How to buy a Sub-sale Property in Malaysia: Things to consider in an industry of vampires & vultures!

Nope, I'm not writing the fourth sequel to the Twilight saga, where Bella & Edward decide to get a new house in Seremban :-P. The truth is, I had never read the series nor watch the movies. But what I went through recently in dealing with property sale transactions remind me of all these blood-sucking creatures, and there are lots of them in Twilight, I heard ;-) Actually, in our current 'capitalist'-controlled economy, these creatures roam the world and somehow or another we got sucked involuntarily into a system they created purposely. How ironic!

Anyway, for those who have yet to get where I'm heading with this post, let's just recap with an overview haha...Alright, after almost 13 years living in Sg Petani, while working in Merbok, we've finally made the move &got transferred to Seremban in May last year. We sold our double storey 4 bedroom house in Bandar Laguna Merbok, SP at the end of April and the transaction got finalised sometime in early November.

Let me highlight to all of you the "Pros & Cons in a sub-sale":

1) When will you receive the money in a sub-sale property transactions?

I've always thought that buying a house was sengsara enough, but rupa-rupanya waiting for your money when selling is even worst. You see, when you buy a house in a sub-sale transaction, you got a house almost immediately, but when you are selling your house, you're letting go of your property, but you'll only received your money 4-6 months down the road. This actually throws off most of our financial arrangements because we need to finance another place in Seremban.

2) Finding out the value of a property & what it meant in a sub-sale?

Finding & funding a property in Seremban was initially rather daunting. We don't know where to start, which area to focus on and we've also found out that whilst banks will fund up to 90% of the price of a property you bought direct from housing developers (subject to your current liability), they will only fund 90% of the value of a certain property in a sub sale transaction, i.e. when you buy from a third party. 

What's the difference you ask? 

Let say, a house from a developer is being sold at RM100k, banks will finance RM90k out of it. However, if you were to buy a property from another individual, who's selling at the same price, banks require a property valuation report and will only finance 90% of the value of the property. If the value reported is RM100k or more then you'll be fine. In contrast, if it's of a lesser value, say RM50k, then you'll only be financed for 90% from the RM50k, instead of the selling price of RM100k. So you'll only receive financing of RM45k & if you still want the property you'll have to korek money from elsewhere to settle the difference, not including the cost for lawyers, valuers, bankers & insurers. That's basically what happened to us in Seremban. We found out the hard way that a sub sale of property in Seremban can be disastrous to finance. The 'real' value of most properties in Seremban is way lower than the ones in Sg Petani. I'm rather surprised, because Seremban is the state capital (in comparison to SP, which is not). No wonder most private sale & purchase have difficulty going through. Imagine needing to top up the difference of up to hundreds of thousands in some case.

3) Finding out the difference in loan entitlements' banks are willing to grant & what that difference meant to you in a sub-sale?

So now we definitely know that there's a cekik darah difference between the pricing of properties being offered by housing developers and the real value of those properties. Developers' pricing calculation, somehow, somewhat have included a future (of up to maybe 10 years) appreciation in value. Meaning in reality, you are paying a future profit to them, NOW! Coupled that with the fact that when you are financed by banks (who've made a 'pact' with developers by having the above mentioned policy of financing up to 90%), for the first 10 years you are only paying interests/profits to the bank. Your loan principal will only start reducing halfway through the loan term. So really, REALLY we're being sucked out dry by these vampires & vultures. They have put in place a system that do exactly that! Screw us! Suck us all of our hard earned money! 

But most times, we all have no choice. We need to serve these 'warlords' because we need a place to stay. And they say it's good for the economy, and they say house is a good investment, and they say so many other things. But truthfully, most of us is only so glad that we have a place to stay, a place to call home. We don't go roaming the earth thinking of the economy or the future value of our home on a daily basis. Further, what's the point of having a million ringgit valued house if you can't or won't be able to sell it anyway.

4) Why in the end we succumb to the cutthroat system?

We have no choice. We cannot rent forever, because of the sheer number of stuff we have. Plus, we don't want to be transferring here & there anymore. Kesian anak2, kesian badan sendiri. We found a perfectly located single storey 4 bedroom house - 2-5 minutes drive to the office, school & shops, but it's smaller than our place in SP. It's in a sold out new development area and somehow or another, one guy wanted to let go of his place even before the keys are being released. The price he quoted was exorbitant considering its size and the value is so much lower, even lower than the developer's initial selling price, regardless of the house being so close to UiTM. And being a sub-sale, we'd need to top up the difference before the sale could be concluded. With money from our house sale in SP still stucked, we scrambled elsewhere to make up the difference. So stressful.

Alhamdulillah, in the end we signed the S&P for the house in June and it was settled by October. We moved in early September & up till today, we're still sorting most of our stuff. There's just too many books, hundreds of them huhuhu... And of course, we had some delays with the cabinet makers. Oh well, kisah masuk rumah dan rupa parasnya will take up another posting soon.

So in conclusion these 4 points seriously need consideration if you were to buy a property through a sub-sale transactions. With proper financial management you'll pull through, or else you'll have to reconsider or choose to wait a little while longer before finally owning a house of your own.

My humble abode's living area in S3, 

finally, after 5 months of sorting...