SINGAPORE – Instead of paying just $120 to get a proper valuation of his HDB flat, a man embroiled in divorce proceedings took the free option by relying on past transactions of similar units to price his home.
He argued that the flat was worth $480,000 but his wife, who also looked at past transactions, came up with a figure of $560,000 – a valuation eventually accepted by the Family Court.
The husband had been the main breadwinner, earning about $15,000 a month, while the wife had been earning $1,800 monthly as a customer service officer before she became a housewife to look after their child.
As a result of the higher valuation of $560,000, the share of the couple’s matrimonial would have increased by $80,000, against the lower valuation of $480,000.
When the court awarded the wife about 20 per cent share of their assets, the husband had to pay her about $15,000 more for her share of the flat. This extra sum was more than 100 times the cost of the valuation report.
So you should never be penny wise and pound foolish when dealing with property because your guessing game may lead you to price it wrongly.
In his appeal to the High Court, the husband maintained that the flat was worth $480,000 and not $560,000. He argued that the lower court had overvalued the flat by not considering its condition, which he said was “in a state of deterioration”.
But at the initial hearing, the man did not mention the state of the flat, much less provide a figure for renovation or repair costs.
Justice Choo Han Teck said there was no justification to question the ruling on the valuation. “The husband had the opportunity to submit valuation reports or quotations showing how much the renovation works would have cost. He did not do so,” he noted, adding that the man chose to rely on records of past HDB resale prices.
Both spouses submitted search results showing the resale prices of flats similar to theirs in the same estate between April 2021 and April 2022. But one problem of using such data is that the results did not specify the actual units sold, as only the approximate locations were available.
The husband limited his search to sales figures of between $400,000 and $500,000, but none of these units was on the 10th floor, as their flat was. He used these search results to support his proposed valuation of $480,000.
While some of his former wife’s search results overlapped with his, she also looked at units in different blocks in the estate. One unit, on the 13th to 15th floor, was sold for $560,000, and another, on the 10th to 12th floor, was sold at the same price.
These results led the Family Court to value the matrimonial flat at that price because these were the most recent transactions in the search results.
The husband argued that the court had overvalued the matrimonial flat because higher-floor units usually fetch higher prices.
But Justice Choo found that the lower court’s finding was reasonable in the circumstances since neither spouse had produced proper valuation reports, which could have given accurate figures to support their cases.
What you should do
If you plan to sell a property, you should get a proper valuation so you know how you should price your home.
It is common for real estate agents to send mailers to owners showing estimated values of their homes to entice them into selling.
But such “desktop” valuation, which is done by comparing existing data such as recent transactions of similar homes in the vicinity, may not accurately capture the true value of your home.
This is because your home could be in pristine condition and boast a majestic view that could sway potential buyers to make a higher offer.
Moreover it is also hard to use such valuation methods if you live in an exclusive neighbourhood with few property sales.
It always pays to know the true value of your real estate before any sale process so that you do not end up short-changing yourself over a small fee.
“Source:[Get proper valuation of properties to avoid short-changing yourself] © Singapore Press Holdings Limited. Permission required for reproduction”
