As a property seller, it is important to consider who are your potential buyers, and what they can afford to pay. The total value of a property that a buyer can afford to pay is dependent on their income, which determines how much they can borrow from the bank, and their savings, which will determine how much of a down payment they can afford to pay.
Ever since Bank Negara Malaysia implemented the policy that housing loans would be based on net income instead of gross Selling in a Buyer’s Market income, the amount a home buyer could borrow from the bank for a housing loan has been reduced. Furthermore, with loan-to-value ratios of 70% for the third residential property onwards, this has somewhat put a cap on speculative activity in the property market.
Given that there is a limit to the amount buyers can borrow, which is based on their net income, as a seller, you should also consider how much of a down payment a buyer can afford to come up with, as well as additional expenses such as
stamp duty and legal fees, which can result in a substantial amount
The Malaysian property market currently offers many choices for buyers and tenants. However, if you are selling your property, you can still get a good price, as long as it is of fair value and also at a price that buyers can afford.
If you set your selling price too high while the bank valuation of your property is conservative, the buyer will have to come up with a percentage of the property’s valuation as down payment, and also the difference between the
valuation and the selling price.
This is a major reason why some property transactions are unsuccessful and were not concluded.The required upfront monies to purchase a property in the secondary market has become very high.
Sellers should also consider the location of their property, and the national and international economic climate. If they are expecting expatriates and companies as their prospective buyers, they should consider the fact that expatriates and companies are selective about the areas they reside in.
In fact, companies and expatriates are looking to lower their living expenses, given the current economic climate internationally, especially with stagnant growth in the United States, and the persistent sovereign debt crisis in Europe.
If you consider the state of the property market and the perspectives of your prospective buyers, you are more likely to be able to achieve a successful and fair transaction that is mutually favourable for both yourself and your buyer.
Good Condition, Good Transaction
It is important to ensure that your property is in good condition when you are showing it to prospective home buyers. This is especially important if you are still living on the property itself.
Structural issues such as architectural and engineering defects should be resolved, because home buyers are usually not keen about forking out
additional funds to repair those defects, especially after they have
incurred a significant expenditure to acquire the property.
Sometimes, it is just a simple matter of keeping your home tidy. If your home is very untidy, it can become an eyesore and would discourage home buyers from considering your property.
This is a simple case of ‘more is less, less is more’.
You may enhance the value of your property by renovating your property and performing simple tasks such as repainting the walls, and having the floors swept and mopped. By maintaining a good environment within your property, you can enhance the ambience of your home, thus making it attractive to home buyers.
Selling and Buying Simultaneously
As a home owner, if you are selling your home with the intention of shifting to another property, you can make modifications to the sale transaction with the assistance of a lawyer.
You may ensure the sale transaction takes effect immediately after you have secured a new property, or you may sell your home first, and then rent the same property until
you have secured a new property to stay in.
In short, as long as you sell your property at a fair value and take into account the expectations of home buyers, you should be able to get a good deal when selling your property.
Chan Ai Cheng
General Manager, S. K. Brothers Realty (M) Sdn Bhd Registered Estate Agent with the Board of Valuers, Appraisers and Estate Agents Malaysia (LPPEH), Member of the Institution of Surveyors Malaysia (ISM), and the Malaysian Institute of Estate Agents (MIEA), Registered Financial Consultant with the International Association of Registered Financial Consultants (IARFC), For any feedback on this article, please email email@example.com