No matter if you’re going to buy a property for your own stay, or for investing and growing your wealth, one thing remains important: Finding the best deal possible!
It doesn’t matter if you head to a property auction and discover an old gem that just needs to be cleaned and refurbished, or walk into a developer’s showroom and find out that they’re having great sales and rebates on their newly launched project.
As long as you find something that sits comfortably within your budget, ticks off most boxes on your checklist, and you can see yourself holding onto it for more than 5 years – you’re already on the right path.
All you gotta do is make sure that you don’t make an ill-informed decision and put your entire financial future at risk!
Keep in mind the common law of caveat emptor, which means the buyer should always be careful before a purchase, as well as do their own research and enquire as much as possible.
The legal term ‘caveat emptor’ refers to the full phrase of <em>“Let a purchaser beware, for he ought not to be ignorant of the nature of the property which he is buying from another party.”</em>
It’s with that law in mind that we have compiled a list of some of the most common sales tricks to keep an eye out for – you wouldn’t want to be the next victim, now would you?
There are so many good deals in the property market that if you grab the right one at the right moment, you could actually be saving yourself a few thousand Ringgit!
For example, there’s the newly reintroduced Home Ownership Campaign (HOC), which will run from 1st June 2020 to 31st December 2021.
Not only will you get to enjoy a minimum of 10% discount off the property price, you can get a full stamp duty exemption on the loan agreement, among others.
What if you get news from a friend or relative that they’ve got a fantastic deal which you really SHOULDN’T miss?
Well, you might want to miss out on it, especially if it involves something that sounds too good to be true.
For example, there was a case in Sabah in 2015, where the people were promised free housing (total value at roughly RM150 billion).
Therefore, it doesn’t hurt to constantly identify and verify all parties involved – including agencies, legal firms, developers, and valuers (to name just a few) – especially before making any payments.
2) Making payments to con people
It’s no secret that con people lie and cheat their way into people’s bank accounts for a living. Their ability to spin the truth until you’re presented with a very rosy picture of sweet promises is exactly how they’ll make you part ways with your hard-earned cash.
Case in point: this slick conman who once operated in the Sunway area in 2018. Under the guise of wanting to help his “aunt” rent out her apartment unit at a much cheaper price compared to the market rate, he managed to swindle thousands of Ringgit from a number of people before disappearing.
Avoid making any form of payment to an owner, agent, or lawyer whom you have literally JUST met!
Get your own lawyer to help verify the other parties involved, they’re shrewd and intelligent professionals after all, whose duties involve protecting the interests of their clients.
Your lawyer should also be checking for any outstanding loan amount and overdue charges from the previous owner when it comes to buying any subsale properties.
3) Seller/owner wanting to collect multiple deposits
Yet another case of a sweet talker would be someone who’s already bankrupt, or the property developer’s company has been closed down.
In such cases, the banks will seize all their assets in order to sell off, and the money will go towards settling their outstanding debts.
The seller/owner will then appear to be selling at a very low price (unusually attractive compared to the rest of the market).
But in reality, he/she is attempting to collect down payments from multiple buyers at the same time i.e. double/triple sales.
The innocent buyers, who did not do a land check beforehand to see if there was any restriction on the property, would then realise that the home they were about to get has actually been taken away and sold off by the bank.
As a down payment is usually 10% of the property’s sale price, you can bet that the seller/owner would be pocketing a very large sum of money before disappearing!
4) The property actually belongs to someone else!
Speaking of the word ‘restriction’, there’s another legal term which you should be aware of: ‘caveat’. It’s different than the one we spoke of in the introduction, as this one is referring to:
“…a mechanism that prevents the registration of the transaction under the National Land Code (NLC) to protect the interests of certain parties.”
What this essentially means, is that it’s a legal method of ensuring that a buyer has protection against the owner/developer selling it off to someone else.
Now, if a buyer has already lodged a caveat against a property, it cannot be sold until the caveat is settled or lifted.
Can you imagine buying a property and moving in with your family and pets – only to have a stranger turn up on your doorstep one fine day, and claim that your home actually belongs to him/her?
Not only will the shock of suddenly losing your home be great, you’d also be in a very difficult financial situation.
And that’s why it’s highly advisable for you to conduct a land search first, before making any deposits/booking to check if there are any caveats in place.
You can do this via your lawyer’s assistance, at the Land Office’s counter, or even online here.
5) Is your loan secured?
In view of current economic conditions, which is extremely uncertain due to the COVID-19 pandemic, the banks may be constantly shifting their policies in order to stay relevant.
This includes tightening any loan approval and valuation processes suddenly. So, make sure to double check your latest loan eligibility and valuation before you actually sign the Sale and Purchase Agreement (SPA).
Also, only make conditional offers which are subject to your loan’s approval and official bank valuation. You won’t be able to back out of your offer once that piece of paper has your name on it!
Relevant Solution for Checking Loan Eligibility
6) Buying cheap but not being able to keep up
You’ve decided to get a subsale property from an owner who’s willing to sell it off REALLY cheap to you because they “think you’re a nice person, and like your personality, and you seem like the perfect new owner, etc”.
Please don’t fall for all of that! There’s a high possibility that they don’t actually have the holding power.
Basically, they’ve gone and bought a property that has a monthly repayment amount which is more than what they can afford, causing them to have barely enough cash to survive each month.
Ask yourself too if you will have a strong holding power, i.e. the ability to repay the mortgage instalment for a sustained period of time.
Remember, the standard tenure for a home loan is 30 years and above! Else, you’d end up buying cheap and selling even cheaper.
One way for you to check if you can actually afford that home loan you’re about to sign for is to check your Debt Service Ratio (DSR).
This is a simple method that’s used by the banks to estimate how much you can afford to fork out for all your expenses and commitments.
This includes a variety of other loans such as your credit card(s), student debt, and car loan. The calculation will also take into account your fixed expenses such as food, rent, savings, and utilities.
7) Wrong land title
This one is probably one of the simplest to spot, and yet has managed to catch many unsuspecting property buyers by surprise.
We’re not referring to whether it’s a 2-storey terrace or a cheap flat, we’re actually talking about whether it sits on a residential land, or a commercial one.
Did you know that knowing (and asking about) the differences between both can actually save you quite a bit of money in costs such as quit rent, electricity and water charges, as well as monthly maintenance fees?
A serviced residence is one type of property that usually sits on a commercial land, compared to a condominium or apartment, which would sit on a residential land.
So, it’s in your power to check and make sure the type of land, since whoever is selling to you may conveniently forget to tell you – unless you’re really in the market looking for a serviced apartment for Airbnb purposes.
8) Avoid the ‘urgency’ trap
Do you know the term ‘herd mentality’? It refers to how people can be easily influenced by a group of their peers to make a decision, on a mostly emotional (instead of a rational and logical) basis.
When it comes to this, a property agent might decide to tell the story of how the owner “isn’t free to conduct viewings during weekdays”, and thus make sure that all prospective buyers will have to visit over the weekend.
When there are so many people present at the same home, there’s a sense of urgency created because it seems as though there’s a lot of interest.
This sort of situation will give the seller the power to negotiate for the highest price, since everyone will be putting their best offers forward.
Don’t be rushed by an agent or scenarios like these! Stick to your schedule, stand firm on what you want, and always keep your budget in mind.