In previous article, we’ve talked about the pros and cons of purchasing a property from developer. (Click here to read this article if you missed it) In today, we will discuss about what is the pros and cons of purchase the property from secondary/ sub-sale market.
When the time comes to buying a property, its always gives us a feeling of overwhelming as there is many existing/ hidden problems that makes us worry about, especially when purchasing a second-hand property.
Here is some tips for you, if you decided to buy a second-hand property, the first step you must do is check on that homeowner whether he/she is the legal owner of the said property. You can done this verification at relevant land office and you can also check whether the said property has any encumbrances. This action is to protect yourself from losing your hard-earn money.
Besides, if you’re consider to buy a second-hand property, these are the pros and cons that you should concern about.
You can get what you’ve see
Before make the purchase, you can get the every single thing and detail that you’ve seen in the said property such as. furniture, units, view and etc. It will not have much changes after you make the purchase.
If you’re buying the second-hand property with the purpose of investment, you can then rent out that property directly. In addition, a rental contract is usually 1 year or above which mean you will have a steady passive income every each month and need not worry about monthly loan instalment.
No delays problem
If you buying a second-hand property, you wouldn’t face the common problem of delays on construction deadlines and abandoned project. This is because the property is ready-built property and you can move-in the said property anytime once the legal paperwork is done.
The buying process is complicated
The buying process is usually different with buy property from developer as it is complicated. Before buying a second-hand property, you will have to compare a bunch of properties in the market or location, find out the value of property, checking the current market price, property inspection, negotiate the price with seller and etc.
The seller hazards
If you’re unlucky, you could buy the property from the seller with no sense of responsibility. Such as you’re almost got that house at the final dealing process, but you’ve receive the last minute message that the seller decided not to sell out her/his property, he/she got the better deal or changing the property price. It’s very annoyed as you just wasting your time and money!
Different of loan entitlement
The bank will only approve the loan amount that according to the value of the property in the current market. For example, let say you buy a property from developer, and the property is being sold at RM 100,000, then the bank will offer the loan up to RM 90,000 which is 90% of the said property price.
However, if you buy a property from sub-sale market, the bank will require a property valuation report and will only offer the loan up to 90% of the value of the property. Let us explain to you clearly, if the report showed that the price of the said property is RM 100,000 or above, then you will be fine. But!!! If it’s of a lesser value, let say RM 50,000, then you will only get the loan at a 90% from RM 50,000 which is RM 45,000, instead of the selling price of RM 100,000.
Besides, there is other factors that you should put into your considerations too;
Before buying a second-hand property, you will need to prepare a lot of cash to pay for the fees as follows;
✔ 10% of down payment
✔ Loan application processing fee
✔ Property valuation fees and costs
✔ Stamp duty
✔ Legal fee
✔ Deposit of utilities (water and electricity)
✔ Property insurance and an insurance for housing loan (if you taken any housing loan)
In conclusion, as I always said, nothing is perfect, if you seen a thing with bright side then you must find out its down side to protect your interest.