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There is one thing worse than an Enbloc ----- and that is an Enbloc done badly. Since the majority have the necessary mandate to sell, then they owe it to all SPs to make a success of it. Minority SPs can only watch and wait, if they sell then lets pray it's at a price we can move on with, if they don't sell, then we are happy to stay for a few more years.

That FAQ flyer


Two young marketing agents came to my door yesterday handing out 3 pieces of paper; 1) Letter of rebuttal to the 'Vice-Chairman's undated letter distributed to SPs', 2) Dates of the the next 2 signing sessions and 3) Tampines Court Collective Sale FAQ.

The first was dealt with my an Anonymous commentator in far more succinct terms than I ever could. The second needs no comment other that they obviously haven't gotten permission yet to use the air-conditioned Activity Room for free.
The third throws up a wonderful set of canned responses to the FAQ of enbloc.

(edited/truncated version, answers are in my own words)

Q. How is the reserve price  determined?
 A. The residual land Value Method.*
*Yet when I asked to see the RLV, the MA point blank refused to show me. 

Q. Why should I sell at $1.xx?
A. Because it is a premium price when compared with recent transacted sales. A 50% premium!
The TC record price was $1,250,000 set in May 2013. The fact that a TC unit can command this sum in a good market makes a mockery of the present RP. But why are they even talking about individual unit prices? The RLV on which the RP is based has no connection with individual unit prices. When I ask about apples why are they talking oranges?

Why? because the Premium so beloved of marketing agents is a simple but fallacious marketing tool. This 'premium' never holds as it is set in a time in the past and there are umpteen Strata Titles Board / High Court / Supreme Court cases to prove this is so (the most notable being Horizon Towers), and most importantly, the premium is never guaranteed. I cannot stress enough that pointing to a present day individual unit sale and linking it to the expected sales proceeds 3 years down the road is ludicrous and should never be employed. It preys on the clueless and uninformed. 50% sounds like a windfall to many people! It is, in fact, daylight robbery.

SPs from round 1 will recognise the more detailed flyer from Round 1 - touting it's infamous 66% Premium. We all remember too well the raucous, almost riotous EOGM in 2007 when majority owners realised that their precious 'premium' had disappeared since signing the CSA and were baying for blood.

Q.Why not sell at a higher reserve price?
A. The reserve price is set to attract bidders. Bidders will outbid each other and raise the RP

So, the RP is not set to reflect the true value of the land, but to attract bidders. But...they only require one bidder at the present RP to sell (and that interested party is probably already there, hence the low RP). The idea that there will be many bidders a.k.a government land sales is fallacious. For a start, the Government does not tell the bidders in advance what the reserve price will be, so the developers do their own calculations and bid accordingly. They bid blind to the RP. The Gov then awards the tender to the highest bidder and there are never any private deals done behind closed doors with midnight deadlines. If the bids are under the secret RP then the land is not sold. 

Enbloc sales are different. The bidders know what the RP is in advance and know just how much to bid. If they bother to bid at all it might be a tiny bit higher to give the impression that it's a real tender exercise. It is not. Most times though.they will hold back and wait for the private sale option to kick in. An inexperienced Sales Committee can be strong-armed behind closed doors and feel they have no option but to sign the deal before midnight etc. We have been there, done that, so you know I am not making it up.  If the Marketing Agent sets the RP low then the developers are very happy indeed. They get the land at an undervalue, the MA gets his juicy commission and the owners are left shortchanged. The RP you set will be the eventual sale price.

Q.Will the land valuation affect the reserve price?
A. " If the market valuation of the development is higher than the RP, then it has to be sold above its market land value. Conversely, the reserve price will be the minimum bid price for the development"

This just doesn't make any sense. Must sell ABOVE the official valuation? Really? 
The valuation report is to rubber-stamp the RP, the figures are manipulated. So don't expect any surprises here.

Q. Is it possible to get any higher than $1.XXm?
A. We will do our best for TC.

The MA is working on a no-sale-no-fee basis. They will do what is best for themselves. Strata titles Board/High Court/Supreme Court cases to prove this is so. Again, no surprises here.  Do they have a purchaser in the wings at the present bargain basement price? If so, they will continue to resist calls to raise the RP until they hit a dead end but 'it is possible'  the $1.XXm is all you can hope for.

Q. Is a "down" market the right time to sell my property?
A. If you sell in a down market, you are also buying in a down market.. and vice versa

It can be true of normal individual sales, but it is not true of enbloc sales given the length of time between committing to an RP and receiving the sales proceeds into your bank account. According to Hutton's Letter to SPs (dated 10 Aug 2016), the RP was set in on 28 Nov 2015.  Owners agreed to this RP on 25 June 2016 when it was already 6 months old. They have 1 year to achieve the 80% (until 24 June 2017) and another 1 year to make an application for Sale to the STB (23 June 2018). The STB can take up to 2 months. If there are no objections and no proceedings to the High Court, then owners can expect their proceeds to be banked around the 3rd quarter of 2018
So you set your price in a down market and wait to buy again 3 YEARS LATER. 

By no stretch of the imagination can you say that you are buying and selling in the same market. As in TC Rd 1 and in many other enblocs that have gone to court, the RP simply cannot hold it's value fort a 3 year period.

Q. Is there any legal cost upon signing the CSA?
A. No, not yet. The STB expenses ($225/unit) need to be paid by the consenting majority on reaching 80%.

The estimated STB charges are $100k (see page 9.2.2 of the CSA)

The flyer neatly skips the aggravating Total Costs & Expenses question by deflecting to the point of signing and the single STB payment.
At the end of the day, if owners are not careful, they are going to face a whopping deduction from the sales proceeds which will dwarf any estimated future maintenance cost of TC to owners. I'd rather pay $10k to replace an electrical station than $30k to move to Hougang.

The Relocation
Q: Can I get a similar size replacement?
A. Yes, try the HUDC in Hougang. 

The MA boasted tin the FAQ Flyer that the Casa Rio prices were 'based on their extensive research'. Their extensive research failed to highlight to the owners that these units were unliveable, cockroach infested hellholes that even the HDB could not sell in the 1980's. They never had any occupants. They were eventually sold at Auction. Such is the quality of their research,

Q.With $1.xxm what can I buy?

Q. Will I have the necessary funds to purchase my next property?
A. No answer, just points out the process. 

Q. When will I need to find my next home?
A. After the Sale you have 3 months to start looking and 6 months to move out.

All in all, a pathetic little flyer targeted at 4 year olds.

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