DIBS or no DIBS

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DIBS or no DIBS

Postby yhgoh » Thu Jul 26, 2012 11:24 am

Guys,

I have a question since I see DIBS being offered by most developers these days. How does one determine whether to accept the DIBS offer or opt for rebate instead?

Here's an example,

Package 1
DIBS
Loan agreement and stamp duty to be borne by developer.

Package 2
No DIBS
Loan agreement and stamp duty to be borne by purchaser.
3% off selling price

Property is a condo unit at level 23 (level 27 highest), purchaser not first time purchaser, unit selling at 350k, 90%MOF.

Thanks.
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Re: DIBS or no DIBS

Postby Waterfish » Thu Jul 26, 2012 11:27 am

Just remember that even with DIBS, once the developer cabut... it is the buyers who are responsible to the loan, not developer.

I think both are quite equal. Just depends on your needs.
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Re: DIBS or no DIBS

Postby linkor » Thu Jul 26, 2012 11:37 am

I would take DIBS. better cashflow mah.
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Re: DIBS or no DIBS

Postby Waterfish » Thu Jul 26, 2012 11:47 am

Maybe he is cash cow ler... :mrgreen:
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Re: DIBS or no DIBS

Postby 1282009 » Thu Jul 26, 2012 12:33 pm

I would choose DIBS too instead of 3% rebate but that's just me.
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Re: DIBS or no DIBS

Postby seanooi880327 » Thu Jul 26, 2012 12:46 pm

i will go for DIBS..

If developer late delivery and pass the handling date, then we have to bear the interest after that or still DIBS??
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Re: DIBS or no DIBS

Postby ukulele » Thu Jul 26, 2012 2:06 pm

yhgoh wrote:Guys,

I have a question since I see DIBS being offered by most developers these days. How does one determine whether to accept the DIBS offer or opt for rebate instead?

Here's an example,

Package 1
DIBS
Loan agreement and stamp duty to be borne by developer.

Package 2
No DIBS
Loan agreement and stamp duty to be borne by purchaser.
3% off selling price

Property is a condo unit at level 23 (level 27 highest), purchaser not first time purchaser, unit selling at 350k, 90%MOF.

Thanks.


assumption..

3 years completion, on the dot..
interest @ b-2.40%, where b = constant @ 6.60%
90% margin..

abt 18k progressive interest, spread evenly over 36 mths drawdown..

3% rebate of 350k = 10.5k..

the numbers is pointing to DIBS..

but depends on the developer's construction / execution risk and reputation, they cud either over-shoot, or abandon, or perhaps complete ahead of schedule.. then the higher level of the unit means delayed billing, gotta discount the 18k by anor 30%-40%, hence actual progressive interest may cost between 10k-12k only.. and depends whether u are buying to sell or to own..?

having considered all angle, i wud take the DIBS considering there are other props to take care of in your case.. and the loan facility agreement and SD will set you back anor 4k going by the books..

if i have to take the cash rebate, i'm exposed to rates fluctuation, the burden of running cost in the abadonment risk, of coz, the risk of developer not holding up their part of the bargain in paying the interest to the lender.. if it's a reputable developer, i may take my chance.. but not before negotiating for the permissible paying-down of principal during the construction stage.. this is also subject to the cash-in-hand or expected cashflow..
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Re: DIBS or no DIBS

Postby Roy » Thu Jul 26, 2012 6:48 pm

Has the construction started or already halfway in progress?

DIBS probably better unless the development is already in the middle of construction
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Re: DIBS or no DIBS

Postby centaline » Thu Jul 26, 2012 9:51 pm

yhgoh wrote:Guys,

I have a question since I see DIBS being offered by most developers these days. How does one determine whether to accept the DIBS offer or opt for rebate instead?

Here's an example,

Package 1
DIBS
Loan agreement and stamp duty to be borne by developer.

Package 2
No DIBS
Loan agreement and stamp duty to be borne by purchaser.
3% off selling price

Property is a condo unit at level 23 (level 27 highest), purchaser not first time purchaser, unit selling at 350k, 90%MOF.

Thanks.


When is the expected VP date? 3% off is around 10k. So, even with cumulative interest it is not near 10k. If you have a few thousand lying around without any good use, I'd choose to go with rebate and pay the interest. So, how much would be your loan legal costs and stamp duty? You can do the math.
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Re: DIBS or no DIBS

Postby kochin » Fri Jul 27, 2012 11:18 pm

best is always try to have 20% of the prop price and go for without dibs. if high floor, quite confirm that rebate would be more worthwhile than taking dibs. good luck.
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