I have actually met people who do not buy property because they do not want to be indebted to a bank. They wait until they can afford it, usually when they are close to retirement or even retired. They then withdraw their savings, gratuity and EPF to purchase a house. Not a wise move considering that the life expectancy for Malaysians is in the region of 75 years and they still need a considerable sum of money to retire on. There is such a thing as good debt and bad debt. Property loan certainly qualifies as good debt provided you are able to make your monthly obligations.
I have been asked this question a lot, especially in 2015. Heck, even my tailor asked me to look out for a good property for him in his location of choice. He said that he trusted me not to hike the price up as other RENs sometimes do. I was flattered. Unfortunately, his location of choice was out of his budget. So I suggested some areas close to his place of work where he could get good value for money.
Everyday our newspapers and magazine advertise all sorts of new property development. The pictures are colourful and glossy, the details perfect. If your attention was captured, you may care enough to go for the open day and visit the showroom. Refreshments and perhaps a barbecue await you. Friendly sales staff are there to attend to all your queries. The show unit is lovely, the furniture and décor just to your taste. Free legal fees are provided for your Sales and Purchase Agreement and mortgage officers eagerly await to give you a loan, if you qualify of course. What more can you ask for?
I hate to be the party pooper but really there is plenty to ask.
Here are some questions you may wish to ask when buying from the developer?
1) What are the actual dimensions of the show unit? Is it the same as the actual dimensions of the property on sale?
2) In the event that the property is not completed as scheduled, what is the compensation that you the purchaser is entitled to?
3) What is the value of the property according to a professional valuer? In this instance, you may wish to check the value of the property with an independent valuer, not one engaged by the developer. If the property has yet to be built, the valuer may use similar neighbouring properties for comparison before providing a value. Banks today ask for at least two valuers who should concur on the value of the property. It is better to be prudent then sorry as neither the bank nor the buyer should be dealing with loans on overvalued properties.
4) If free items such as kitchen cabinets, air conditioning units and zero moving cost have been provided by the developer, has the cost of these offer items been added to the price of the property?
5) If the price of the property is already higher than the provided by the value provided by the independent valuers , what are the chances of property price appreciation? Should the you decide to sell the property, will you make a profit after taking into account your payment for legal fees, stamp duties on both the S&P Agreement and the loan agreement, balance of mortgage payable to the bank and Real Estate Property Gain Tax(RPGT)?
6) If the you intend to rent out the property, will the rental be sufficient to cover mortgage payment, quit rent and assessment fees, maintenance and repair fees if any? If not how do you intend to meet your property expenses in addition to other financial obligations you might have?
7) If you intend to stay in the property, does the location, size and surroundings suit the needs of your family and your extended family if they intend to stay with you? Don’t by a property just because it is cheap of free gifts are given. You are better off renting until you find a property that meets your needs and budget.
Property developers are in the business of building to provide housing that meets the needs of the clients they serve. Good developers seek to provide quality buildings that are safe in a suitable pleasant environment. Unscrupulous property developers give you poor quality building in a location with poor access while promising you an access road and school in the future. However, both good developers or unscrupulous ones have something in common in that they seek a healthy profit margin. That is among the reasons why developers build three storey houses with special offers because they are able to charge the client a higher price for a larger built up space. A discerning buyer would ask himself if he would be able to climb up to the top floor of the house in his old age. He would also ask if the room on the ground floor is large enough for him or his aged parents. Is the maid ‘s room provided large enough for the live in maid to fit in a bed and a closet. Most of the maids’ rooms built in houses today are fit for brooms and mops and perhaps an ironing board. Maids are people too who deserve decent living quarters too.
In recent times there have suggestions by the developers to bring back the Developer Interest Bearing Scheme (DIBS) to make houses more affordable to first time house buyer. In reality the DIBS only serves to delay the time in which the purchaser starts making his first mortgage payment ,while the price of the property remains unaffordable. It is obvious to me just bring back the DIBS is not going to solve the question of affordability. Isn’t it obvious to you?
Have you bought or sold a property? I have and it amazes me how you can be told things that are absolutely contrary when you are buying and selling.
In the book “The Richest Man in Babylon”, George Samuel Clason wrote the importance of owning the roof over your head. After that is achieved, a wise move would be to acquire rental properties to provide passive income. This wisdom holds true for the Babylonians on the banks of Mesopotamia as for us today in our modern homes.
I have dealt with many real estate negotiators (RENs) in Malaysia- to buy properties and to sell. I have also worked with a reputable real estate agency that adheres a high professional code of conduct. Sad to say a number of RENs, I have met are lacking professionalism and ethics. According to the Handbook on Real Estate Agency Standards published by The Board of Valuers,Appraisers and Estate Agents Malaysia (BOVEA) are merely sales people that are engaged by a registered Real Estate Agent.
Malaysian Estate Agency Standards (Standard 9)9.1.1 Negotiators are not given explicit recognition in the Act or Rules but are informally recognised by the Board as assistants engaged by estate agents in their practice of estate agency. They are usually salespersons who themselves are paid a fee or commission based upon conclusion of a successful estate agency transaction. Negotiators can also be under the direct employment of estate agents and be paid salaries rather than fees of commissions
When John bought a single storey house at an auction, he thought that he had got a good bargain. He bought the property at 25% below the current market value and he did not have the headache of viewing and bargaining with any REN. Little did he anticipate the problems that ensued. You see, when you buy a property at an auction there are a few things that you should be aware of: