In a fairy tale, a real estate agent is similar to a fairy godmother, who acts as an advocate, confidant, best friend and even marriage counsellor (in some cases), guiding first-time buyers through one of their biggest (and often stressful) financial decision of their lives.
However, they are ultimately also salespersons who earn commissions based on what a house sells for. Their advice and tips may not be as objective as you think.
They provide an important service, thus, how do you garner advice from these experts and ensure they have your best interests at heart?
iMoney understands your dilemma, and has asked the one most important question that you wish to find out from your property agent: “What is the one home buying tip you would give to a first-time homebuyer?”
Here are 12 invaluable home buying tips from real estate agents in Malaysia. Find out what is the number one tip to successfully buy your first home from these reputable and experienced agents.
1) Choose a strategic location
Before you even engage a real estate agent, decide on the location you want to buy, down to the residential area. Here’s how you decide. If you are planning to buy for your own occupation, choose a location that is near your work place with convenient access to transportation and communication infrastructures.
Next, narrow down your options by setting a budget. In Malaysia, first time home buyers usually qualify for a 90% margin of finance mortgage loan, but you will still need at least 20% to 30% of the property price in cash for down payment (10%) and at least 10% for legal fees, stamp duty and other loan document charges.
Lim Ah Leck, Registered estate agent, Tiram Realty
2) Aim for landed property
First time buyers should always consider landed properties first, be it a single-storey terrace or double-storey linked, even a bungalow (if your finances allow), instead of an apartment or condominium. Though the prices for landed properties can be much higher than a high-rise residential unit, it comes with the benefit of individual title for each unit, which is available immediately.
On the other hand, the strata title for an apartment or a condominium is usually delayed and this can also cause a delay in getting financing for your property. Having the individual title ready when you purchase a landed property can expedite your home loan approval procedure.
Michael Thiruchelvam Sebastian, Principal, M. S. Properties
3) Enjoy flexibility with your home loan
Most first-time buyers complain that they can’t afford a property, especially in the urban areas like the Klang Valley. Here are three reasons you may be able to afford a home:
- If you are young, you have the advantage of stretching your home loan to a maximum of 35 years. This means lower monthly repayment, making your dream more affordable.
- For first time buyer of a residential property, the margin of finance is normally 90%, making the initial down payment more affordable at 10% of the property price.
- Get a flexible mortgage scheme, so you can repay the loan and work on bringing down your outstanding balance in the shortest time possible.
If you still find property prices out of your reach, consider eliminating car instalment from your expenditure, as it made up a substantial amount of spending for most individual. Consider working for a company that provides transportation, or take public transport.
KL See, Director, Metro Homes Group
4) Only buy a home you can afford
A home is a big ticket item, sometimes the biggest ticket item a person will purchase in his or her lifetime. Buyers who proceed solely based on their emotions often get rejected for a housing loan. At this point, he or she would have already paid the non-refundable deposit.
Avoid the heartache by determining the amount of loan you can get from the bank before deciding on a property to buy. Don’t let this little, nevertheless important step of home buying, ruin your entire dream home hunting experience!
William Yap, General manager, ERA Network (KL) Sdn Bhd
5) Do your homework
When it comes to buying a home, almost everyone wants to share their two cents with you. The trick is to not listen blindly and filter the information accordingly.
Only seek advice from experts, such as reliable and reputable property agents and other buyers or sellers in the area of your interest. Avoid making your home-buying decisions based solely on market rumours and unproven trends without first doing your own due diligence. Research is of the utmost importance when buying a property.
Once you have done your research on the type of property and location, bear in mind that there are hidden costs, such as strata title, legal fees and stamp duties that will arise and can be quite costly. Therefore, if you wish to purchase your property early, start saving early.
Dr Lee Ville, Director, New Bob Realty
6) Start small and aim big later
Buying a house is your first step to building your financial net worth. However, before you look for one, it is worth doing some research on the type of property and location that match your financial capability. It is a long term commitment; it makes sense to start small as a first-time buyer before moving to bigger and more luxurious properties. With interest rates speculated to increase in the coming years, it is always good to look for fixed interest rate loan to avoid any financial turmoil that may result in a spike in your monthly repayment.
7) Are you ready?
Forget about home buying criterion and jargons, like location, leasehold, freehold, single storey, apartment, condominium, KLIBOR, DIBS and so on. The one most important home buying tip for a first time home buyer is to decide whether you can afford a house and whether you are ready to be a property owner.
The general rule of thumb is to calculate your affordability by checking if your total housing debt to income ratio does not exceed 33 %. Another simple, conservative yardstick is your mortgage debt alone should be less than 28% of your monthly income.
It is important for first-time buyers to ascertain this first before going futher in the process of buying a home. Always buy or rent according to what you can afford.
Hj. Abdul Razak Bin Mohamad Yatim, Director, Hartanah Consultants (Estate Agency) Sdn Bhd
8) Save money by choosing the right location
To select the best location involves considering a few factors, such as the location of your workplace and your spouse’s workplace, distance to a school (if you have children) and all your other needs. By living too far from your workplace, you will end up spending more on transportation to work, such as petrol cost and toll.
However, if your options are limited, consider buying a home with the convenience of public transport, such as near an LRT or KTM station to save on transport cost and travelling time.
Madhavan Nambiar, Principal, Country Properties
9) Inspect before bidding for an auction property
For prospective buyers who are considering auction properties, there are a few things you must do before you consider bidding for a property. First, inspect the property to check on the physical condition of the property, and to see if a major repair is needed. Once you are satisfied with the condition of the property, contact the auctioneer to obtain a copy of the Proclamation of Sale.
Read the terms and conditions carefully as they vary with different banks. Request or apply for a loan qualification with your friendly banker before bidding, to ensure you are capable to meet the settlement timeline for the balance of payments.
– Danny Loh, Property Auction House Sdn Bhd
10) Engage an independent mortgage advisor
Before making the huge decision to buy a home, ensure you have a clean financial record to prevent hiccups when applying for a loan. If you have any outstanding debt with credit cards and personal loans, consolidate your debt. You can also check your credit report at the Central Credit Reference Information System (CCRIS) for free.
A property can be the biggest and most expensive item you purchase in your lifetime. Therefore, plan, save and ascertain that you will be able to pay your down payment before making the decision to buy.
It is also important to use an independent mortgage advisor, such as iMoney, to compare all banking property loan products, to ensure you get the best housing loan offers available.
David Yong, Director, propertrack Real Estate Investment Services
11) Choose a property based on your finances
As buying a house is a huge financial decision, a potential buyer must consider all aspects – emotional ride, the added responsibility and the finances involved – before deciding on a property. A good place to start is to know the monthly repayment you can comfortably afford and what houses and location fit your price range.
Wendy Tong, Head of agency, PA International Property Consultants (KL) Sdn Bhd
12) Do not rush
Many a times, I have seen people rushing to buy properties without doing thorough research and discussion with family members. A prospective buyer should conduct a detailed and thorough investigation into the home, the location, and the financing process before purchasing a property.
Some of the things a buyer should check before buying are:
- Fair market value (to avoid overpaying)
- Title particulars i.e. tenure, restrictions in title, encumbrances, etc.
- Locational characteristics (survey the area around your potential home to ensure there are no negative factors, such as high-tension cables, oxidation pond, or prone to flood, etc.)
- The physical condition of the house (e.g. building defects, illegal extensions/alterations)
- Do the numbers! (Don’t over commit yourself lest you find yourself in financial hot soup)
The above checklist is by no means exhaustive, but offers a simple guide to avoid stress and problems upon purchase. It is important for buyers – first time or otherwise – to exercise prudence and caution to ensure one do not end up buying something one would regret later or worse, find oneself in financial trouble.
Sr Michael K. K. Kong, Registered valuer, MacReal International Sdn Bhd
The tips and advice given above are extremely important to take note of, and it can possibly save you from making a bad decision that you may regret later on.
Ultimately, though, one’s choice in choosing their dream home is a personal decision – one that differs for everyone.
Have you bought any property or are you in the process of buying one? Share with us some of the tips or lessons you have learned in the comment section below.
Considered all the tips and advice above and ready to take the plunge? Calculate your housing affordability and determine the property price point you should go for.
Giving up on your dream home as it is just too far out of your reach? Get a starter home first.
Contributed by iMoney.my, Malaysia’s leading financial comparison website, you can view the original article here. To compare and apply for the best financial products, such as fixed deposits, home loans, personal loans and credit cards, visit www.iMoney.my