Step 1: Start with research
Before you start your search for a property to buy, you’ll need to determine your budget, the location you want to live in, and the type of home you’re looking for. Once you have a clear idea of what you want, start your research online by checking out property listing sites, and shortlist the properties that meet your criteria. You can also check out the area you want to live in and watch out for “FOR SALE” signs.
Here are some things to consider when searching for a home to buy:
- Location - Are you looking for a location with exciting nightlife or would you prefer a quiet neighbourhood for serene family life?
- Price - Purchasing a home is a huge decision - not only because it could be where you live for many years, but also because it is a large financial investment you may have to commit to for 30 years. When setting your budget, it is crucial to consider what you can afford monthly. Ensuring that the monthly mortgage amount does not excessively strain your monthly living expenses is of utmost importance. You will also need to consider the many “hidden” fees associated with buying a home such as stamp duty, valuation fees, home insurance, legal fees etc. These costs add up and may affect your budget!
- Type - While landed homes can hold value through the land they occupy, they come with their own maintenance costs and safety considerations. Meanwhile, highrise buildings often have shared communal spaces and may be less private.
Step 2: Engage a Real Estate Agent
Engaging a professional real estate agent can help you save time, money, and reduce your stress levels. They can provide you with valuable insights on the current property market, find the right home for you, help you negotiate a fair price, and guide you through the entire buying process.
When engaging a real estate professional to assist you, make sure to check if they are licensed by BOVAEA (Board of Valuers, Appraisers and Estate Agents Malaysia) as a Real Estate Negotiator (REN) or Real Estate Agent (REA). RENs have to go through a two-day course in order to receive a certificate of attendance and are not permitted to open their own agency. Meanwhile, REAs have to obtain a Diploma in Real Estate (which requires sitting for examinations) and work under a licensed REA for two years before they are qualified. Engaging the services of unqualified real estate professionals would leave you unprotected by law should anything untoward happen. You can confirm your agent’s qualifications on the BOVAEA website.
Step 3: Conduct Viewings
Now that you have your shortlist, it’s time to visit the properties in person. During the viewing, take note of any potential issues such as structural problems, maintenance issues, and potential renovations that may be needed. This will help you make a more informed decision and avoid any costly surprises later on. You may also want to take a stroll or drive around the neighbourhood to take note of nearby amenities such as markets, F&B establishments, gyms, clinics, etc to ensure that you’ll be living in an area that suits your lifestyle.
Furthermore, if the property you are viewing is strata-titled, you may not be allowed to alter the property’s facade. Therefore, if it is important that a property suits your personal tastes, a strata-titled neighbourhood may not be suitable for you.
Step 4: Check for encumbrances
Before making an offer on a property, it’s crucial to ensure that there are no outstanding encumbrances on the property. In particular, be sure to check if it is a freehold or leasehold property if the land tenure is an important consideration in your process. You may also want to check with the seller if they have received the Individual Title or Strata Title from the developer. Your real estate agent or a lawyer can assist you with this and ensure that the property is free from any legal issues.
Step 5: Engage a Lawyer
Engaging a lawyer is essential to ensure that the legal paperwork and documentation are in order. Later on in the process, they will help you review and sign the sale and purchase agreement and transfer the property’s ownership from the seller to you.
Step 6: Negotiate and make an offer
Once you’ve found a property you like, it’s time to negotiate a fair price. Be prepared to engage in some back-and-forth with the seller to reach a mutually beneficial agreement. Once you’ve agreed on a price, make an offer in writing through a Letter of Offer (LO). The LO is sometimes called a booking form.
To buy a subsale property in Malaysia, you have to pay a deposit of 10% of the purchase price, split into two stages. At this stage of the purchasing process, you’ll have to cough up 1-3% of the purchase price to secure your offer. Most booking forms or LOs will state that this deposit will be returned in the event that you are not able to secure a home loan.
Step 7: Secure a home loan
Once you’ve discovered your ideal property, it’s time to begin exploring housing loan options after making your earnest deposit. It’s crucial to arrange your financing in advance before signing the Sales and Purchase Agreement (SPA).
It’s important to ensure that you choose a loan that aligns with your repayment capabilities based on your income and existing commitments. Additionally, it’s possible to receive a smaller margin of financing than expected. For instance, a bank’s valuer might deem an RM500,000 home to be worth RM450,000. As a result, you could be eligible for only RM405,000 instead of the anticipated RM450,000, which may strain your budget. Hence, it’s wise to have some extra funds available to put down a larger deposit than you initially planned.
If you’re not able to secure a loan, it’s likely that you have credit score issues or your income is insufficient for the loan amount you are applying for. To find out if you have credit issues, use Bank Negara’s eCCRIS tool to check your credit report. To find out if your income is sufficient, check if the monthly home loan repayment added with other financial commitments such as a car loan exceed 70% of your monthly income.
When applying for a home loan you might be tempted to submit only one application to your agent’s recommended bank officer or to apply to the bank you are most comfortable with. However, applying to multiple banks will give you a variety of options and you’ll be able to choose the offer that suits your budget the best. Even a 0.01% difference in the interest rate will make a difference!
Applying for your home loan through UrbanVault will allow you to apply to multiple banks with only one application, making the process more convenient while enabling you to shop around for the best interest rates.
Step 8: Time to prepare the Inventory list & SPA
The Sale and Purchase Agreement (SPA) is a comprehensive legal document that outlines the terms and conditions of the property sale. It is important to ensure that all relevant details regarding the property are accurately described and clearly stated in the SPA. This includes information about any previous renovations, additions, upgrades, or extensions that have been made. It is crucial to verify that these details match what you have observed firsthand. For example, if you are purchasing a condominium unit, make sure that the number of allocated car park bays is explicitly mentioned in the SPA to avoid potential disputes in the future.
Before finalising the SPA, discuss with the property seller which movable items or fixtures will be retained or left behind in the home. To do this, visit the property and make a note of all the items you would like the seller to remove or keep in the property.
For instance, if you wish to keep an antique clock in your new house, you can request the seller to leave it for you. Once an agreement has been reached on these items, they will be listed in the inventory list, which will be included as part of the SPA. The inventory list serves as a record of the items you expect to find when you take possession of the property and will be incorporated into the SPA that you will be signing. Effective communication with the seller is essential, and an agreement should be reached before the final signing takes place.
Step 9: Sign the Loan Agreement & MoT
At this stage, your loan agreement should be ready for signing to confirm financing from the bank. Use a loan calculator to ensure that the loan terms (tenure, interest rate, any special payment plans) are within your means. Additionally, you may want your lawyer to look through the loan agreement to ensure that it is fair and legal.
Once you have your Loan Agreement signed, it’s time for the seller to transfer the property to you via a Memorandum of Transfer (MoT). Sometimes, complications arise when the seller hasn’t received the Individual Title or Strata Title from the developer (mentioned in Step 4). In such cases, you have two options:
- Opt for a simultaneous Memorandum of Transfer (MoT) from the developer to the seller, and from the seller to the buyer.
- Choose the slightly more complicated route of completing a Deed of Assignment and/or submitting a form to demonstrate the Developer’s Consent.
Step 10: Pay the rest of the deposit
Once the sale and purchase agreement is signed, you’ll need to pay the rest of your 10% deposit to secure the property, depending on how much you paid at the LO stage.
FYI, if you’re buying a home for the first time, you can enjoy a complete waiver of stamp duty on the memorandum of transfer and loan agreement for residential properties priced up to RM500,000. This beneficial opportunity is part of the Keluarga Malaysia Home Ownership Initiative (i-MILIKI) programme which was introduced in July 2022. The exemption applies to sales and purchase agreements finalised between June 1, 2022, and December 2023.
Step 11: Get the keys to your property!
Before the seller gives you the keys to the property, their lawyer may present you with a list which details bills that have been paid up to the point of transfer. You may have to reimburse the seller for the Agreed Apportionments which have been prepaid, which can include management fees, sinking fund and water bills.
Once you have settled any prepaid fees, your seller will finally give you the keys to your new home. At this stage, the property will be in Vacant Possession and you can finally call it yours and begin organising your house-warming party!
In conclusion, buying a subsale home in Malaysia can be an exciting experience. By following these steps and engaging with professionals, you can make informed decisions, negotiate a fair price, and ensure a smooth and stress-free transaction. With careful planning and research, you’ll be on your way to owning your dream home in no time!
If you feel ready to buy a home now, apply for your home loan securely and seamlessly with UrbanVault!
**This post serves as a general guide for purchasing a subsale unit, but it is important to note that circumstances will vary. It is highly recommended that you conduct your own research and seek advice from professionals to address any specific questions you may have.
