This article aims to provide a practical guide for buying a home as supposed to selling, in the previous article.
Each phase of the process is outlined below:-
Set a Budget/ Decide a Loan
If you have decided to buy a home, the first action is to set a budget based on how much money you have and, if needed, how much you can borrow.
It is also important to find out if you are able to borrow money and if so, how much.
There are generally two types of loans for which you may apply, i.e. term loan or flexi loan.
The former means you have to repay the loan and interest for a fixed period interest, whereas the latter allows you to reply more to reduce the payable interest.
2. Find out the future expenses of the property you wish to buy:-
(a) bills, such as quit rent and assessment;
(b) utilities, such as water, electricity, sewerage; and
(c) other services for the property, such as maintenance, sinking funds, insurance, gas and garbage, etc.
3. Length of Time
Buying a home in Malaysia normally takes 2 to 3 months, if it is a freehold property.
The process can take longer if the home you wish to buy is a leasehold property, or if owner have not yet obtained the strata title from the developer via a process called Perfection of Transfer.
In some cases, the purchase may take up to 2 to 3 years if you are buying a property that is under construction.
4. Real Property Gains Tax
While the seller may need to pay Real Property Gains Tax when selling (or ‘dispose of’) a home, the stamp duty for transfer is to be paid by you as the buyer.
The stamp duty rates and exemptions can be found here.
5.To find a property yourself
You may look at real estate pages in the local newspapers or search online, there are many free online property advertising platforms available. These offer for sale would normally contain:-
(a) the sale price;
(b) the property description (address and freehold or leasehold title);
(c) fixtures and fittings (like electronic items, furniture and curtains) which are included; and
(d) any legal encumbrances or rights, like bank’s charge or conditions about using the property.
As a precautionary measure, you may want to conduct address search, or land search here to verify owner’s details, or developer’s search here to verify developer, depending whom you are buying the property from.
6. Inspection & Offer for Sale
Since the price is negotiable at this stage, do inspect the house together with the seller to find out its condition, and if it is worth the asking price.
Inspection is also vital to ensure no existing tenant or occupier is currently residing at the property.
Should you wish to commit to the purchase, you may propose an earnest deposit (normally 3%) to be paid to the seller.
Next, the offer for sale should be signed accordingly with the seller to ensure the basic terms contained therein are agreed to and legally binding.
7. Negotiations & Sales Agreement
While the sale agreement is pending (with basic terms in the offer for sale included) to be drafted by seller’s solicitor, unless the seller did not hire a solicitor, the buyer’s solicitor will also make sure that there are no problems with the ownership of the property, rights of possession, access, or future acquisitions in the property which you have just committed to buy.
In short, your solicitor should be making verifications and searches.
If the seller has hired a solicitor, the agreement will negotiated between the solicitors.
The sale agreement would normally have to be signed within 14 working days from the date of which the offer for sale is signed.
8. Signed, Stamped & Bind
When both the buyer and seller are happy with the contract, they will both sign final copies, stamp and send the documents to each other.
The sale agreement is legally binding once this happens.
At this point, usually neither party can pull out without paying compensation.
9. Completion of Purchase
To facilitate the completion of the purchase, your solicitor will deal with the remaining checks:-
(a) Documents for transfer ownership are handed over to the buyer.
(b) Money is transferred from the buyer or buyer’s financier to the seller.
(c) The seller moves out and leaves the property in the state agreed in the contract.
(d) The seller hands over the keys to the buyer.
(e) The property now belongs to the buyer.
If you are buying a home with other people, you may wish to refer to our article: Law on Co-proprietorship in Malaysia.
If you are selling your home, you may be interested in our article: Property Law in Malaysia: a self-help guide for selling your home.
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