1. What are the some of the latest transactions in the same area or building?
Your property agent will have the answer, work with your property agent to identify some of the latest transactions in the same area. Your property agent has access to accurate data from multiple sources, such as the BRICKZ (which is a paid services) or from their company database retrieving source from JPPH, which they can present in a pdf format with some analysis of chart for your reference. If your property agent is specialize on that area, he/she can also speak from professional experience, especially if you’re looking at outskirt area, which some data might not be updated or may not be relevant to current market.
2. What is Property Valuation?
- The financial status of the borrower; and
- The value of the property.
Notwithstanding that you have an impeccable financial record, i.e your income is more than sufficient to cover the loan, you are not heavily geared and you have one or more financially active bank account with healthy cash flow, the banker must factor the value of the property into its risk assessment.
How does the valuer determine the property value? The valuer obtains the most recent transacted sales price from JPPH (Jabatan Penilaian Dan Perkhidmatan Harta) and make the necessary adjustments based on the condition of the property and value added from renovation (if any). Therefore, properties in the same area located next to each other will not necessarily share the same value.
Using the same example above, one may argue that the market is currently selling at RM500,000 but why is the valuation of the property at the rate of RM450,000 only?
One of the reasons is that the JPPH only updates its sale transaction data every three to six months. Whilst the property price may increase tremendously over the period of three to six months, the valuer has to rely on the sale transaction data which is not up to date with the latest market value.
3. When does the “completion” of the purchase took place?
For example, the owner wants RM500,000 but the highest valuation obtained is RM450,000. This gives you grounds to offer around the vicinity of RM450,000 rather than submit to the vendor’s demands.
Even if you want to offer more, you can consider your upper limit to negotiate to by considering the amount of cash the bank would give you. If the highest valuation is RM450,000, a 90% loan would only come up to RM405,000. This means that even if you were to offer RM470,000, you would need to cough up a cash amount of RM65,000 to top up the purchase price, not to mention the amount to be paid for stamp duty and legal fees, which can come up to about RM20,000 for a property of that value.
Even if you can afford RM470,000, you might want to open your negotiations somewhere around the highest valuation of RM450,000.
If the owner needs to sell, he or she might accept it. If he or she is still holding out for a higher price, the vendor may make a counter-offer for a higher price, eg RM480,000, or for different terms. If you want, you can then come up to your maximum offer price of RM470,000, knowing that this is the most you can afford and he or she can then take it or leave it.
If the owner accepts within your well-researched budget, congratulations!
4. What can my property agent do for me?
A good property agent will help you find a hidden gem in the market within your budgeted price, save a buyer a tremendous amount of time and frustration, help you avoid a poor purchasing decision and expertly negotiate and finalise the deal. The role of property agent is also facilitates a more direct negotiation between the buyer and seller, with fewer parties involved in the negotiation.
Ultimately, your agent should save you time and effort by helping you hone in on options that best suit your preferences and circumstances, and by doing valuable due diligence on the property.
5. What do I need to prepare ahead of my purchase?
- An understanding from your bank of how much you could obtain in loan financing. Mortgage brokers can also be helpful in obtaining quotes from multiple banks.
- Get your loan and lawyer.
- At least 2% in cash for the earnest deposit, and another 8% per cent at the official signing of Sale and Purchase
- Stamp duty—to be charged by the government
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