Buying a property is an exhilarating experience, filled with endless possibilities and dreams of creating a place to call your own. While many people are drawn to the allure of shiny new developments in the primary market, there is a world of opportunity waiting in the secondary market through sub-sale properties. Contrary to popular belief, a sub-sale property does not equate to subpar quality. In fact, according to the National Property Information Centre (NAPIC), secondary market transactions account for a whopping 80% of all property transactions in Malaysia. So, how can you make the most of this sub-sale property opportunity? Let us guide you through the ten essential steps to securing the best deal on your dream home, while exploring the pros and cons along the way.

1. Determine Your Budget

Every property purchase journey begins with understanding your financial capabilities. It is crucial to determine your budget before diving into the market. By knowing what you can afford, you can narrow down your options and focus on deals that align with your financial capacity. Consider factors like the down payment, stamp duty, legal fees, and potential renovation costs. It’s worth exploring funding initiatives and incentives available to help you purchase a sub-sale home, such as the Bank Negara Affordable Homes Fund and the MyDeposit Scheme. These initiatives can provide support in terms of down payment assistance for qualifying citizens, easing the financial burden of home ownership.

2. Find Your Perfect Sub-sale Property

The joy of shopping for a property lies in the excitement of finding your dream home. The secondary market offers a wide range of subsale properties, each with its own unique features and opportunities. To make the most informed decision, it is essential to seek the guidance of a knowledgeable local property agent. Their expertise and familiarity with the area can provide valuable insights into local trends, desirable neighborhoods, and property types. What sets sub-sale homes apart is the ability to physically visit the properties, walk around the area, interact with neighbors, and explore the potential of each unit. This firsthand experience allows you to envision your life in the home and assess the available amenities. Sub-sale properties also present a unique opportunity for potential return on investment through renovation. By purchasing a property in need of beautification, you can add value and personalize it to your taste.

3. Price Comparison

Sub-sale properties offer more variety in terms of pricing compared to new units in tower blocks. Factors such as wear and tear or upgrades can impact the final price of a sub-sale property. When considering the cost, it’s important to factor in potential renovation expenses to avoid any unfavorable trade-offs. Your local real estate agent, armed with market knowledge and access to historical transacted prices, can guide you in understanding the pricing trends. Consider getting an independent valuation to confirm the property’s value and ensure a fair deal.

4. Financing Your Purchase (Bank Loan)

While purchasing a property requires a significant amount of cash, carrying it in a suitcase is not the way to go. The most common and practical approach is securing a home loan. A home loan allows you to manage the financial commitment in a structured manner. Banks typically offer loans up to 90% of the property’s assessed value. It’s important to note that the bank’s valuation may differ from the asking price, potentially creating a financing gap. Understanding your creditworthiness is crucial, so checking your CCRIS and CTOS reports is recommended. These reports provide insights into your credit history and repayment capabilities, helping banks assess your loan application. Remember, it’s always wise to explore different loan offers and compare them to ensure you get the best deal. Don’t hesitate to consult multiple banks to find the financing option that suits your needs.

5. Appoint A Lawyer

While not obligatory, hiring a lawyer for your property transaction is highly recommended. Navigating the legal complexities of the Land Office and scrutinizing legal documents require expertise and experience. Entrusting a lawyer ensures that you receive a fair deal and avoids any unforeseen heartaches caused by hidden clauses or legal complications. Investing in the services of a knowledgeable lawyer will provide you with peace of mind throughout the process.

6. Make A Deposit

Once you’ve found the perfect subsale property, it’s time to make your claim. This is done by signing an Offer to Purchase and/or Agreement to Sell and making an earnest deposit. These documents solidify the commitment between the buyer and seller, while the earnest deposit demonstrates your dedication to completing the transaction. It’s crucial to use a trusted third party, such as a real estate agent or appointed lawyer, to hold the earnest deposit in escrow until the completion of the transaction. Usually the earnest deposit is somewhere between 1%-2% of the property price.

7. Ready for Sales & Purchase Agreement (SPA)

The Sale and Purchase Agreement (SPA) is a significant milestone in your journey to owning a subsale home. Before proceeding, it’s crucial to ensure that the seller has the legitimate right to sell the property. Instances of fraudulent individuals attempting to sell properties they do not own have been reported in the past. Verifying the seller’s ownership at the Land Office is essential. The SPA itself is a complex legal document that outlines the terms and conditions of the sale. Your lawyer will play a pivotal role in ensuring the SPA is comprehensive, protecting your interests, and verifying that the property is accurately described. Pay close attention to any renovations, additions, or extensions mentioned in the SPA, ensuring they align with the actual state of the property. The Inventory List, a crucial part of the SPA, specifies the movable items and fixtures that will remain or be removed as part of the agreement. Clear communication and detailed documentation are key to ensuring a smooth transaction.

8. The MOT and Loan Agreement

With your dream home within reach, it’s time to finalize the financing. Sign the Loan Agreement with the bank to confirm the financing of your home loan. This is your opportunity to review and assess the terms and conditions, interest rates, and tenure to ensure they align with your financial goals. Your lawyer will also review the Loan Agreement to ensure its standard and acceptable. The transfer of property in subsale homes usually occurs through a Memorandum of Transfer (MOT) between the seller and the buyer. However, there are instances where complications arise, such as the seller not having obtained the Individual Title or Strata Title from the developer. In such cases, alternative options like simultaneous MOTs or completing a Deed of Assignment may be pursued. Consulting your lawyer will guide you through the necessary steps.

9. Completing the Purchase Process

Bid farewell to your hard-earned money as you embark on the journey of homeownership. With all the necessary forms completed and submitted, it’s time to pay the remaining 10% deposit. By conducting thorough financial diligence throughout the process, you should have a clear understanding of any additional costs that may arise. Stamping fees and legal fees can be anticipated, ensuring a smooth transition. Now, the keys to your new home will be handed over, marking the beginning of an exciting chapter in your life.

10. Get Your House

Finally, it’s time to transform your house into a home. As you settle into your new property, another document, the Agreed Apportionments, will be presented by the seller’s lawyer. This document details the bills that have been paid up to the point of transfer. Some of the payments include:

>> Management fees
>> Sinking fund
>> Water bills

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.