The very flat, apartment or house you’re living in right now has a caveat lodged on it. In fact, if it hasn’t been fully paid for yet. The caveat is still there, lurking in the darkness. So what’s a caveat, you ask? Can it affect the feng shui of your home? Is it alive? Can you eat it?
What the heck is a caveat?
A caveat is a kind of notice that your lawyer lodges online with the relevant government agency to indicate that you are going to buy the property.
Basically, the lawyers or their secretaries log into a government website and fill in a form, including the details of the buyer and transaction, and pay a fee in order to submit this application. Once accepted, the caveat has been lodged.
Anybody else who wants to buy the property has only to search the government’s database to find out that you’ve got first dibs on the property. It’s like a “reserved” sign on a restaurant table.
That also means that you can search for any property that’s currently in the process of being bought. You’ll be able to see the caveat lodged by the lawyers of the buyer.
(By the way, here’s how “caveat” is pronounced…)
Why would you want to search for caveats?
Caveats contain some very useful information, including the transaction price of a property.
Yup, you heard that right, by searching for URA caveats, you can find out how much people are selling their property for.
So if your neighbour is selling his unit and has already found a buyer, you can secretly find out how much he’s selling it for by sneakily searching for the caveat on his property. Think of it as a more technical form of social media stalking, if you will.
Before you buy a property, your lawyer will also do a search to make sure that there are no existing caveats on the property.
How do you use the URA caveats portal?
Caveats for all private residential property transactions can be searched for on URA’s website. All caveats lodged within the last 36 months are listed on the site.
You can search for specific properties according to date of sale, property type, type of sale or project name/postal district.
You will then receive search results with the following information:
- Project name, street name, type, postal district, floor level
- Tenure (eg. freehold or 99 year leasehold)
- Type of sale (eg. resale, subsale or new sale)
- Nett price
- Area in square feet
- Unit price
- Date of sale
That’s some very useful price info right there. But note that the info is only for private property transactions. For HDB property, you can just refer to the resale flat prices published by HDB.
What should property buyers look out for?
If you’re a prospective property buyer, you should definitely search for recent URA caveats in the same area (or better yet, in the same project).
Why? Because the prices quoted on property listings websites are almost always inflated. You will need to know how much the property is really worth in order to bargain effectively.
You should compare per square foot prices of units of a similar size as the property you’re thinking of buying. That’s because the square foot prices of smaller units are almost always higher than those of larger units in the same development.
If you can’t find units in the same project, make sure you compare units that have the same tenure as yours and of a similar age, as there is no point in comparing the price of a freehold property with that of a 99 year leasehold one.
What are the limitations of URA’s portal?
URA caveats can tell you the price at which a property was sold. But they can’t provide you with more certain details about the project.
That means that if you’re checking the prices of units in an unfamiliar project, you might need to Google the actual development or even pay it a visit. A disproportionately high or low selling price might be due to factors such as the age of the building, the condition of the unit, inaccessibility of public transport and so on.
The circumstances of a sale might also affect the selling price on the caveat. For instance, properties might be sold below valuation price if the owner was in need of money, or in the case of a foreclosure.
Still, thanks to caveats, we now have access to valuable pricing information that helps us avoid getting cheated when buying property.
Do you have any tips for doing price research when buying property? Share them in the comments!
The post URA Caveat - What It Is & How to Use It to Research Property Transactions appeared first on the MoneySmart blog.
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