the property agency ("Agency") and its agents ("Agent") have a different way of selling properties for the Developer/their client ("Developer"). Here is the process as I understand it. If any property agent is reading this, please feel free to correct me if I am wrong.

1. The Agent stressed that we have NOT officially launched the project and the price list is as SUGGESTED (only tentative/indicative) by Agency.

2. If we are interested in a particular unit, we will write a cheque (5% of SUGGESTED price) to the Developer's account to DEMONSTRATE our interest in that unit. (The Developer/Agency is asking prospective buyers to "shown hand" first in a poker game.)

3. After we wrote the cheque, Agency will put a small orange sticker on that unit. For some units, there were 3 or 4 stickers. Agents will use that "stickered" presentation to demonstrate to the next prospective buyers on the level of "hotness" the project is accumulating.. (I asked the Agent - who verify whether the stickers represent real interest.)

3. There will be a specific launch date, launch time and balloting time as determined by the Developer/Agency. (I am not sure when they decide on this. But if I were the Developer, I guess I will only LAUNCH when my agents have secured 3 or 4 cheques for each unit on offer.)

4. Half an hour before 11.15am on launch day, the Developer releases their FINAL price list. (If I were the Developer, I will obviously launch at a higher price given the many cheques/stickers collected.)

5. Agent will then attempt to call those who have shown their interest with their cheques. Agent's intention is to seek confirmation as to whether to put my brother's cheque into the "lucky draw" to be final purchaser of the unit.. ie. assuming more than one party has shown a willingness to proceed at the HIGHER Developer's price list.

However, if my brother decides not to proceed at the new Developer's price, we have the right to withdraw and the Agent will return the cheque with no further obligation.

6. But should my brother decides to withdraw AFTER being successful in the ballot, a penalty is payable.

7. My brother decides to proceed with the process. Agent sent a SMS to confirm our intention. He affirmed with a return SMS.

What if the prospective buyer did not received the phone call/SMS, Agent said the cheque will be withdrawn from the balloting process. (True enough.. after the balloting, we witnessed a family disputing viciously/vehemently with their Agent/Agency on the lost chance of getting a unit. For some reasons, they did not received any phone call.)

8. Balloting exercise subsequently ensue in the presence of anybody who manage to squeeze into the showroom.

9. For my brother's unit, he was duly informed of being the successful purchaser without any competing interest.

10. Normal sales & purchase arrangement follows. Bankers, lawyers, agent, CPF monies, talking about tiles.. follow.

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Besides the above, what are my other concerns?

1. Does any Authority need to approve the process of sale?
2. Can the Developer/Agency vary the details of the process during the "soft" launch?
3. What is "soft" launch?
4. Should the sales process be explicitly presented somewhere in the showroom?
5. Our Agent did a good job explaining the process to us. But it is not in black and white.
6. I find it very uncomfortable having to write a cheque to show my interest. I thought a cheque is a promise to pay. You can be sued if that instrument is dishonoured.
7. Isn't Developer and Agency the same party?

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Paya Lebar site - Damn if you award, damn if you don't

economics of land & building

Situation - Urban Redevelopment Authority (URA) rejected the only bid from a UOL Group-Singapore Land consortium for a commercial plot in Paya Lebar. Reason given -price being 'too low' at $565.74 psf per plot ratio (psf ppr). Compared to the last awarded site in that area in April, it is actually 35% lower than the $872.16 psf ppr top bid in April.


Arguments for and against the award of the tender as follows:-

• The rejection would delay the government's long-term plans to decentralise commercial activity outside the CBD and help ease business costs and reduce congestion.

• URA has to uphold the interest of the nation ie. the secure the maximum disposal value for nation's assets.

• URA has just wasted the bidders' resources in producing a bid without the reserve price being made public prior to the start of tender assuming that price is the sole criteria in deciding an award or otherwise.

• The UOL-SingLand consortium defended their bid price after taking into consideration the prevailing volatile market, unfavourable economic outlook, site's mixed use configuration and the site being technically more challenging as the plot is split into two triangular portions by a section of Geylang River.

• URA may think that there is less urgency NOW for the development of new office space on the island given the ample pipeline supply of over eight million sq ft net lettable area. (But doesn't URA know the stats on office supply and "economic feel" before it put the land up for tender?) 

• Price is not the sole criteria for URA. In late 2007, URA had actually awarded a plot at Marina View at 45% below the price for the next-door plot awarded a few months earlier against a backdrop of escalating office rents then. (So may we know exactly why you have rejected the bid?)

• Had URA awarded the second Paya Lebar plot to UOL-SingLand at a much lower price than the earlier plot, it would put a downward pressure on the rental rate in the area as it can make do with a much lower rental or pricing level. Tenants could also benefit from the lower rental rates.

• Had URA awarded the second Paya Lebar plot to UOL-SingLand, the earlier consortium comprising of Low Keng Huat, Guthrie and Sun Venture Commercial who had paid the higher price in April, would definitely not be happy. (But on willing buyer, willing seller basis, who could they blame?)

• Had URA awarded the second Paya Lebar plot to UOL-SingLand at a much lower price than the earlier plot, it would induce a systemic shock. URA is artificially seen to have helped prop up the market. Good and bad to this, depending from whose point of view you are looking at this.

• But what is/are the criteria of assessing a tender of a site in the "confirmed" list? There are two lists where URA lists sites available for sale. The "confirmed" list consist of sites with no reserve price. The "reserve" list consists of sites with the respective minimum price acceptable to the state being made public. A site on the "reserve" list may send a signal to the market that there is less urgency for its development as compared to those on "confirmed" list. So is it urgent or not urgent for URA to develop the Paya Lebar site or is it just money not enough?

Source - Business Times and Straits Times - Nov 5, 2011.