This article is inspired by this Forbes expose as well as this literary piece by Carl Joon. Call it a SpringsRealEstateNetwork.com specials of sorts. 😉
Unless you work as a real estate agent and a pro purchasing agent, home buying is hardly something you actually get used to. And that is exactly the case for most of us. Because of our lack of knowledge and expert experience on it subjects us to the most ridiculous yet most convincing myths about home buying, which in turn causes us to make the most common mistakes in home buying.
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It doesn’t matter if you’re into something as upmarket as Kempas Utama or as “bottom feeder” as the Haven…
To help avoid this, you have to be informed and know how to tell fact from fiction. Here are 5 common home buying myths for starters:
- Myth number 1: You cannot have more than one real estate agent in Malaysia. Because a lot of purchasing agents let their clients sign an exclusivity contract, a lot of buyers think that this is the only way to go, that they cannot buy a house with another buying agent. But that is not your only option. Early on, inform your buying agent that you intend to hire the services of other agents. This way, you are freed of the exclusivity clause and instead be given a contract that will work for you and the agent both.
- Myth number 2: “You cannot get a mortgage to buy a 11 Mont Kiara unit with a bad credit history,” a negotiator once told me. Nonsense. While a clean and impeccable credit score will help you get lower interest rates and better deals on mortgage and home buying, it is not a necessity. Your less than ideal credit score will still allow you to get a mortgage, albeit with consequences including being listed at higher risk loans which, in turn, give you higher interest rates. You can get any piece of real estate you want… even if it’s 11 Mont Kiara!
- Myth number 3: You need a huge amount of money for down payment to buy a house. This was the norm about a decade or so ago, but mortgage lenders have now become more relaxed and tolerable. In replacement of a huge down payment, you only need to present a good proof of income or anything that would prove that you can afford a house. Depending on the lender, you may be required a small down payment (instead of the believed 20 per cent), or be totally rid of it. Presenting a huge down payment, however, still makes applying for a mortgage a whole lot easier.
- Myth number 4: Renting is better than buying. Sometimes, really, we’re better off with renting. This is especially true if you’re single and not looking to settle down soon. The monthly fees are relatively cheaper, you have less responsibilities, and you can save up more for your retirement when you’re just renting in your younger years. Buying, with the uncertainty of investments in the real estate and the market itself, can be inferior to renting at some point.
- Myth number 5: All forms of remodeling is a great investment and will raise your home’s market value in the future. Unfortunately, tons of home buyers believe this and end up buying a hopeless house with the hopes of remodeling it and therefore raising its market value. But a misplaced pool or an oversized backyard spa, even an ultra-modern kitchen that would make Gordon Ramsay jealous, could overturn the fates of a house that did not have a good projection right from the beginning.
There are tons of decision-making required in getting a house in Malaysia. Trust me, it’s more than just having to pick which house would suit your family best, or which one had the bigger lawn. Especially for those who are on a budget, even the mode of payment is a matter of big concern when it comes to purchasing your own house.
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Apart from deciding on which mortgage lender to get services from, or which payment form to take, or even which way to go with the interest rates, you will have to decide whether you buy a house in a traditional mortgage, buy it via an auction, or get it on a rent-to-own basis.
Given the recent changes as announced by PM Najib Razak in the Budget announcement, rent to own schemes may soon catch up as prices of homes become rather steep for most middle and low income Malaysians.
Reasons to Get a Rent-to-Own House In Malaysia
While some Malaysian homeowners frown at the idea of a rent-to-own house, there are tons of actual benefits to get when you purchase a house this way. And I am speaking from experience: I have got clients who rented who then purchased their respective units in Soho Suites KLCC three to five years down the line. No joke.
If you aren’t yet convinced on this, here are 5 reasons why you should pick a rent-to-own house over a traditional home sale:
Rent to own house? That might be the only feasible thing to do for prudent Malaysians
- The monthly fees are almost always lower than a traditional mortgage. While it is a little more expensive than traditional rent, it is still lower than mortgage payments. This is perfect for those who are still trying to save up for the big payments, or those who are trying to get back up from a foreclosure but still making sure that they are still working their way into getting a good home even before they could be eligible again for a mortgage loan.
- This is the perfect time to spend your post-foreclosure years. A person who has filed bankruptcy and/or has had a home foreclosed is normally not allowed any form of mortgage until after five to seven years. This is also a perfect time to get their acts together while work towards a real home. You’re not wasting your cash on empty rents but you are actually working towards a real home without having to worry about mortgage applications and eligibility for it until at least the contract expires.
- It is easier to be eligible for a rent to own than an actual traditional mortgage. Freelancers and other non-traditional earners in Malaysia who could not pass up the much higher standards of mortgage lenders these days don’t need to go through the regular process for them to get a mortgage loans. The standards are lower, the process is easier. Plus, there is less paperwork involved too!
- Brand new homes and condos are offered in this way. If you’re longing to get a brand new house (say, a landed property in Setia Alam), or at least a unit in a brand new condo unit in the neighborhood, the rent-to-own option is almost always more easily available here. So you can easily get the brand new home of your dreams without so much a burden on you financially.
- You get a chance to ‘try out’ the house before tying yourself down with all the payments on mortgage. There is no room for regrets here; it is easier to bail out of a rent to own place if you’re unhappy with it, than it is when you try to bail out of it from an actual mortgage.
Still not convinced? Maybe this MSN article will persuade you somewhat.
NOTE: Special thanks to Say Jo, Patrick Groove and Steve Sushi for their inputs.
Every home owner trying to sell his home lives for one thing in this phase of his home owner life: to get the Malaysian house sold. And the biggest step to get into that very important part of the process is getting an offer and closing it.
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But before you jump for joy over the prospect of getting your first offer and sealing the deal, there are tons of things that you have to consider before you seal the deal. See, when it comes to getting an offer, it is more than just the numbers.
Here are some of the things that you might want to ask yourself (or share with your realtor) before accepting any offer on the house:
- Is it going to be bought in your asking price or at least within your comfortable range of negotiable price? This is the biggest factor about selling a Malaysian house and getting an offer so make sure that they (prospective buyers) want and are willing to pay for the house at the price that you’re selling it. Remember, once the deal is inked, you can’t change anything or ask for anything more. There’s no room for regrets here!
- What are the contingencies indicated in the offer? Contingencies are the conditions on the offer and contract that would get the deal closed. As soon as these conditions are met by both parties, the deal is considered closed and the payment is to be expected. Usually the contingencies include home inspections and home repairs for the side of the home seller. Read this carefully to make sure that it is fair for you as much as it is fair for the buyer. Don’t forget to make your own conditions for finalizing the sale known to the other party as well so it makes it to the offer.
- When is the payment going to be made? It is your right to know just exactly when you are getting your payment otherwise you might end up partially selling your Malaysian home by accepting an offer that does not say when the payment is going to come anyway. It’s like being in an open, unlabeled relationship – an awkward phase at best, a tormenting and uncertain wait at worst.
- How am I going to get paid? You have every right to know how you are getting your payment: are you getting it in full cold cash, or is it going to come in parts from a financing company? Make sure these are made clear in the offer as well.
- Am I happy and content with this offer? You may be getting everything right on paper but you may not exactly be the happiest person about it. Whatever it is, it would be to your advantage to actually ask yourself if you would be happy to sign that contract and hand over that house. After all, that’s what matters most – if you’re happy with it or not.
Go over the offer, wait for another offer a bit, consult as many lawyers and as many realtors as you can, and make the right decision. Good luck!