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REM CHAPTER 3, WHEN TO USE WHICH METHOD? - Coggle Diagram

- - - - Reserve price
      - • Open bidding
      - • Sold to highest bidder
      - • Physical /online bidding
  - - - Statutory requirement- for Mortgagee or trustee sale
      - • Considerable competition for undervalued property
      - • Time limit within the auction
      - • To establish value or market sentiments
  - - - Must be sold to the highest bidder (if meet reserve price)
      - • If dispute arises, property to be auctioned again at the last undisputed price
      - • Pay immediately 10% and sign condition of sale
      - Increase in each bid to be regulated by auctioneer
        
        • If no bid made at the auction, property may be withdrawn
  - - - Competition is concentrated within a short span of time
      - • Reserve price is set by owner
      - • Bidding can only move the price upwards from Opening Bid
      - • Sale can be conducted quickly
      - • Conditions of sale are less restrictive
      - • Extensive advertising
      - • Open and transparent mode of sale
      - • Structured and organised manner
  - - - Tends to be expensive - a lot of advertising to attract bidders to attend auction
      - • Vulnerable as it is a lengthy process – in 6/8 weeks there may be changes in market conditions
      - • Damaging effect on price if property is unsold in an auction
      - • Usually associated with bank foreclosure
- - - - Private i.e. only buyer and seller are privy to the negotiations
      - • Buyers/ sellers negotiate separately with / without agents
      - • “Subject to contract”
  - - - Commonly use for all types of properties
      - • Smaller or individual transactions eg sale of HDB resale flat, private
      - residential condominium, leasing of commercial units etc
      - • Usually used by real estate salespersons
      - • Involve the use of ‘Option To Purchase’ (OTP)
  - - - Cheap & Simple
      - Flexible
      - No immediate time pressure
      - Negotiations are private
      - Opportunities exist by bargaining until a relatively late stage
  - - - No deadline
      - Little incentive for RES to do their best without sole agency
      - Risk of Overexposure
  - - - 1) Property listed with salesperson (exclusive listing) for sale
        
        2) Salesperson advertises property for sale
        
        3) Buyer responds to advertisements
        
        4) Salesperson arranges for viewings/inspections
        
        5) Above repeated various times
        
        6) Buyer is keen to purchase – makes an offer (usually lower than asking price)
        
        7) Salesperson reverts to seller
        
        8) Seller gives counter-offer
        
        9) Salesperson tells buyer for consideration – repeated several times
        
        10) Price agreed upon by seller and buyer
        
        11) Seller issues Option to Purchase – buyer pays option fee
        
        12) Buyer exercises Option – pays balance amount
        
        13) Solicitors conduct searches
        
        14) Completion of sale – all payments made and titled deeds and keys handed over
- - - - Blind bidding
      - • Reserve price (undisclosed)
      - • Prescribed Tender documents -> Offer
      - • Tenders are open at the same time. Then select which tender bid to accept. (usually the highest)
      - • May or may not be sold to highest bidder
  - - - Alternative to auction
      - • Strong demand and rivalry amongst purchasers
  - - - Opportunity to compare bids in private
      - • Price can be kept confidential
      - • Opportunity to impose conditions other than price – e.g. design / use / conservation guidelines
      - • Need not award to highest bidder
  - - - Blind bidding
      - • May involve abortive work and expenditure by the bidders
      - • Expensive method - > publicity & paperwork