Experience Sharing

Mr A intended to purchase a property of a new first-hand residential development in urban area, which had 200 residential units in total. But when he inquired the estate agent about details of the development, the estate agent informed him that the vendor would initially sell two residential properties with “the best view” by way of tender the following week. Mr A longed to own a flat with a harbour view to watch fireworks. He thought that it was a chance he could not afford to miss. He paid great attention to market news. Despite the fact that the relevant tender documents had not been released, he noted that there were market rumours that the vendor had on various occasions revealed that the indicative price per square foot of the two to-be-tendered properties would be $ 25,000 or above. Mr A fully believed in the information. So, when the vendor made available the relevant tender documents, Mr A readily submitted a bid at an amount slightly above the indicative price. His bid was successful. Mr A, however, subsequently learned from the newspapers that the vendor would sell other properties of the development a month later and the properties of comparable view were priced at about $ 20,000 per square foot in the price list. Furthermore, he later found out that the prices of properties of other similar developments in the vicinity were only $ 17,000 per square foot. Because of his eagerness to own the property, Mr A did not question market rumors about the target prices indicated by the vendor and made an offer rashly without much deliberation. He regretted that he had not checked relevant information before submitting his bid including the sales conditions and transaction information of nearby developments.

Advice from the SRPA:

• The Residential Properties (First-hand Sales) Ordinance (the Ordinance) stipulates that if vendors sell or offer to sell a first-hand residential property by way of tender, vendors are not required to make available the price lists for the public while other provisions of the Ordinance still apply, including the requirements on sales brochures, sales arrangements and register of transactions. According to the Ordinance, vendors must set out the transaction prices and terms of payment in the register of transactions in relation to the properties sold by way of tender.
• Vendors must set out details of tender in the documents containing information on sales arrangements. According to the Ordinance, vendors should provide hard copies of the document containing information on the sales arrangements at least 3 days before the first day of the tender period, and throughout the tender period (i.e. from the commencement date to the closing date of the tender period ).
• Prospective purchasers are reminded that vendors may not, in every round of sale, offer to sell all residential properties. Prospective purchasers should pay attention to every sales arrangement made available by the vendors to check which residential properties are offered for sale, whether they are offered for sale by way of tender, and how many residential properties are yet to be offered for sale. Prospective purchasers should bear in mind that vendors may offer to sell other properties which better suit their needs in the next round of sale. To know whether other properties and what properties will be offered for sale by vendors subsequently, prospective purchasers can check with vendors direct or refer to the sales arrangements which have been made available on the vendors' designated websites.
• If prospective purchasers plan to purchase first-hand residential properties by tender, they should read the register of transactions of the development concerned to learn about the sales conditions and transaction information of every residential property in the development. They should also compare the prices of properties of similar developments nearby, read the sales arrangements, tender notices and other relevant tender documents and assess the tender price carefully. Prospective purchasers should not simply believe in market rumors and, without knowing how many residential properties are yet to be offered for sale, rush to submit a bid with a high price. If required, prospective purchasers should seek professional advice.