GREEN LODGE EN BLOC
BIDS 30% lower than reserve

The Green lodge collective sale at Toh Tuck Rd has fallen through in February 2010 with only three developers expressing interest in the property at 40 percent less than the asking price.

Expressions of interest came in between $80m-$85m despite the condo being marketed at $130m. And this is despite the fact that the collective sale price was adjusted from the original $142m originally proposed by the collective sale agents for the property, Chambers Management.

“Even when the price was touted at $142m, we were doubtful of whether

any bids were worthwhile,” said a resident. “This is because

we like the area and new apartments near by are selling for around $1600 - $1900 per sq ft.”

The original price quoted for the condo was $142m when the condo decided to go en bloc some three years previously.

As the market sentiment changed, the property price was dropped from $142m $130m and when the tender for the sale closed on January 13 of this year, only three expressions of interest were received. These were not even firm bids.

Developers felt that the price was out of sync with the current market conditions and also due to the government releases of land sales.

However, most of the owners of the condo were kept in the dark about details of the bid or procedures. “We only knew about the offers when it was reported in the Business Times,” says another owner.

“Although we asked the sales committee and agent for details of the sale, they simply said they had imposed “a black out period”. We felt that since it is our property, the process should be open and transparent. But the press was given more information than we were.

'We objected that this is like handing the Title Deeds to the SC because we are kept in the dark about the whole process. There was no transparency in the matter.”

The SPs were later called to an extraordinary general meeting to be scheduled for the week of around 11 February 2010. The meeting was later cancelled.

It was later learned that this meeting was to discuss a possible bid from one developer at $115m. However, when the developer decided to back out, the EOGM was cancelled.

The Sales Committee finally announced to the owners that the en bloc was unsuccessful.

“It has been almost three years of waiting for nothing”, said an owner. We have not been able to decide on important matters like maintenance of the estate. The estate has gone to shambles because of this.”

Another resident added “The sales committee is so powerful, they can withhold information from us and even keep us in the dark about bids. It is like, it is not even our property anymore. And all this for what? The agents touted an unrealistic price to get us interested…They could not deliver. And now when all is said and done, it turns out that we are only able to sell at half the recommended price. What a waste of time and energy!”

Bank on it!

It is a sad fact that those who want to buy enbloc are more experienced than Stayers. It's a case of Mr-Developer-saw-a-chance-to-make-a-huge-profit-from-unwitting-condo-owners-and-went-laughing-all-the-way-to-the-bank. This scenario will undoubtedly change as owners become more savvy about en blocs. Or because many lambs to the slaughter have been examples for all of us to learn from. Take for instance the many owners who sold out and found that the market for their properties increased THREE OR FOUR TIMES from the day they signed the CSA to the day they received their pittance payments from the developer. Hopes crumbled for reaping profit. Anxiety replaced euphoria. Even those who voted "yes" asked those who voted "no" to negate the sale.

Finally, a reconciliation with one's neighbours. Ha Ha!

Actually, there's a simple way to look at it.

You sold at X. The developer puts in X+C. He needs to make a profit. So he charges X + C+ P. Oh no. That new price is the benchmark sale for condos in your area by the time you get your cash. So you have to stump up X+C+P+stamp duty +reno cost+moving cost. That's a far journey from X, yes? And not a profit, right?

Why didn't you realise this earlier? To be fair to those who fell before you, those sacrificial lambs, they were new to the game. And the game had so much glamour! Fever!

Beware of wolves in saucy alluring clothing.

Here are some of the sentiments expressed by the lambs before the slaughter:

• $$!!! profit
• the press reported sales everyday so we must cash in on the fever
• if so many of our neighbours are for it, it must be good (baaa...baaa)
• I can go either way, makes no difference, a little more in the pocket is good though
• agents packaged the en bloc and replacement units so attractively
• no one is interested to upgrade my condo
• the pressure to sign the CSA and the calls from the SC and agents were hard to handle
• *the fact that a big developer wants to buy from me is exciting, wahlau Ong Beng Seng!

Here are some of the sentiments expressed by the lambs after the slaughter:

"I will fight to keep my home. My chances of winning may not be high but I will exhaust all legal means to protect my home."

"This is my home, something money cannot buy."

"Against my wishes, I not only have to give up my home but am also forced to compromise significantly in terms of area size, location and environment of my new home"
"I would like to appeal to the public to beware the pitfalls of collective sales and hope all homeowners in a similar situation be mindful not to let go of their property unless they can find a suitable alternative"

"We will already have to suffer from losses such as renovation costs, stamp duties, interest charges on our mortgages and other transaction costs. We had to sell below the replacement cost, touch our pecious savings and the loss has been too huge to bear"

"Even the SC wanted me to win my case. The market went up and everyone was shortchanged. I sued .. everyone lost. Whole condo was sad. The market went up and our proceeds were short by one third to buy a new home.!"

Your biggest single investment. Please... consider a financial model? Financial models are all about basic maths. So here goes

1. what is your loan
2. how much interest have you paid to the bank (be honest... how much did you really pay so far)
3. what maintenance have you paid over the years?
4. how much CPF do you need to return with interest
5. what is the cost of a new property with stamp duty and renovation (remember this will be two years down the road and you can't predict the market - so provide for at least 100% increase, 200% to 300% safer in prices)
6. what is the transport, relocation, and other costs to move to the new location

Now. Minus all the above against the en bloc offer price.

Positive cash flow and profit? No? At the end of the day, en bloc profit is a myth. Created by the people-who-laugh-at-you-all-the-way-to-the-bank.

En blocs started in 1999. But really only caught on in the past few years. Mistaken assumptions have been made by the many. But their tales are good guide posts for YOU.

Only you can become Mr/Mrs Stayer-who-wised-up-and-realised-that-profit -from-en blocs-is-a-big-load-of-hogwash.  Not worth the drama and the trauma.

That's my opinion anyway. And that of all those sacrificial lambs from the condos that en bloced. They are now wearing shorts. Because in the en bloc process, you see, they lost their pants!

What is your experience in your en bloc? To make a comment, register here