Sellers asked to illegal rent after extension
To first be able to buy a flat, you’ll need a HFE. You can apply that for free on HDB site. Once you have it, you can apply for a BTO or resale.
Second, know the valuation of the house to avoid COV! Also always account for the extension of stay. EOS is a goodwill on buyer’s end, not compulsory. Sometimes during negotiations, you’ll need to account that you’re letting the owners stay rent free in your home after completion, so you can negotiate the price down by quoting the EOS!
Based on those, we offered 10k above listed price, owners actually rejected it and told us if we could offer 30k above, they’ll accept. We still tried to nego by lowering the value to 20k, they still didn’t accept. As we wanted the house, we decided to match the 30k. But ultimate shocker was, their seller agent actually told us the owners are arguing because one wants to accept and the other think it’s under valued!!!
This was super ridiculous for us as we offered the value they asked, 30k above listed and they came back with such a nonsense excuse. Our agent actually told us, it’s probably because there’s 2 agents handling their listing, hence one wants to close asap while the other don’t want to lose out on the commission. Finally we gave them an ultimatum, get back to us in 24 hours or the offer ceases. Eventually they accepted and we paid the OTP! This whole process took about a week after viewing!
After that negotiation experience, we were glad we got a buyer agent. We never know if after EOS, or in the process of buying, what other issues the seller might come up with. And indeed they came back asking us to rent to them after extension as they couldn’t move in to the other flat they purchased. Thankfully our agent was there to handle that request, and although some people do rent after extension by getting rental, our agent told us we would never know when HDB would do a spot check. Some people may be tempted as the rental could help cushion reno costs if they’re not in a hurry to move in, it’s really not worth it!!! We gave the sellers a pretty good reason not to rent, but they still asked again when we met for completion appointment, but our agent answered for us, which relieved us of the emotional load to reject people hahaha
After negotiations, comes the paperwork. We’ll share this in our next post, as there’s a special clause where sellers and buyers can negotiate on how many days after OTP to submit the paperwork (0-90 days). This would actually increase the time sellers get to stay in the flat for free. Do follow look out for next post for more!
When buying an HDB resale flat, it's crucial to understand the rules around Extension of Stay (EOS). EOS allows sellers to stay in their flat rent-free for up to three months after completion, but renting out the flat during or after this period is strictly prohibited by HDB regulations. From my experience, sellers may sometimes request to rent illegally after EOS, possibly to cushion their relocation costs, but this can lead to serious consequences like repossession of the flat. Having a buyer agent is invaluable in such cases, as they can effectively manage negotiations and keep the process compliant with HDB rules. Additionally, buyers should always clarify EOS terms upfront during negotiations, including any reimbursements for property tax or town council fees while the flat is occupied by sellers during EOS. Understanding valuation and Cash Over Valuation (COV) is also important to avoid overpaying. I personally used online valuation streams and sought professional advice before making offers. The paperwork phase can also include a special clause letting sellers and buyers negotiate how many days after the Option To Purchase (OTP) to submit documents, potentially extending the sellers' rent-free stay. Stay vigilant and ensure all agreements are recorded in writing. Overall, buying a resale HDB flat demands thorough knowledge of extension regulations and clear communication. By staying informed and working with reliable agents, you can protect your investment and avoid the emotional and legal stress that comes with illegal renting requests.
What was the magic reason that your agent answered to reject the rent request?