House buying guide –with more insightful tips that first time home buyers need to know
Buying a house is more than just a financial investment as a house is often costs tens or hundreds of thousands. The money that a purchaser put down to buy a house is often the result of years of savings. So before you commit to purchase a property, you have to be clear about your objectives whether is it for your own occupation or investment or both? Although the house provides safety, shelter and comfort to your family, the decision to purchase or invest in a particular property today is a major one, the investment can become a solid asset or wealth in the future or turn out to be a financial disaster if the housing project is abandoned. www.intproperties.com compiles this updated blog with more up-to-date information, tips and guides.
Basically, you have the choice to buy residential properties of the following categories with its advantages and disadvantages as belows:-:
1.Buying a new/off-the-plan house from primary market;
This usually refer to buying property off the plan from housing developers which are yet to be built or under construction.The advantage of buying from the developer is that it is new and has never been occupied before. There are usually cheaper than completed properties. There is also the 18 months defect liability period available, if it is a residential property.However, the disadvantages are one cannot inspect it before purchase, and there is no certainty of quality or workmanship or completion or delivery date, which prompts some buyers to opt for a reputable developer.
Beware that most show units are beautifully constructed and decorated with impressive interior fittings and furniture to woo buyers whereas the units that you are going to purchase may just be a standard vacant unit without those additional things. There are progressive interests to be serviced by purchaser/borrower for loan amount disburse to developer during construction period. You will also have no idea who are your immediate neighbours or the address number of the property before buying.
In times of market slowdown and economic uncertainties, there is a greater risk of under construction housing projects being delayed or stalled or abandoned as most of the Malaysia housing developers are still building houses on Sell Than Built (STB) concept. If you wish to purchase a new house from housing developers, then check out the developer’s background and its track record, choose only to deal with housing developers with proven track record with on time delivery and reliable maintenance management team. Ask for feedback on their previous projects from third independent source! Walk away from errant housing developers. Get more information and guidelines at the website of Malaysia Housing and Local Government Ministry. Related link: Purchasing a new property.
2.Buying a completed house from secondary market;
The advantage of buying completed property is that you can inspect the house and its neighbourhood and you will get exactly the unit that you have seen. There is no risk of the project being abandoned; some buyers would rather pay the extra premium.
The disadvantage is that such properties have been lived in before, and may have some undesirable history. The other option is to buy a completed new property which is pending or has issued its certificate of fitness. Related link :Pros and cons of buying property from primary market or secondary market.
3.Buying auction property;
The advantage of buying an auction property is that it is usually below the market price. An auction is a good market place for those who wants to acquire properties fast and potential buyers could choose their preferred properties in terms of location, size and pricing at the auction and also for those who wish to acquire second property for investment as it could be rented out almost immediately.
There are factors and pitfalls that a property buyer needs to know when buying action property. Learn more at my latest blog – 8 things to consider when buying auction property.
As property is a specialized sector involving comparatively high capital, low liquidity investment, it is wise to consider one’s financial budget and needs before making a decision to rent or to buy a house.
Renting versus Buying
If you do not have much savings for the down payment to purchase the house, a cheaper alternative would be renting. As tenant, besides the normal rental and utility deposits required by the landlord, you do not need to bear documentation costs such as legal fees for preparation of sale and purchase agreement and loan documents and stamping charges for ownership transfer and yearly taxes like assessment rates and quit rent. No maintenance charges and structural repair costs either as these costs are also to be borne by the landlord. One disadvantage is that you may have to move out if the landlord decides to sell off the house or take back the place for his own use by just giving written notice to you or even increase the rentals upon expiry of tenancy. And each time you move, relocation or moving costs will be incurred.
It is certainly a better alternative to rent rather than buying if your stay is intended for short term period or you are subject to transfer to other workplace by your employer. However, buying would be a better option if and when you are going to remain in one place for long time. As new buyer of the house, you acquire the interest of the property which means you have the benefit of security and ownership of the house and it provides stability for your family. Recommended blog - Buying vs. Renting.
What are the most important factors to consider before you decide to buy your choice property? Studies have shown that two important factors influencing a person’s decision to buy a property are Location and Price.
Location versus Pricing
Completed houses in established well-populated areas are usually fetched relatively higher price than their equivalent types in new areas. These completed houses are situated in a prime locality whereby ample facilities, public transport and all essential services are easily available and are close to the heart of the main employment centres. In contrast, newly built houses in new growth areas are usually located further away from the city whereby amenities and services are usually lacking or partially available. Prices of residential properties in prime localities will usually move up where job opportunities area readily available whilst supply of houses and land availability is limited. So it would be prudent to compare the weightage of location versus pricing factors in each individual’s budget.
If a person is currently working in Bayan Lepas Industrial Area, one would have to consider whether to pay the price of say RM550,000 to RM700,000 to buy a standard double-storey terraced house nearby his workplace somewhere in Bayan Baru/Sungai Nibong/Sungai Ara area of Penang Island or pay only less than half of the price for a similar double-storey terraced house in Bukit Tengah/Bukit Mertajam area on the mainland but further away from workplace which requires longer travelling time as well as the hassle of traffic congestion at Penang Bridge.
However, for those who are looking for affordable landed houses costing RM150,000.00 and below, your choice is rather limited and you have to widen your search to new growth areas in mainland Penang or Kedah areas which is far away from major workplace.
The future housing trend of housing in land-scarce Penang ; more supply of high rise flatted housing units whilst new stock of affordable landed homes are likely to come from new growth areas in Southern district or Northern district of mainland Penang..
Once you make up your mind to purchase a house, the next question is about sourcing for a right housing loan?
Financing a house
There are many loan packages available in the market that a buyer can choose from ie commercial banks and finance companies, building societies and insurance companies and government loans for eligible government servants.
For first-time house buyers, a recommended must read resource website would be Banking Info, a consumer educational programme by Central Bank of Malaysia which provides complete guidelines and invaluable tips on financing a house, type of loan packages, legal fees and stamp duties incurred when acquiring a property.
How much lawyer fees and stamp duty when purchase a property?
When a buyer has decided the property that he/she wishes to purchase, you are advised to engage your own solicitor to act on your behalf and are required to pay the legal fees for sales and purchase agreement and loan agreements as well as stamp duties for both documents.
To know more about charges on legal fees for the purchase of a property go to : How much should you pay a lawyer in a property transaction?.
Cash or financing when buying property?
If you are buying a property for cash instead of bank financing, there are factors to consider too, its benefits and downside, more at Cash or financing when buying property and Buying properties for cash.
Now, ready to go for house hunting ! Get a FREE printout on Property Buying Checklist-Download here!
For advisory on individual property needs, email to your property consultants at Izrin & Tan Properties Sdn. Bhd. or call us at +604-6588333 (Penang Office) or +603 92839782 (Kuala Lumpur Office) and we would be pleased to assist.