View Full Version : Truth Behind ABSD & FV
I've recently bought a PC (first time private buyer) from Far East. It's quite a learning experience and I thought to share.
Unlike other developers, FEO offers stamp duty and furniture rebates on top of an array of discounts. So instead of having an upfront discount on the purchase price they want you to pay first and then reimbursement comes later. With furniture will come in after TOP and stamp duty 14 working days after payment of the full 20%.
First up was banks factoring the "discounts" which you will only receive in future as part of the purchase price. So instead of being able to borrow 80% of the full purchase price (i.e what you need to pay) they will only lend 80% of purchase price minus future discounts. And I was promptly offered crap advice by my lawyers to "give up" the discounts to borrow more... aka a really quick way to get poorer.
Then came the rebate. It states 14 working days after they received the "stamp duty" receipt. 1.5 mths later, I* I did not receive the rebate. According to them, their lawyers never forwarded the documents to them... But they magically got it from them the day I complained and so had to wait 14 more days.
It is now almost 3 months since I've walked into the FEO showroom and signed on the dotted line. And to date I have not received a dime from FEO.
So lesson is for potential FEO buyers or any developers who doesn't give upfront discount on the purchase price... Have enough cash to cover the discounts and the corresponding decrease in LTV before even signing.
Lucky I had enough buffer for all this convenient misinformation. I can only imagine what will happen to a buyer with lousier cashflow and lower cash on hand.
The promised discount is essentially an interest free loan to developers (and for me to one of the fattest developers) indefinitely with no stipulated term. Words cannot describe how disgusting the whole scheme feels.
correct me if i am wrong. The stamp duties you are paying goes directly to SLA, it doesnt go to FEO right? So why you say you are giving them interest free loan?
All is about business... the house always win. :o
correct me if i am wrong. The stamp duties you are paying goes directly to SLA, it doesnt go to FEO right? So why you say you are giving them interest free loan?Think he's saying the developer delay in paying the discount so like developer is taking an interest free loan from the buyers coz that money is not theirs to keep. :cheers6:
Think he's saying the developer delay in paying the discount so like developer is taking an interest free loan from the buyers coz that money is not theirs to keep. :cheers6:
The developer only receive 20% of the purchase price, so technically, they are only sitting on 20% of the stamp duties rebates.
does it make any sense? :D
Stamp duties is based on price after discount or before discount?
Stamp duties is based on price after discount or before discount?
should be discounted price before stamp fee rebate and FV
FEO=Banker
Buyer= Player
Rule NO 1....Banker ALWAYS wins
Rule No 2...same as Rule No 1....:D :D :D
FEO=Banker
Buyer= Player
Rule NO 1....Banker ALWAYS wins
Rule No 2...same as Rule No 1....:D :D :DAgreed... Developer always win. I asked for developer to make good something that they failed to provide me with in my new unit which was stated clearly in the S&P. After 1 month, no news from them. I pushed my lawyer to contact them again. After a second month, developer called me and said can split cost as they accede to the request I demanded. :doh:
correct me if i am wrong. The stamp duties you are paying goes directly to SLA, it doesnt go to FEO right? So why you say you are giving them interest free loan?
If there is no rebate, the purchase price should be lower... Rebate is just a form of delayed discount. Problem is the developer can and did deliberately delay and delay and delay the payment with no reason at all... And as a buyer there is nothing I can do about it.
The real price is (purchase price - all discounts). When the discounts are delayed, effectively you are just lending developers cash.
If there is no rebate, the purchase price should be lower... Rebate is just a form of delayed discount. Problem is the developer can and did deliberately delay and delay and delay the payment with no reason at all... And as a buyer there is nothing I can do about it.
The real price is (purchase price - all discounts). When the discounts are delayed, effectively you are just lending developers cash.
this is nothing compared to the cashcard we are using.
Think he's saying the developer delay in paying the discount so like developer is taking an interest free loan from the buyers coz that money is not theirs to keep. :cheers6:
The developer gets to "borrow" and keep the stamp duty rebate money and future furniture voucher money. All at the same time keeping their sale prices High.
If no $ because of the lower bank loan, people give up on the rebates or give up their 5%. Feels like an elaborate attempt to cheat to me. How are these rebates beneficial to the buyers?
If there is no rebate, the purchase price should be lower... Rebate is just a form of delayed discount. Problem is the developer can and did deliberately delay and delay and delay the payment with no reason at all... And as a buyer there is nothing I can do about it.
The real price is (purchase price - all discounts). When the discounts are delayed, effectively you are just lending developers cash.
actually buyer with tight cash flow will prefer to have such rebate than to get it discounted before hand.
blackjack21trader
08-05-12, 17:56
sister lilyput is right. she is talking about the time value of money. $1 now is worth more than $1 in the future hor. i guess she know something is not right but dunno how to put it in words.
actually buyer with tight cash flow will prefer to have such rebate than to get it discounted before hand.
Don't see why that's the case. Immediate discounts should be much better?
Anyway such practices makes me lose confidence with the developers. And if FEO does it, I presume others do it too? Haha so not buying a BUC after this :scared-2:
sister lilyput is right. she is talking about the time value of money. $1 now is worth more than $1 in the future hor. i guess she know something is not right but dunno how to put it in words.
2 to 3 weeks with saving rate below 1%. Thats is not even enough to pay for zizhar dinner lor
I suppose FEO has so many projects in the pipeline and so many patterns until they themselves lose track. It also seems their sales people can be creative in generating forms of discounts until you can get 2 different price quotes when you talk to 2 different agents for the same unit. Alot of tikam tikam nowadays.
2 to 3 weeks with saving rate below 1%. Thats is not even enough to pay for zizhar dinner lor
Savings in banks isn't the only way to store money. It's the earnings reporting season and quite a good time to buy into companies you think is good before the report record earnings :(
Lilyput is right. For every million pty FEO sold to you, you loan them 10k for the FV (1%) for 3 to 4 yrs. And another 30k for a few months from the stamp duty rebate. These numbers multiply by a thousand you have a 10mil interest free loan for 3ys, 30mil short term loan for 3 months. The short term loan can cover a lot of running cost like salary and show flat site rental etc. And for the 10mil long term credit, you have your imagination.
U r rite to feel cheated. Such cash back nonsense should have never been allowed.
There is no real discount they just mark-up higher and tell you come with discount to make you happy.
Even if this discount is given it does not appear in caveat so higher price will be published.
That the reason for giving rebate(at later date) rather than striaght discount.
The developer gets to "borrow" and keep the stamp duty rebate money and future furniture voucher money. All at the same time keeping their sale prices High.
If no $ because of the lower bank loan, people give up on the rebates or give up their 5%. Feels like an elaborate attempt to cheat to me. How are these rebates beneficial to the buyers?Well, don't think they are here to cheat on you. Just have to wait for your rebates and voucher to come. Its an attempt to delay payment though... sigh! Reputation???
Don't see why that's the case. Immediate discounts should be much better?
Anyway such practices makes me lose confidence with the developers. And if FEO does it, I presume others do it too? Haha so not buying a BUC after this :scared-2:
assuming your property is $1m, in order to exercise the option, you have to pay 20%, which is $200K. Plus stamp duty (e.g 30K) = $230K of upfront cash/cpf
With rebate, you only need around $200K of cash/cpf. And to some people that $30K can make quite a lot of difference.
assuming your property is $1m, in order to exercise the option, you have to pay 20%, which is $200K. Plus stamp duty (e.g 30K) = $230K of upfront cash/cpf
With rebate, you only need around $200K of cash/cpf. And to some people that $30K can make quite a lot of difference.
Wrong,
With rebates u need $248,600 CASH. This have been discussed before:
Loan on 80% of List price minus all discounts = ($1,000,000 - $30,000) x 80% = $776,000.
SD will still be @ $24,600 (not 30k) since caveat is at $1,000,000 not $970,000.
Hence total upfront cash needed = ($1,000,000 - $776,000) + $24,600 = $248,600.
Without rebates one can borrow the full 80% of $1,000,000. Hence total upfront cash needed = $224,600. (Lesser than taking cash rebates)
In such a case, if the buyer desperately needs the $30,000 he will be in trouble.
Wrong,
With rebates u need $248,600 CASH. This have been discussed before:
Loan on 80% of List price minus all discounts = ($1,000,000 - $30,000) x 80% = $776,000.
SD will still be @ $24,600 (not 30k) since caveat is at $1,000,000 not $970,000.
Hence total upfront cash needed = ($1,000,000 - $776,000) + $24,600 = $248,600.
Without rebates one can borrow the full 80% of $1,000,000. Hence total upfront cash needed = . (Lesser than taking cash rebates)
In such a case, if the buyer desperately needs the $30,000 he will be in trouble.
I am only comparing the part on stamp duties rebate, not talking about other discounts. $30K is just for simple illustration purpose.
With stamp duty rebate, your cash upfront will be $224,600-$24,600 = $200,000K (of course you have to pay the $24,600 first)
I am only comparing the part on stamp duties rebate, not talking about other discounts. $30K is just for simple illustration purpose.
With stamp duty rebate, your cash upfront will be $224,600-$24,600 = $200,000K (of course you have to pay the $24,600 first)
SD rebates works the same way. it may take up to few months.
Since u need to pay first, Cash upfront is still more than without rebates. So technically u still need more money than without rebates
SD rebates works the same way. it may take up to few months.
Since u need to pay first, Cash upfront is still more than without rebates. So technically u still need more money than without rebates
Rebate and discount works differently. Rebate is something that you pay first than you get reimbursed. Whereas for discount, it is given you before you pay. How the latter affect your bank loan etc, it is not something we are discussing here.
With rebate someone who is cash tight, they can always take a short term loan (either from banks or family) to pay for the stamp duties. That is the main difference.
There is no real discount they just mark-up higher and tell you come with discount to make you happy.
Even if this discount is given it does not appear in caveat so higher price will be published.
That the reason for giving rebate(at later date) rather than striaght discount.
yet people continue to buy from new launches, oh well...
There is no real discount they just mark-up higher and tell you come with discount to make you happy.
Even if this discount is given it does not appear in caveat so higher price will be published.
That the reason for giving rebate(at later date) rather than striaght discount.
Another reason developers like to give rebate is that it does not affect List Price. URA should take the price data from purchase price after all rebate and discount.
Wrong,
With rebates u need $248,600 CASH. This have been discussed before:
Loan on 80% of List price minus all discounts = ($1,000,000 - $30,000) x 80% = $776,000.
SD will still be @ $24,600 (not 30k) since caveat is at $1,000,000 not $970,000.
Hence total upfront cash needed = ($1,000,000 - $776,000) + $24,600 = $248,600.
Without rebates one can borrow the full 80% of $1,000,000. Hence total upfront cash needed = $224,600. (Lesser than taking cash rebates)
In such a case, if the buyer desperately needs the $30,000 he will be in trouble.
So after receiving the 3% rebate, total cash needed is $248600-$30000=$218600 which is only $224600-$218600=$6000 lesser compared to one without rebates
It is better to have the 3% rebate minus off the purchase price upfront.
Total cash needed will be $217700. Savings of $900 on the stamp duty.
Another reason developers like to give rebate is that it does not affect List Price. URA should take the price data from purchase price after all rebate and discount.
This is the main reason.
rebate sounds good to those buyers that have to pay 3% ABSD. In fact, it is just a gimmick.
Rebate and discount works differently. Rebate is something that you pay first than you get reimbursed. Whereas for discount, it is given you before you pay. How the latter affect your bank loan etc, it is not something we are discussing here.
With rebate someone who is cash tight, they can always take a short term loan (either from banks or family) to pay for the stamp duties. That is the main difference.
i know the difference between rebates and direct list price discount. What i am talking about is relating to rebates.
Rebate and discount works differently. Rebate is something that you pay first than you get reimbursed. Whereas for discount, it is given you before you pay. How the latter affect your bank loan etc, it is not something we are discussing here.
With rebate someone who is cash tight, they can always take a short term loan (either from banks or family) to pay for the stamp duties. That is the main difference.
discount upfront on purchase price is better than rebates. Many thought rebates will reduce the cash needed which is wrong.
So after receiving the 3% rebate, total cash needed is $248600-$30000=$218600 which is only $224600-$218600=$6000 lesser compared to one without rebates
It is better to have the 3% rebate minus off the purchase price upfront.
Total cash needed will be $217700. Savings of $900 on the stamp duty.
Yes, definitely more beneficial to get direct discount off the list price. lesser SD + more loan.
One need less cash for discount if comparing rebates VS discount.
I am reading this thread for the first time and think some points need to be mentioned :
1) The reason why there is all these rebates, furniture vouchers, etc is ... to make people hold the property until TOP. With the new SSDs, this may not look very necessary, but imagine if 2-3 years after you buy and you want to sell at an obscene profit (despite the SSD), the developer will get to "save" on these vouchers/rebates as the next buyer is unlikely to get it from the developer.
2) Rebates keep the pricing in caveats at the level developer wants (as mentioned very correctly by someone). This is a VERY VERY important tool to the developer. Thats why there is a ALOT of resistence to lodge caveat at net price.
3) Rebates is a way to differentiate their customers. This rebates can vary from customer to customer. Some developers give Office Boy 1-2% more rebates than those published on the price list. hehe... :p :p :p
Thats all !
DKSG
Yes, definitely more beneficial to get direct discount off the list price. lesser SD + more loan.
One need less cash for discount if comparing rebates VS discount.
Both are having the same amount of loan quantum. Only difference is on the stamp duty.
Both are having the same amount of loan quantum. Only difference is on the stamp duty.
thats right and thats what i'm driving at. People who don't understand how rebates work may think that rebates gives them more cash flow/ Which is false. it takes up more cash than direct list price discount.
thats right and thats what i'm driving at. People who don't understand how rebates work may think that rebates gives them more cash flow/ Which is false. it takes up more cash than direct list price discount.
And it seems like developers can delay the rebate without any penalty.
Can we negotiate for the rebates to be discounted on the purchase price upfront?
I am reading this thread for the first time and think some points need to be mentioned :
1) The reason why there is all these rebates, furniture vouchers, etc is ... to make people hold the property until TOP. With the new SSDs, this may not look very necessary, but imagine if 2-3 years after you buy and you want to sell at an obscene profit (despite the SSD), the developer will get to "save" on these vouchers/rebates as the next buyer is unlikely to get it from the developer.
2) Rebates keep the pricing in caveats at the level developer wants (as mentioned very correctly by someone). This is a VERY VERY important tool to the developer. Thats why there is a ALOT of resistence to lodge caveat at net price.
3) Rebates is a way to differentiate their customers. This rebates can vary from customer to customer. Some developers give Office Boy 1-2% more rebates than those published on the price list. hehe... :p :p :p
Thats all !
DKSG
#2 is correct. This ensures caveats lodged are all the SAME...so in the eyes of buyers (early or later) everybody seems to be paying the same. All buyers happy because there is transparency. However, behind it all are the funny rebates which are hidden from public eye. Rebates allow developers to exercise flexibility in their final pricing without causing unhappiness among buyers.
If u look who started this rebate thingy, this developer is holding the psf index stable immediately after CM & to keep the buying momento going.
The mechanics of the rebate is the complication that caught the newbies off guard. So primary sch maths foundation is very important....hahaha
#2 is correct. This ensures caveats lodged are all the SAME...so in the eyes of buyers (early or later) everybody seems to be paying the same. All buyers happy because there is transparency. However, behind it all are the funny rebates which are hidden from public eye. Rebates allow developers to exercise flexibility in their final pricing without causing unhappiness among buyers.
The whole thing is murky at best.:doh:
Making sure that people hold on to the properties until TOP is a very important strategy.
As developers move their prices up slightly as the selling progresses, most initial buyers would be sitting on paper gains.
Thus it is important to lock these people up so that they do not come into the market to undercut the developers.
Of course, everything goes once the project is TOP. Thats why you can see for some projects like Helios, physical TOP is in Jan, but owners are only served the notice 3-5 months later, giving developer time to sell off (without much success) the reminaing units.
DKSG
I am reading this thread for the first time and think some points need to be mentioned :
1) The reason why there is all these rebates, furniture vouchers, etc is ... to make people hold the property until TOP. With the new SSDs, this may not look very necessary, but imagine if 2-3 years after you buy and you want to sell at an obscene profit (despite the SSD), the developer will get to "save" on these vouchers/rebates as the next buyer is unlikely to get it from the developer.
2) Rebates keep the pricing in caveats at the level developer wants (as mentioned very correctly by someone). This is a VERY VERY important tool to the developer. Thats why there is a ALOT of resistence to lodge caveat at net price.
3) Rebates is a way to differentiate their customers. This rebates can vary from customer to customer. Some developers give Office Boy 1-2% more rebates than those published on the price list. hehe... :p :p :p
Thats all !
DKSG
How come Office Boy got so good lobang? You buy multiple units right?
Making sure that people hold on to the properties until TOP is a very important strategy. DKSG
i tot SSD is more effective than rebate & FV, no? 1mio even at 4% SSD 40k wor.
And it seems like developers can delay the rebate without any penalty.
Can we negotiate for the rebates to be discounted on the purchase price upfront?
Quite impossible as the developers will wanna have a higher priced caveat lodged.
i tot SSD is more effective than rebate & FV, no? 1mio even at 4% SSD 40k wor.
I think they just want to squeeze as much out of consumers as possible. There is no harm (other than their clients feeling used) in delaying since the signed agreement have no teeth to bite them hard. Imagine the opportunity costs of all the extra cash they can get... Rolling it over and over by dumping it into a random corporate bond will also fetch them 5% interest.
i tot SSD is more effective than rebate & FV, no? 1mio even at 4% SSD 40k wor.
I agree that at this moment, SSD is more effective. But if like previously, your $ 1mil condo can sell $1.3 mil 2/3 later, you may choose to compete against the developers before TOP.
DKSG
How come Office Boy got so good lobang? You buy multiple units right?
Office Boy is in the "Friendship Club". Haha!
Or maybe they just want to get rid of pests like Office Boy who keep going to their showflats and give comments. haha!
DKSG
Office Boy is in the "Friendship Club". Haha!
Or maybe they just want to get rid of pests like Office Boy who keep going to their showflats and give comments. haha!
DKSG
Perhaps you can help yowetan on his flamingo valley :D
Perhaps you can help yowetan on his flamingo valley :D
Why he need help ?
DKSG
PS : If I can, I will help.
I agree that at this moment, SSD is more effective. But if like previously, your $ 1mil condo can sell $1.3 mil 2/3 later, you may choose to compete against the developers before TOP.
DKSG
Agree with u if the projects are not completely sold like those current capland. If not for SSD, those hot projects sold out in few weeks, the following mth u see agents/investors flipping liao, e.g caspian
Why he need help ?
DKSG
PS : If I can, I will help.
he want to catch flamingo, if u lending a hand must also help count his bullets before firing hor.
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