Given that the property market is softening now, it is more common to see HDB flats selling near or at their valuation. In fact, it is possible to see that there are HDB flats selling below valuation. If you are contemplating to sell your HDB flat below valuation and you have used CPF funds to finance your HDB flat, do keep in mind that you may be required to refund back any shortfall in your CPF refund if the sales proceed is insufficient to pay back this refund. This CPF refund is the amount which you have drawn out from CPF to service your housing loan plus accrued interest. This can be illustrated by a simplified example below.

Valuation       : $400,000

Sale Price       : $380,000

Outstanding Housing Loan     : $300,000

Amount left        : $80,000

CPF refund with accrued interest : $120,000

Shortfall         : $40,000

The sales proceed received will be used to pay off the outstanding housing loan first, which can be from HDB or the banks. The amount left after paying off the loan will be used to pay off the housing levy if there is any to be paid before it is being used to pay the CPF refund as explained earlier. In the example, the seller of the flat was left with $80,000 after paying off the outstanding housing loan. However, the seller of the flat is required to pay $120,000 back to the CPF board. As such, there is a shortfall of $40,000. Since the flat was sold below valuation, the CPF Board may ask the seller to top up the CPF shortfall by the amount sold below valuation. Thus, do think carefully about the consequences and whether you will be affected by this if you are planning to sell your HDB flat below valuation.