Truth Behind ABSD & FV

[Lilyput]

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.

[Ringo33]

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?

[roly8]

All is about business... the house always win.

[ysyap]

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.

[Ringo33]

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.

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?

[avo7007]

Stamp duties is based on price after discount or before discount?

[Ringo33]

Stamp duties is based on price after discount or before discount?

should be discounted price before stamp fee rebate and FV

[radha08]

FEO=Banker

Buyer= Player

Rule NO 1....Banker ALWAYS wins

Rule No 2...same as Rule No 1....

[ysyap]

FEO=Banker

Buyer= Player

Rule NO 1....Banker ALWAYS wins

Rule No 2...same as Rule No 1....

Agreed... 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.

[Lilyput]

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.

[Poloclub]

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.

[Lilyput]

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.

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?

[Ringo33]

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]

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.

[Lilyput]

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

[Ringo33]

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

[insigina]

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.

[Lilyput]

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

[amk]

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.

[xis]

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.

[ysyap]

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???

[Ringo33]

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

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.

[price]

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.

[Ringo33]

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)

[price]

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

[Ringo33]

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.

[august]

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...

[avo7007]

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.

[Rosy]

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.

[Rosy]

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.