Saturday, May 14, 2016

Severe penalty on giving up a property purchase

Michael (not his real name) went to the launch of a new condominium project. The show room was packed with potential buyers. It was chaotic. The buyers were given a queue number and had to wait for some time before being called to pick their unit and sign the option to purchase the flat.

Michael was under great pressure. If he did not take up his preferred unit immediately, it would be offered to the next buyer. To add to the pressure, they were offered a "discount" that would be withdrawn if the contract was not signed immediately.

He selected his unit, paid the option money and signed the contract.

After returning home, he did his budget again and realized that he could not really afford the mortgage on the property. His wife also felt the same. They decided to give up the booking.

The developer forfeited 25% of the deposit, which amount to nearly $20,000. This represents nearly one year of savings for the family. It was a severe penalty. This penalty is stated in the contract and had been explained to the buyer.

Michael learned that the developer was able to sell the same unit to a new buyer at a higher price. But the marketing manager of the developer firm was not prepared to refund the penalty to Michael. It became a part of the developer's total profit.

Michael and his wife had learned a painful lesson. They will not attend any new property launch in the future. It is easy for them to be caught in making a bad decision, as they were under hard pressure selling techniques.

1 comment:

Anonymous said...

In New Zealand, buyers have 3 days to change their mind, and sellers cannot use pressure tactics. if they do, they can be heavily sanctioned. When will PAP start to put in laws that actually protect consumers, workers and the vulnerable?

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