Important! When buying 2nd hand homes

It takes alot to make a happy home owner

It takes alot to make a happy home owner

Before you rush into paying your down payment for that nice house, why not spend a little time running through these items first?

1. Find out more about the house.

Talk to the neighbours, surf the net or just ask around for a history into the area and what kind of news made it to the newspaper. That way you’ll be less likely to be surprised by strange things happening to you or the house that may have been caused by previous owners.

2. Check the amenities in the house.

2nd hand houses may come with problems that can range from a stuck toilet, leaking faucet or even a broken window. Make sure to inspect every room in the house and test all the amenities. Make sure there are no water damaged walls and ceilings.

3. Make sure the structure of the house is stable and in good condition.

This includes foundation, walls, floors, ceiling, roof and attic. Watch out for water penetration and structural damage like floor beams that have been cut or altered. Any irregularities like warping, bulging or cracks can be signs of much bigger problems hiding.

If all satisfactory, the next thing that should be of concern is; Financing and legal.

- Try to negotiate for a minimal booking fee… normally 1% to 3% is the norm. Make sure that in the booking receipt, it is stated that the booking fee is refundable inĀ  the event that you fail to secure a loan on time.

- The rule of thumb is, you need to pay off the remaining downpayment (normally 10% of selling price) in 14 days and sign off the SPA then. However this is also negotiable.

- If you’re withdrawing your EPF to purchase , remember to bring your signed SPA to apply.

- If you’re applying for a loan, the bank will run a few things to process your application. This includes getting a valuer to ensure the selling price is as per the market, legal processes, etc. (This can easily take 2-6 months) Most of the time, you will have to bear the cost of these processes. However, try to get a ZERO ENTRY loan so that the bank will absorb your:

  • Processing fee
  • Property valuation fee
  • All legal fees pertaining to loan agreement including scale legal fees, stamp duties, caveat, disbursement fees, search,

- Most of the time, you are expected to settle all loan approvals and final agreements in 3 + 1 months where the seller can choose to terminate the contract due to non-payment.

Fees you need to be prepared for as a buyer (May differ from case to case)

1. Lawyer fees for SPA (1% on the first RM100,000.00, 0.5% on the next RM4,900,000.00, 0.25% on the remainder).
2. Stamp duty for property transfer – At the moment any property below RM250,000 is entitled you to 50% exemption on stamp duty. (1% on the first RM100,000.00, 2% on the next RM400,000.00, 3% on the nest RM1,500,000.00 and 4% on the remainder)
3. Cukai Tanah and Cukai Pintu.
4. Restoration/ renovation (if required)
5. Permit for renovation (if required)
6. MRTA – Mortgage Reducing Term Assurance (Very important)
7. Utilities deposits

ps: Although not entirely truthful, it is quite common that under an agreement between buyer and the seller/agent, selling price of the property is stated at a slightly higher price so that a higher amount of loan can be applied. That way, you get a bit of extra cash to pay for unexpected expenses. HOWEVER, please do not abuse this. Any extreme hiking up of the price of a property may get you sued for fraud.

Additional guidance can be checked out HERE

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2 Responses to Important! When buying 2nd hand homes

  1. Alim says:

    In addition, you should leave or return to the house from your office during rush hours to get a feel of the access. Or try out some daily routines like going to market or sending kids to school.

    It is very important to look at the neighbors and neighborhood to find out:

    1. Who are your neighbors – if they are mostly rental tenants, the overall cleanliness may be bad. However, the plus point is your rental prospect may be good. If you are planning to live in the house, avoid college students – they don’t sleep and they make noise!

    2. How frequent do they collect the rubbish, can you smell from your house, if it is an apartment, how do the cleaners collect the rubbish, are they using the passenger lift as well.

    3. Check out the common area to get a feeling on how good is the maintenance office.

    4. Talk to security guard to find out about break-in cases.

    5. Go to the apartment at night to check out the security procedure or parking spaces. You may ended up walking 10 minutes to your apartment at night if you are driving your second car.

    6. 2 sen advice – don’t rush.

    Please don’t get me wrong, I am all for secondary properties. Because they have “track-records”.

  2. Peter says:

    Actually it is not recommended to mark up the selling price. That extra money will be calculated with the loan interest, and you need to pay more in other fees eg stamp duty.

    If you can generate better return using that money compared with the current morgage loan interest, then by all means proceed with it.

    http://www.klang-valley.com