Subsale

WHAT IS SUBSALE PROPERTY
  • A subsale house is a second-hand property that is sold in the secondary market.
  • Unlike new properties or under-construction properties, a subsale one usually has a pre-existing owner who bought it from a developer during a property launch.
  • If you are thinking of purchasing a home in the subsale market, this beginner’s guide is for you!
GUIDE IN SUBSALE HOUSE COST & SET A BUDGET
  • The purchase of a sub-sale home in Malaysia typically requires a minimum of 10% down payment.
  • It involves 2 stages, where the buyer will first pay a simple earnest deposit (about 1-2% of the purchase price) upon signing the Letter of Offer or Booking Form. This booking fee indicates the buyer’s commitment in ensuring the deal goes through while waiting for their loan application to be approved by a financial institution. Usually, a third party such as a property agent or lawyer is engaged to hold the earnest deposit in escrow ahead of the completed transaction. The remaining of the down payment (about 7-8%) and stamp duty fees will follow once you sign the Sales and Purchase Agreement (SPA).
  • On top of that, you will need to fork out monies for the closing costs – stamp duties, valuation fees, and legal fees. Although it is not obligated by law, it is encouraged to hire a lawyer when purchasing a sub-sale residential property to ensure that you end up with a fair deal. A legal professional will assist you in preparing all the legal paperwork related to your property purchase and will be able to advise you on the best legal recourse if things don’t go according to plan. Legal services include finding out any hidden clauses in the SPA that you will be signing off on and carrying out due diligence work on your behalf, such as land title checks at the local Land Office.
  • There is also the mortgage insurance cost, which is roughly 3% of your property value – there are 2 options to pick from, the Mortgage Reducing Term Assurance (MRTA) and
  • Mortgage Level Term Assurance (MLTA). Lastly, you should remember to have some funds in reserve for your renovation cost. The extent of renovation and refurbishment will depend on the overall condition of the subsale house – but most experts recommend not spending more than 10% of your home value on renovations.
  • Let’s say your target property has a transaction price of RM600, 000 – your budget estimate will be as follows:
    Cost Amount  Cost Calculation (RM)
    Down payment Minimum 10% RM 600,000 X 0.1 = RM60,000
    Stamp Duty Stamp Duty on SPA & Memorandum of Transfer
    First RM100,000: 1%
    RM101,000 – RM500,000: 2%
    RM500,001 – RM1 million: 3%
    Above RM1 million: 4%Stamp Duty on Loan agreement
    0.5% of loan amount (90% of property value)
    Stamp Duty on SPA & Memorandum of Transfer
    First RM100,000: RM100K X 0.01 = RM1,000
    RM101,000 – RM500,000: RM400K X 0.02 = RM8,000
    Next RM100,000: RM100K X 0.03 = RM3,000Stamp Duty on Loan agreement
    0.5% of loan amount: 0.005 X RM540,000 = RM2,700
    Mortgage Insurance Typically 4% of property value RM600,000 X 0.04 = RM24,000
    Valuation fees First RM100,000 = 0.25%
    Next residue up to RM2 million = 0.2%
    First RM100,000 = RM100K X 0.0025 = RM250
    Residue of RM500,000 = RM500K X 0.002% = RM1,000
    Legal fees Sale & Purchase Agreement (SPA) legal paperwork fees
    First RM500,000: 1%
    Next RM500,000: 0.8%
    Next RM2,000,000: 0.7%
    Next RM2,000,000: 0.6%
    Next RM2,500,000: 0.5%Loan Agreement legal fees
    First RM500,000: 1%
    Next RM500,000: 0.8%
    Next RM2,000,000: 0.7%
    Next RM2,000,000: 0.6%
    Next RM2,500,000: 0.5%*Plus, a few hundred Ringgit in disbursement fees for SPA and Loan Agreement.
    SPA legal paperwork fees
    First RM500,000: RM500K X 0.01 = RM5,000
    Next RM100,000: RM100K X 0.008 = RM800Loan Agreement legal fees
    First RM500,000: RM500K X 0.01 = RM5,000
    Next RM500,000: RM100K X 0.008 = RM800
    Real estate agent’s fees About 2% to 3% of property price RM600,000 X 0.02 to 0.03 = RM12,000 to RM18,000
    Repair and renovation costs Up to 10% of property value RM600,000 X 0.1 = RM60,000
    TOTAL COST RM 189,550