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Considerations When Selling Properties Under Construction

Selling properties, like condominiums and HDB flats, under construction presents unique challenges for real estate salespersons. It requires painting a compelling picture of the future to buyers while also addressing the uncertainties of the building’s development at present. There are also many things to consider when selling properties during the pre-construction and construction process, from the regulatory frameworks to meeting customer expectations.


But by fully understanding the nuances of selling such properties and proactively addressing them, you’ll be well-prepared to overcome the challenges inherent in selling these types of properties and potentially achieve positive outcomes.

1. Understanding the Housing Developers Act

As the bridge between the developer and buyers of the property under construction, it’s important to be knowledgeable of the regulations under the Housing Developers Act. This legislation establishes a comprehensive and robust structure to protect the interests of both buyers and developers, ensuring transparency, fairness, and accountability throughout the sales process.

a. Project Licensing

Under the Housing Developers (Control and Licensing) Act 1965, it’s essential for all housing developers to have a written licence from the Controller that authorises them to carry out housing developments. This licensing requirement acts as a critical first step, ensuring that only developers who meet specific criteria, such as financial stability and track record, are permitted to engage in the sale of such properties. Moreover, this safeguards buyers from potential risks associated with dealing with unverified or unreliable developers.

b. Advertising Properties Under Construction

When promoting properties under construction, whether through TV commercials, print media, or digital platforms, it’s crucial to adhere to the Housing Developers Act.

This legislation mandates the inclusion of certain key particulars in all advertisements. These details are essential for providing potential buyers with transparent and accurate information about the project.

Key particulars include:

  • Developer’s Identity: Clearly state the name and licence number of the housing developer, enabling buyers to verify their credentials and track record.
  • Land Tenure and Encumbrances: Disclose the tenure of the land (e.g., freehold or leasehold) and any existing encumbrances that may affect ownership rights.
  • Vacant Possession Date: Specify the estimated date when buyers can take vacant possession of their units, setting realistic expectations for move-in timelines.
  • Legal Title Conveyance Date: Indicate the anticipated date when the legal title of the units will be transferred to the buyers, providing clarity on ownership transfer.
  • Project Location: Clearly state the location of the housing project, including the lot number and Mukim/Town Subdivision, for easy identification and reference.

Equally important is understanding what is prohibited when creating these advertisements. The Housing Developers Act outlines several restrictions to prevent misleading or deceptive advertising practices, which include:

  • False Claims of Patronage: Avoid any suggestion of endorsement or patronage from government departments, statutory bodies, or public institutions unless explicit authorisation has been granted.
  • Misleading Connections: Refrain from implying any connection with any government department, statutory body, or public building place that doesn’t exist.
  • Unsubstantiated Attributes: Do not attribute any qualities or features to the housing developer or the project that cannot be genuinely claimed or substantiated.

c. Sales and Purchase Agreement

The Sales & Purchase Agreement (SPA) is the legally binding contract that formalises the transaction between the buyer and developer. As a real estate salesperson, being well-versed with the SPA of the property under construction is paramount. It not only solidifies the relationship between the buyer, developer, and yourself but also ensures a transparent and smooth transaction process.

When assisting buyers with the SPA, pay close attention to the clauses that cover crucial aspects of the property being sold. These include:

  • Property Description: Ensure the SPA accurately and comprehensively describes the property, including its size, layout, finishes, and any included fixtures or fittings.
  • Payment Schedule: Review the payment schedule of the building under construction in detail. Ensure that it aligns with the progressive payment scheme mandated by the Housing Developer Act. Make sure you clarify any potential variations or additional charges that may occur.
  • Completion Timeline: Understand the estimated completion date and any provisions for potential delays. Communicate this information clearly to the buyer, managing expectations and minimising potential disputes.
  • Defect Liability Period: Explain the defect liability period, during which the developer is responsible for rectifying any construction defects. Ensure buyers understand their rights and the process for reporting defects.

2. Being Well-Versed in the Phases of Construction

A typical construction project is a complex undertaking involving a series of well-defined phases, each marked by its unique set of milestones and potential challenges. Therefore, when selling properties under construction, you should be well-versed in these phases. This knowledge will enable you to effectively communicate the project’s progress to potential buyers, manage their expectations, and address any concerns that may arise during the construction process.

  • Site Preparation: Clearing the land and preparing it for construction.
  • Foundation: Laying the groundwork for the building.
  • Superstructure: Constructing the main framework of the building.
  • Architectural Works: Completing the exterior and interior finishes.
  • Mechanical & Electrical Works: Installing essential systems.
  • Testing & Commissioning: Ensuring all systems function correctly.
  • Completion & Handover: This is the final stage when the property is ready for occupancy.

3. Communicating Potential Risks and Rewards

When selling properties under construction, or any property for that matter, you should communicate the potential risks and rewards associated with the investment. That way, buyers can make a more informed decision based on a comprehensive understanding of the situation.

a. Risks

Investing in properties that have yet to be completed carries inherent risks that real estate salespersons must proactively address with potential buyers.

  • Market Fluctuations: The property market is dynamic, and prices can fluctuate during the construction period. While this can lead to potential gains, there’s also a risk of the market softening, affecting the property’s value upon completion.
  • Developer’s Financial Stability: While rare, the possibility of a property developer facing financial difficulties exists, which could impact the project’s completion or lead to delays.
  • Change in Specifications: In some cases, minor discrepancies between the promised specifications and the final product can sometimes occur. As a real estate salesperson, it’s crucial to maintain transparency and proactively communicate any such changes to buyers as soon as they become apparent. By promptly informing buyers of any deviations from the original specifications, you demonstrate your commitment to open communication and manage their expectations effectively.

b. Rewards

Despite the risks, investing in these properties presents enticing rewards that can significantly appeal to buyers. These advantages include:

  • Potential Capital Appreciation: Properties under construction are often priced lower than completed ones. If the market appreciates during construction, buyers stand to benefit from substantial capital gains.
  • Customisation Options: Some developers offer buyers the opportunity to personalise aspects of their units, such as finishes or layouts, adding a unique touch to their future homes—think Optional Component Scheme (OCS) for HDBs.
  • New & Modern Features: Newly constructed properties generally boast the latest designs, technologies, and amenities, offering a modern and comfortable living experience.
  • Lower Maintenance Costs: New properties typically require less maintenance and repair in their initial years, saving buyers money and hassle.

4. Managing Expectations Throughout the Construction Process

Real estate salespersons should proactively manage expectations throughout the entire sales journey and construction process. This involves the following:

  • Clear Communication: Maintain open and regular communication with buyers, providing updates on construction progress and addressing any concerns. Regularly scheduled updates, whether through emails, phone calls, or site visits, can help buyers feel informed and involved in the process.
  • Transparency: Be upfront about potential challenges and delays, and offer solutions where possible. By setting realistic expectations from the get-go and keeping buyers informed about any developments, you can mitigate potential frustrations and build confidence in the process.
  • Accessibility: Be available to answer buyer queries and provide support whenever needed. Your accessibility reassures buyers that they can rely on you, especially when unexpected issues arise. This can help maintain their trust and satisfaction.
  • Professionalism: Conduct yourself ethically and maintain a high level of professionalism throughout the process. This includes being punctual during set appointments, following through on commitments, and handling real estate complaints and disputes with discretion and care. Professionalism not only enhances your credibility but also reflects positively on the property and the developer you represent.

5. Building Trust with Buyers

Establishing and nurturing trust with buyers is crucial for achieving successful sales and fostering long-term business relationships. A solid relationship management strategy when selling properties under construction should be built on the following pillars:

  • Honesty and Integrity: Be truthful and transparent in your dealings. Buyers are more likely to commit to a purchase when they feel they can trust you to provide accurate information and honest assessments. This includes being upfront about both the strengths and potential drawbacks of the property.
  • Expertise and Knowledge: Demonstrate a deep understanding of the property, the construction process, and relevant regulations. Your expertise will reassure buyers that they are making an informed decision, and it also positions you as a valuable resource they can rely on throughout the process.
  • Empathy and Understanding: Show genuine care for your clients’ needs and concerns. Buying a property under construction can be an emotional and stressful experience. By empathising with your clients and acknowledging their anxieties, you can build stronger, more trusting relationships.

Learn the Nuances of Selling Properties Under Construction at Real Centre Network

With the complexities that come with selling properties under construction, enrolling in a Real Estate Salesperson (RES) property course can help you navigate its challenges with confidence. This is where signing up for a RES course at Real Centre Network course can be beneficial. Our programme is designed to equip you with the knowledge and skills required to effectively manage and sell all types of properties, from buildings under construction to established condo units. Through theoretical learning and practical insights, we ensure you’re well-prepared to meet the ever-evolving demands of the real estate market.

In addition to our RES courses, Real Centre Network offers a range of Continuing Professional Development (CPD) courses, including our specialised property negotiator course. This course equips you with the skills to facilitate various types of property negotiations, ensuring you can represent your clients’ interests with utmost professionalism and effectiveness.

Whether you’re embarking on your real estate career or seeking to refine your existing skills, Real Centre Network provides the courses and guidance to fuel your success. Our commitment to your professional development ensures you have the tools and confidence to handle any property transaction, including the unique challenges of selling properties under construction.