Just because it’s a subsale, doesn’t make a property sub-par! According to the National Property Information Centre (NAPIC), secondary market transactions account for about 80% of all property transactions in Malaysia.
While primary market properties offer a great buy for some, the secondary market offers an exciting opportunity for many.
So how do you make the most of the subsale property opportunity? Here’s our ten-step guide on getting the best deal on a subsale home, as well as the pros and cons of choosing one!
Subsale properties are properties which are resold from the existing owner. This means that when you buy a subsale property, you are buying from another homeowner, not directly from the developer.
New properties in the primary market on the other hand, are typically bought from developers. In that sense, you can think of them as secondhand properties. Hence, they’re known to be sold in the secondary market or subsale market.
What is a subsale market in Malaysia?
A subsale or secondary property market is where properties are purchased from existing owners. Primary property markets on the other hand, involve purchasing directly from the developer while the property is still new or under construction.
Both types of properties vary greatly in their pros and cons. Subsale properties for example, will usually involve more expenses upfront. If you want to know whether a subsale or brand new propertyis more suitable for you, check out our comparison here!
Step 1 – Determine your budget
Working out your budget is the first step on any property purchase journey. Only by finding out what you can afford, can you decide on the right deals that are suitable.
Take a look at some of our handy resources to help you on this:
Don’t forget about that down payment (which can be hefty) when working out your finances! That’s 10% of the total price of the home, which must be paid at the point you sign the Sale and Purchase Agreement (SPA).
You should also remember to consider things like the stamp duty, legal fees, and even the cost of renovation, if the chosen property requires work.
There are incentives out there to help you purchase a subsale home, although admittedly they tend to be more limited compared to those that cover focused new-build projects (like the PR1MA scheme).
Funding initiatives are available to help with the down payment for qualifying citizens. Here are a few that are worth checking out:
The trick is finding the right balance to suit your needs. It’s worthwhile (and worth every cent!) getting in touch with a knowledgeable local property agent to help you.
Choosing someone with good familiarity of an area means all sorts of valuable insight on local trends, best neighbourhoods to live, and even insider knowledge on property types and what you might expect.
Of course what’s great about a subsale home is… there’s an actual property home to go and visit!
You can walk around the area, chat to the neighbours, and enjoy the pleasure of exploring the unit itself.
That chance to see the potential property with your own eyes, touch it with your own hands, and get to know the available amenities is an important part of getting the right fit for you.
Subsale homes also provide a unique opportunity to get a better deal with your property. A subsale home that needs beautification works can actually provide great potential for return on investment (ROI).
For example, if you’re the kind of person who wants to manage a property upgrade, you might be able to buy a cheaper property in order to renovate and thus increase its value.
If you want to make extra sure, you can always have an independent valuation completed to confirm the value of a property with credited professionals.
The fact is, a subsale home is an established property, located within a matured neighbourhood, which means additional information at your fingertips which allows for added insight.
That also means existing information for the bank to provide a more comprehensive valuation for any potential home loan application.
Subsale properties do come with a risk of owners pricing their units far higher than a real valuation would deliver.
So, it only makes sense that negotiation around the price tag and value is something you need to be careful about. Here are some valuation tactics to be aware of:
Inflated price – Higher price tags (above loan value) can try and create the impression of a property worth more than it actually is.
The ‘high-interest’ offers –Suggestions that lots of offers are on the table to bump up the price you pay.
The ‘bargain price’ If the original price is inflated, it’s easy to pretend you’re offered a bargain/discount. Always assess against the true valuation report provided by an independent professional.
The ‘uncertain valuation’ Some disreputable agents might reveal a valuation at a far higher price from a third-party. This can sometimes be a trick to bump up prices in an unethical way. Always compare against the bank’s, and get multiple bank valuations if you want some certainty.
But there are some important steps you (or hopefully your lawyer) will undertake first. A crucial one is checking the ‘seller’ actually has the right to sell!
It might be uncommon, but cheeky fraudsters trying to sell homes they don’t own has been heard of in the past. Checks at the Land Office should be made to establish the owner is really the one you’re dealing with.
The SPA itself is the complex legal document that sets out the terms and conditions of the sale. This is where your lawyer proves his/her worthiness.
It’s important to ensure both parties are happy with, have thoroughly checked, and agree to the details on the SPA.
This does highlight another important point of subsale homes – making sure they’re properly described on the SPA.
Since these properties can often include renovations, additions, or extensions, it’s crucial for you to make sure what is down on the paper matches up with what you see in real life.
The Inventory List is also an important part of the SPA that you need to pay attention to when it comes to subsale properties.
It sets out what moveable items and fixtures are agreed to be left, and which are agreed to be removed as part of the agreement.
So if you don’t want to dispose of that neon purple sofa yourself, you’d better make it clear (in black and white) that the owner will deal with it somehow.
In essence, the SPA is the nuts and bolts of your house deal. That means if you want a ‘good deal’, ensuring you’re signing a ‘good SPA’ is essential.
Step 8 – The MOT and Loan Agreement
You’ve got the dream home in sight, now you just need to confirm the funds. The Loan Agreement should be signed with the bank to confirm the financing of your home loan.
This is your last chance to assess and ensure that the amount you’re borrowing, the interest rates, the tenure etc are forming the right financial foundation for your purchase.
Your lawyer should also have a final look through the document to ensure the bank’s terms and conditions are standard and acceptable.
Then it’s over to transfer of property! In subsale homes this should usually be by way of a Memorandum of Transfer (MOT) between the seller and the buyer.
There have been occasions when this hits a snag, in circumstances where the seller hasn’t been granted the Individual Title or Strata Title by the developer. If that happens, you have two options:
Undertake a simultaneous MoT from developer to seller, and seller to buyer.
Proceed down the slightly more complicated path of completing a Deed of Assignment and/or completing a form to show Developer’s Consent.
Step 9 – Goodbye money, hello property!
Say goodbye to your money, and hello to your property. With all the required forms completed and submitted, it’s time to pay what’s remaining of your 10% deposit.
If you’ve undertaken appropriate financial diligence throughout the process, you should have a good idea of additional costs that might be incurred.
But in case you’re still in the dark about the relevant stamping fees and legal fees required, we’ve got you covered in this guide here!
Step 10 – Make a house a home?
Now it’s time for you to call your house a ‘home’! Of course, being property… there’s yet another document for you to get through as well.
The Agreed Apportionments is a list that’s presented by the seller’s lawyer, to show details of all the bills that have been paid up to the point of transfer. Some of the payments include:
You’ll need to reimburse the property seller for any portion which he/she has already pre-paid, since once you get vacant possession, the seller will no longer be enjoying the use of the property.
Don’t worry though, you’ll get some keys in return! The key handover is an exciting opportunity to make the most of your new home.
With all that done, it’s time to kick back, relax, and start organising the housewarming party.
The pros and cons of subsale property
Subsale property is an exciting opportunity, but it’s one that comes with some important considerations for the buyer. So is it for you? Here’s a handy pros and cons guide.
Pros of Subsale Property
Cons of Subsale Property
An established community to explore.
More variation can also create challenging valuations.
Often in mature neighbourhoods with developed amenities and facilities.
Generally less access to financial incentives or new development initiatives.
Connectivity often improved by maturing neighbourhoods.
Lived-in also sometimes means worn-out.
Generally faster transaction times (move-in anytime) as no need to wait for construction or further development.
No defect liability period to rectify faults at seller’s expense.
A substantial market of subsale properties to explore with unique features and opportunities.
Bank valuations can differ from asking price creating a financing gap.
Potential for real return on investment by renovating a faded property.
More reliance on real estate agent for local professional insight.
Mature neighbourhoods remove the chance of new developments disturbing the community and the views.
Shared facilities within a development can become faded over time.
Avoid the risk of abandoned projects that can occur in new developments.
May require more work to turn the old property into a home that feels like yours.
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