COV, or what is known as Cash over Valuation, is another factor that comes into place when it comes to resale HDB transaction. In a typical resale HDB buying and selling, a request for valuation is usually in place after the buyer and the seller have agreed on a price, the seller would proceed to grant the buyer an OTP (Option to Purchase). Following which, and the buyer side have till the next working day to submit a request for valuation in the HDB resale portal.
As literal as it sounds, the cash over valuation is the amount of cash one need to pay on top of the valuation of the property. Say that the buyer and seller agreed to transact at $550k, however the valuation is only at $500k. Hence the COV is $50k.
This would mean that the particular COV have to be covered fully by cash. On top of that, the bank/HDB loan and CPF would only take $500k into consideration. Say a bank loan is 75% LTV (loan to valuation), hence your bank loan only covers 75% of the $500k value (but not the $550k agreed price).
With that, you also have to note that stamp duty is based on the purchased price (which is the price including COV), and not the valued amount despite it being lower.
Despite this, COV still happens; especially in the appreciating property market. On top of that the urgency of getting a property, or if the buyer happen to like that particular property, they would just go for it even if the price might be well above the market rate. To some who can afford, sometimes it is worth it as long as it’s their dream property.
So far I had transacted well within the valuation; with my most recently purchase going at 0 COV! So feel free to get in touch if you’ll like to get the best offer out of your resale purchase! I’ll also be putting together some resources aimed at helping homeowners!