Friday, February 11, 2011

Buying a flat? Check the writing on the wall first

ARE property agents obliged to check if a unit being sold is targeted by loan sharks, and to alert potential buyers if so?

Most agents interviewed said that while this it is not part of their job, they do so because of a sense of responsibility, or because they have to explain why a flat is being sold more cheaply.

On average, agents said, such units are cheaper than similar ones in the area.

Mr Jeff Soo, an ECG Property agent, said owners of these units may ask cash-over- valuation amounts that are two-thirds less than for other units.

This could possibly mean that a buyer might need to pay just $10,000 for the COV, which is a cash premium paid by the buyer over a flat's valuation, instead of the average $30,000.

Agency heads from PropNex, ERA and Dennis Wee Group (DWG) said that while loan shark cases remain relatively isolated, their agents are constantly on the look out for, literally, the writing on the wall.

Of 10 property agents interviewed, eight said they check out lift landings and corridors for such activities when helping their clients buy a flat.

Some will also ask residents in neighbouring units about the situation. If the unit is a target, they will either not sell the flat or will let their client know about it.

'The buyers will ask anyway, and we'll have to tell them the truth,' said Propnex agent Sean Tan. 'It'll be a waste of our time to bring clients to view these flats.'

DWG director Chris Koh said that loan shark activities are more prevalent in older estates and those with three- and four-room units.

But the responsibility does not rest solely on the agent, said PropNex spokesman Adam Tan. A buyer should ask why a seller is letting go of his unit, although the latter is not bound to reveal the true reason.

Buyers should also beware of units that are inordinately cheap, said ERA key executive officer Eugene Lim. 'The affected unit, as well as those along the same stretch, might not be going for the normal price,' he said.

The Council for Estate Agencies, which regulates the industry, said it has received three loan shark-related complaints from buyers since it began operations last Oct 22.

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