Buyer's Guide : FINAL PART

Looking for property to BUY? Where to BUY? How do I do it? 


I am no expert but having been in the real estate industry as a Senior Real Estate negotiator for 4+ years now, I do have some tips to share on real estate. There will be a series on Landlord guide, Tenant guide, and now buyer's guide or relevant information on real estate in Malaysia. Follow me on my blog if you want to know more. Feel free to leave your comments if you need me to respond to your queries. I'll try my level best to answer your queries.


(Note : All contents shared are my personal observations and experiences,  without prejudice to my rights).

A few days ago, Rocker57 and I were looking at some properties to invest. This set me to thinking that I should digress into Buyer's guide and let Tenant's guide take a back seat as I believe my readers are all in the investing or buying stage instead of renting. I've already churned out Buyer's Guide Part One and II, this is Part III

So here you go :

Check list before you buy: (Part III)

Considerations and questions you need to ask yourself :

• VALUATION OF THE PROPERTY? Market value of a property depends on a few factors ~ location, demand vs supply, past transacted prices, facilities, future prospect of the area, etc.
  Also, do note that bank's loan-to-value is based on their valuation price and NOT your purchase price! So be fore-warned, that you may have to 'cough out' the difference. Example, if your purchase price is RM100,000 but bank valuation is only RM90,000 and it is your second property and you are entitled to 90% loan, then your real loan value is 90% of RM90,000 that is RM81,000. So, you will have to pay up the difference of RM19,000 to the vendor which simply means that your loan is only 81% of purchase price and not 90% as previously thought.
  
• RENOVATED? Renovated units does not contribute significantly to an increase in value of a property. But it does play a role in getting a higher value. General rule of thumb (what I've heard from bankers) is the value of renovation cost drops 50% even if the property is sold after the first year of being renovated. Renovation in bankers terms means structural changes such as re-tiling, built-in wardrobes / kitchen cabinets, extensions, etc. Please note that air-conditioners, sofa sets, dining tables, beds, etc are movable items hence does not add value to the valuation but eases the purchaser's pocket in having to buy new items i.e. if it is meant for investment and is to be rented out immediately upon purchase.
• WHAT IS THE BEST PRICE? Commonly asked question to agents. There is no best price, really. It is what the financier has valued (be aware that financier's valuation is a tad lower than market price as they need to make some margins should there be forfeiture/foreclosure in the near future) and what is acceptable by you, the purchaser. Some purchasers are willing to buy slightly above market value if they like what they see as they need not spend additional sum having to renovate or refurbish it after purchasing it.
• MAKING THE OFFER? Before making the offer, do ensure that you have a pre-approved financing from your financier. Also that you have a lawyer to execute the Sales & Purchase agreement (SPA). If you are selling your current property to buy the new property, then have your property sold first or at the least have it assessed and potential sale time. Most importantly, get ready your funds for all associated costs! Example of associated costs are legal fees (both to execute SPA and banker's lawyer), earnest deposit (10%), valuation fee (most financiers requires an independent valuers report on the property that they have agreed to finance & cost is borne by you, yes YOU). Occasionally, some banks will absorb the cost. Additionally, retain some funds for Stamp Duty or MOT (memorandum of transfer). Almost all the above associated cost happens within 90days after SPA execution, so be prepared and don't be shock that it actually cost more than the actual selling price. You need to anticipate these associated costs.
• SIGNING OF SPA? If you are purchasing from an agent, they will have an agreement to purchase form or offer letter to be signed by both parties (buyer & seller or purchaser & vendor). Earnest deposit is collected at this juncture to proof your intent. Following the agreement, there's a 14 working day period for purchaser's lawyer to execute the SPA. Once both parties has agreed to the clauses in the SPA and signs the SPA, then you as the buyer would need to pay the balance of down payment, most of the time it is 10% of purchased price. Not forgetting the legal fees :)
• WHAT DO I PAY TO THE AGENT? In Malaysia, agents can only accept agency fee from the vendor/seller. As a purchaser, in most instances you need not pay anything to the agent but there can be exceptions depending on the agreement between yourself & your agent. 
• FINDING A LAWYER : Do ensure your lawyer is registered with the Malaysian Bar Council. There has been cases whereby the legal representative ran away with the deposits. So do be mindful. To get to the website : 

  Malaysian Bar Council

  www.malaysianbar.org.my
  
• LEGAL FEES : (both SPA and Loan facility legal fees)
• Purchase Price ~ First RM150,000              1% or min RM300 
•                          Next  RM850,000                    0.7%
•                          Next  RM2,000,000                  0.6%
•                          Next  RM2,000,000                  0.5%
•                          Next  RM2,500,000                  0.4%
•             In Excess of RM7,500,000                     0.3% (negotiable)

• STAMP DUTY OR MEMORANDUM OF TRANSFER
  

  Purchase Price ~ First RM100,000                     1%

                           Next  RM400,000                    2%

                  In Excess of RM500,000                    3%

If you had missed Buyer's guide Part One and II, here are the links :  http://superbiker48.blogspot.com/2012/08/buyers-guide-part-one.html





http://superbiker48.blogspot.com/2012/08/buyers-guide-part-ii.html



Well, I've concluded my Buyer's guide. Should I have inadvertently omitted some pointers, do drop me a line or two. Share it if you like what you read, and thank you for taking the time to read my blog :)

HAPPY BUYING / INVESTING!! Cheeeers!!!