SGHOUSING.COM 新加坡房地产网

The returns may tempt you to jump on the bandwagon, but agents’ fees and possibly development charges could take a fat chunk out of your profits

AS FEVER over collective sales continues to spread, many home owners are rushing to put their estates up for collective sale to capitalise on this craze.

At least 15 residential sites have been launched for collective sale since the start of the year, with at least nine successful transactions already completed.

However, even as home owners turn more bullish about their asking prices, property consultants warn there are various costs involved in such sales that they should be aware of before putting their homes on the collective sale market.

For any collective sale, the highest costs lie in the development charges and differential premiums, which could amount to tens of millions of dollars.

These costs are usually borne by the buying developer and are not included in an estate’s collective sale price.

Nevertheless, resident sellers do have to deduct certain fees and charges from the sale price, which could amount to about 2 per cent of the gross proceeds, or about $20,000 for a unit that fetches $1 million in a collective sale.

The bulk of these costs comes from the fees charged by marketing agents, which could range from 0.2 per cent to 1.5 per cent of the sale price, said Mr Ong Beng Kheong, an executive director of property consultancy Savills Singapore.

‘The amount of fees that agents receive will depend on the complexity of the project as well as the type of development and the number of units involved,’ he said.

These fees usually comprise valuation fees, basic investigation costs such as title searches and legal requisitions, and marketing costs for the collective sale site including advertisements, said Colliers International’s director of research and consultancy, Ms Tay Huey Ying.

Each seller will also have to fork out money for legal fees, which could be quoted either as a lump sum per unit or as a percentage of the overall sales price, said Mr Ong.

‘This could be anywhere from 0.15 per cent to 0.2 per cent for larger projects, whereas for smaller projects, it could range from $1,000 to $2,500 per unit,’ he said.

The other major cost that sellers would have to bear is the cost of an application to the Strata Titles Board for the proposed collective sale.

This fee is about $1,000 and will also cover notices in newspapers as well as a valuation report, said Mr Jeremy Lake, the executive director of investment properties at CB Richard Ellis.

However, out-of-pocket costs are not the only matter to take into consideration when deciding to put a property up for collective sale, say consultants.

One of the most crucial issues in any collective sale is the employment of a good marketing agent. When choosing an agent, the seller should take several factors into account, such as the agent’s fee, marketing plan, track record, level of experience, and current workload.

Sellers should ‘consider the number of number of successful collective sales handled by an agent, the scale of the deals, as well as the experience of the marketing team’, said Ms Tay of Colliers.

‘Take into consideration the number of collective sales currently undertaken by the agent at any point in time.

‘This may be an important consideration as it will give an indication of the agent’s ability to undertake a new collective sale deal,’ she added.

Source : Sunday Times - 26 Feb 2006