What You Need To Know About The Closing Process
So you’ve found your dream home – congratulations! But before the celebrations, there’s one more hurdle to clear: the closing process. For insights and a different perspective on this topic, PropertyGuru spoke to the founder of MCentury Properties Sdn Bhd.
The closing process involves a series of steps aimed at finalising the sale or purchase of a property. From the initial letter of offer to the transfer of ownership, each step requires careful attention to detail. Key milestones include the execution of the Sale and Purchase Agreement (SPA), stamp duty payment, and property registration with the relevant authorities.
The closing process can take anywhere from a few weeks to a few months, depending on various factors, such as the type of property, financing arrangements, and general efficiency of all involved parties.
PropertyGuru reached out to Marcus Mak, the founder of MCentury Properties Sdn Bhd, for his take on the closing process.
Common Pitfalls That Buyers Encounter During The Closing Process
Marcus pointed out that there are two main pitfalls. One is unexpected delays in the closing process, which can occur due to various reasons such as incomplete documentation, slow bank loan approvals, or issues with the property itself.
To avoid such delays, buyers and sellers should ensure that all documents are in order and seek pre-approval for loans. Additionally, buyers should seek assistance from reputable agencies to facilitate the entire process and ensure a smoother transaction.
Secondly, hidden costs. Buyers may be caught off guard by costs such as legal fees, stamp duties, and disbursements. It’s important to clearly understand all expenses involved and budget accordingly.
Marcus also cautioned sellers and buyers to start preparing their finances and documents at least one to two months in advance to ensure a smooth closing process.
“Effective communication, monitoring loan applications, and ensuring all parties are aware of their responsibilities can expedite the closing process,” he said.
The Closing Process for Foreign Buyers
Foreigners are defined as non-permanent residents, and can own various property types, including residential units (landed and high-rise), commercial properties, and industrial properties.
However, there are some restrictions on purchasing properties on Malay Reserved land, low- and medium-cost residential units defined by state authorities, and properties allocated for Bumiputera interests. Foreigners are also not allowed to purchase agricultural land. Nevertheless, in respect of building land or agricultural land gazetted for development, they may do so after receiving consent from the relevant state authority.
Foreigners are also subjected to the minimum property price, which is generally RM1 million. The figure varies, depending on which Malaysian state the property is located in and the type of property.
Marcus said, “Specific states like Johor, Selangor, and Penang have higher minimum thresholds for certain property types.”
There are two main programmes which foreigners can look into – MM2H Programme and Premium Visa Programme (PVIP) Programme.
Marcus shared that the buying process for foreigners includes signing a sales form or offer to purchase, applying for financing, providing necessary documents to the solicitor, signing the Sales & Purchase Agreement (SPA), applying for state authority consent, paying the balance purchase price, and taking possession of the property.
“Foreigners can obtain mortgages in Malaysia. However, like any other country, there are rules and regulations that must be followed when an expatriate or foreigner purchases property in Malaysia, with the process being less complex for MM2H participants. Loan eligibility and the margin of finance vary depending on the borrower’s residency status and financial standing.”
Role of Property Agent At Every Stage of The Closing Process
Marcus said that property agents play a crucial role in guiding both buyers and sellers through the closing process, as they can assist with document preparation, liaise with lawyers and banks, and ensure that all parties are informed of their responsibilities and deadlines.
To expedite the closing process, property agents can help:
Ensure that all parties have a clear understanding of the timeline and requirements.
Facilitate prompt communication between buyers, sellers, lawyers, and banks.
Monitor the progress of loan applications and property inspections.
If you’re a first-time home buyer, Marcus advises, “Engage a reputable property agency, understand all costs involved, and ensure you have a clear understanding of the process and legal requirements.”
Marcus’s 5 Strategies to Expedite the Closing Process
Leverage Data
Utilise property data platforms such as PropertyGuru for Business, iProperty subsale property transactions and so on, to access real-time property information. Centralised databases can also provide quick insights into property ownership, encumbrances, and valuation.
It is recommended that you engage with a property agency that is equipped with these tools to assist you in getting valuable insights and data. You can also subscribe to these tools, but be aware that subscription fees apply.
Opt for Fast-track Loan Approval
Property buyers should consider working with financial institutions that offer fast-track loan approval services. In Malaysia, some banks have specific programmes designed to streamline the loan approval process for eligible buyers, significantly reducing processing times.
Examples of such programmes include Maybank HouzKEY, AFFIN Home Step Fast, and HSBC HomeSmart-i, among others. These programmes can assist property buyers in obtaining loans in a timely manner.
Streamline Document Management
Adopt automated systems for generating and managing property-related documentation. This can include the use of digital signatures, electronic filing, and automated contract generation tools.
Coordinate with A One-Stop Centre
Look for a one-stop centre that offers integrated services, including legal, financial, and real estate brokerage. This can minimise the need for coordination between multiple parties.
Engage A Proactive Real Estate Agent
Work with a real estate agent known for their proactive approach and efficient communication. An agent who actively follows up with all parties and anticipates potential issues can help avoid unnecessary delays.
Understanding the closing process is crucial for a smooth transaction. Buyers and sellers should be aware of possible strategies, potential pitfalls, and the plus points of working closely with industry professionals, such as property agents, to navigate the process more efficiently.
