A Quick Checklist For Selling Your Property
Property is an incredibly popular investment which has the potential to make you massive gains.
However, selling your property is easier said than done. Unless it’s a brand new home that has no sign of wear and tear, most homes which we have lived in or rented out will need time to declutter and made presentable before you can put it on the market.
This may take months to complete and will take up a big chunk of your personal time, but don’t forget the other steps you need to take to make the sale happen. These lengthy process can become overwhelming unless you break it down into smaller, manageable steps.
Everything from doing your research, finding the right agent, or sealing the deal, can be simplified as long as you plan things out carefully and tackle each step one at a time.
So don’t panic, keep calm, and follow these simple steps.
1. Do your homework to set the right price
Just like how you need to do research to buy your first property, you will also have to do a little digging in order to set the right price that will entice others to invest in your property. Look up prices around your area to decide how much your property is worth. If you are not confident with your own estimations, you can try engaging with a trusted property agent or a professional valuer. Getting professional help to value your property also increases the chances of it getting sold.
It is important to remember that most home loans from banks go up to a maximum of 90% of the amount based on the valuation. As such, if you decide to sell your property above market value, buyers will have to pay the remainder out of their wallet.
However, as a seller you can also get an official valuation first if you are not sure about the selling price.
Here’s how the cost breakdown is like:
|For first RM100,000||0.25%|
|Next residue up to RM2 mil||0.20%|
|Next residue up to RM7 mil||0.167%|
|Next residue up to RM15 mil||0.125%|
|Next residue up to RM50 mil||0.10%|
|Next residue up to RM200 mil||0.067%|
How much do you expect to pay in valuation fees if your property is valued at RM400,000?
First RM100,000 = RM100,000 x 0.25% = RM250
Residue = RM300,000 x 0.20% = RM600
Total valuation fees = RM250 + RM600 = RM850
For example, if your property is valued at RM400,000, then the bank will loan out RM360,000 to the buyer. The remaining RM40,000 will come straight from the buyer’s pocket. But if you decide to sell the same property at RM500,000, the bank will still only loan out RM360,000 due to the official valuation. The buyer will have to pay up to RM140,000 instead. Chances are, they will start looking for better deals elsewhere.
You can still sell your property above market value. But you will need to set an appropriate price. Look up properties in your area and how much they are valued at. If any were sold recently, find out how much they went for. The number of properties sold in a certain time frame can give you an idea of how in-demand your area is.
2. Find the right agent
Getting a good property agent to assist you on your sale is invaluable. Their professional assistance can help you sell your property in a quick and profitable manner. A good way to find yourself an agent is to get recommendations from your friends and family who have had previous experience with selling property.
This is one of the most valuable and honest ways to get feedback about a particular agent. You can try to sell your property without an agent, but you will have to do a lot more of the heavy lifting yourself. PropertyGuru has a useful tool which can help you find a number of property agents by region. You can find the tool here.
3. Legal assistance
You will need some legal help when selling your property, especially with regards to transfer of ownership. Having a lawyer onboard from the beginning can help smooth out the process. According to the Solicitors’ Remuneration Order, legal fees are as follows:
|For the first RM500,000||1.0% (subject to a minimum of RM500)|
|For the next RM500,000||0.8%|
|For the next RM2,000,000||0.7%|
|For the next RM2,000,000||0.6%|
|For the next RM2,500,000||0.5%|
Selling price: RM400,000
RM400,000 x 1% = RM4,000
4. Tidy up the place
As mentioned earlier, once you have decided to sell, you need to put in the effort to make your property as nice and presentable as possible to entice buyers.
Potential buyers will only take a small amount of time to view the property, so first impressions are key. If you already have a property agent assisting you, you can ask them for their opinion on the matter.
Adding a fresh coat of paint to your walls could potentially do wonders to help increase interest from prospective buyers.
5. Advertise and prepare for visitors
Now you should be ready to show your place off to potential buyers. Start advertising by taking impressive photos of your property for listings.
Make sure there is plenty of daylight to make your place stand out more. Hiring a professional photographer is an option, but also an extra cost.
You can ask your agent to help list your photos, but you can also use your own personal social media to advertise as well. Remember that word of mouth is a surprisingly powerful tool!
Once a potential buyer is interested in viewing the place, be sure to tidy up and let plenty of air and daylight in. Let the buyer freely explore the house and try not to hover around them too much. While trying to make friendly conversation is key to selling your property, you don’t want to come off as too pushy.
6. Remember to negotiate
Once you find a potential buyer who is genuinely interested in your place, you will then have to negotiate on the price.
There are a number of factors that will influence negotiations. These can include things such as your asking price, market conditions, and the urgency of your sale. You should also consider setting a margin for your sale. If you want to sell your home at RM500,000, then ask for RM530,000. This will leave some room for the potential buyer to haggle.
Once again, you can consult with your agent on how to better negotiate, or even have them mediate the purchase.
7. Seal the deal with a Letter of Offer
Once you have come to an agreement on the sale price, both parties will need to sign a Letter of Offer. Generally, an estate agent will ask the buyer to make a small deposit when the letter is drafted. This is typically around 2% to 3%. A Letter of Offer should contain:
- The legal names of the buyer and seller
- The legal address of the property
- The price that has been agreed upon
- The deposit amount
- Any items such as furnishings and fittings that are included in the sale
- The date before which the SPA must be signed
8. Sign the Sale and Purchase Agreement (SPA)
Once the offer of purchase has been accepted, your lawyer can get to work with finalising the SPA. The SPA is a binding legal contract between two parties that obligates a transaction to occur between a buyer and seller.
When it is executed by the buyer, they will pay the first 10% of the purchase price as down payment. As the seller, you will receive some documentation that needs to be stamped within 14 days of signing the Letter of Offer.
Standard terms for any SPA states that the remaining 90% will be paid to you within three months from the date that the SPA is signed and stamped. However, this time period can vary based on a number of factors such as the agreement and type of property.
9. Transfer of ownership to buyer
Once all payments have been made and all documents signed, the property will be considered successfully sold, and ownership transferred to the buyer.
With this, the selling of your property has been concluded. Just remember that you might have to pay RPGT (Real Property Gains Tax). If you are not sure about the rates, here is a quick summary:
|Period of Disposal||Company||Individual (Citizen & Permanent Resident)||Individual (Non-Citizen)|
|Within 3 years from the date of acquisition||30%||30%||30%|
|In the 4th year||20%||20%||30%|
|In the 5th year||15%||15%||30%|
|In the 6th year and subsequent year||5%||0%||5%|