How Long Does it Take to Sell a House in Malaysia?
Selling a house in Malaysia is not necessarily a long and complicated process. In this article, we will list in detail everything you need to do to ensure that potential buyers can be targeted, as well as the time frame required for each step. Before you are ready to sign a sale and purchase agreement (SPA) and officially transfer the property to the next owner, you will need to involve multiple parties. The entire process may take 6 months or more.
In light of the Covid-19 outbreak, Prime Minister Tan Sri Muhyiddin Yassin has introduced a number of incentives to help promote the real estate market and provide financial assistance to home buyers and homeowners. According to the Prime Minister’s announcement in a recent ERP briefing, Malaysians who sell their properties from June 1, 2020 to December 31, 2021 will not have to pay 5% RPGT tax. In addition, you should master the basic knowledge related to RPGT. The pardon is limited to 3 residential properties sold per person. Then how long does it take to sell a house exactly? We summarize the following steps.
1. Pay all the unpaid bills
In order for the house to be effectively available to the next owner, you must clear all unpaid payments related to the house. Not sure what is left? Please follow the list below:
Withdrawal rent or unit rent for high-rise buildings is a kind of land tax, and all owners must pay to the local government through the land bureau of each continent or Pejabat Tanah Dan Galian (PTG) every year.
This is a tax paid to the local government based on the rental value of your house. The tax is calculated based on 4% of the rental value of your house and needs to include other relevant factors, such as the location and type of the house.
If you own an apartment or condominium, you must pay all unpaid maintenance costs, which will be paid to the management committee and used to maintain and repair the common facilities in the stratified building.
Rental income tax
Although this is not a direct property tax, you will need to pay rental income tax when you file your income tax. The tax amount will vary depending on your status in Malaysia.
❖ Malaysian citizens and permanent residents should pay a rental income tax rate of about 0%-28%
❖ Foreigners and non-permanent residents are obliged to pay a rental income tax rate of 28%
Average time: The time required to clear these payments and collect the relevant receipts depends entirely on how often you perform your billing obligations. If you pay on time, you can complete this stage in one day.
2. Find an appraiser to assess the value of your house
The list price or sale price of the house depends on its value. This step is only valid when the property is a resale property (second-hand property). Therefore, if you want to sell a newly launched property, you can skip this step.
Although there are several ways to assess the value of your real estate, such as checking with a real estate agent, asking a banker or browsing online real estate platforms, the best way is to hire a professional appraiser. The appraiser will be able to help you determine the appropriate selling price through market data, real estate types, similar real estate prices in surrounding areas, and other valuable market factors.
Make sure to hire an appraiser from an authorized company or an appraiser on behalf of the bank. We recommend that you first confirm that the appraiser or appraisal company is a qualified unit registered by The Board of Valuers, Appraisers and Estate Agents Malaysia (BOVEAP). Then, you can arrange an interview with the appraiser of your choice and arrange a time for them to visit your property for appraisal. Then, the valuer will prepare a report on the value of the property after evaluating your unit.
Average time: The whole process may take about 1 week to complete.
3. Set the sale price of the property
The valuer confirms the value of your property based on the data and its personal evaluation. However, this should not be the only indicator of your final sale price. Relative to its market value, attractive prices will attract buyers, even if these residential properties are not in hot spots or have a new and smooth appearance.
The price of your house depends largely on your personal goals as a seller-do you need cash now and sell quickly, or do you want to have the reserved power to wait for the right buyer who is willing to pay your ideal price? After making a decision, you should find out the following:
What is the current purchase intention in your area? Inquire about recent transactions of similar real estate types and building sizes near you-you can use brickz.my to do so. This online platform provides accurate selling prices and up-to-date pricing information for property transactions in Malaysia, which comes from the Appraisal and Property Services Department (JPPH).
How competitive is your industry? Browse real estate websites such as iProperty.com.my to find the highest and lowest prices of competitors in the market, so as to set competitive prices for your buyers. Taking into account the current buyer’s market, your asking price must reflect the market value of the property, and preferably lower than the market price of your competitors. Remember, you must take into account the negotiating profit on the sale price of the property. Buyers usually try to ask for a discount, so it is recommended that you add 5–10% more within the acceptable price range.
Average time: This ultimately depends on how long you spend researching and investigating. You should be able to complete the evaluation within a week.
4. Determine the goal to help you complete the transaction faster
Once you know the value of your industry, you can focus on finding this type of buyer. This will increase your chances of making a profitable transaction. Set goals based on the characteristics of your property, their income level, current living conditions and family size to establish the approximate role of buyers. Other issues include:
Do you want a cash buyer?
Are you willing to sell properties to foreigners?
Do you want to focus on first-time buyers? (Because they can get higher financing profits from the bank)
Having buyer demographics will help you attract buyers and adopt effective strategies to ensure transactions — for example, if you are keen on first-time buyers, you can provide free fixtures and accessories (such as refrigerators or kitchen stoves).
Average time: It can be resolved within one day.
5. Complete indoor installations to increase the value of the property
When you show a house to potential buyers, the first impression is of course everything. Obviously, your house must look decent before it is launched on the market, but it is wise to take some additional steps to further enhance the attractiveness of the house.
In addition to basic repairs, you can also take the following actions:
Please refurbish your cabinets and kitchen surfaces if they are out of date (after all, the kitchen is the core of the home!)
Replace every room with a new light fixture-resetting the new atmosphere is more important than anything else.
Organize the house, but don’t overdo it, so as not to look like a home.
Organize the garden, thoroughly clean the terrace and drains.
Average time: Depending on the effort you put into the work, it may take about 1–3 months to create a good first impression
6. Prepare the necessary documents
This step is very straightforward. You will need to prepare the following:
Latest bank loan records
ID card and passport
Please note that if your current passport number is different from the number stated in the house deed or purchase agreement, you must provide two copies of the passport.
Copy of Purchase Agreement
Copy of title deed
The latest land tax and house tax bills
Management expenses (latest 3 months)
Utilities (for the latest 3 months)
Average time: It depends on your personal speed. This is the preparation that can be completed in one day.
7. Find a reliable real estate broker/agent to sell the property
Hiring a registered real estate agent can help you sell your property faster. You need to choose an experienced broker with the best marketing plan to sell your real estate-look for a broker with work experience in the area and a deep understanding of the real estate market.
Ask about their performance or any evidence of past sales. It can be a booking form/notice, customer feedback, etc.
Once you have a broker, please hand over all the necessary documents mentioned above so that they can sell your property to potential customers.
Average time: It depends on how long it takes you to confirm the real estate agent, so please start as soon as possible. If the broker is regarded as a specialist in the area or industry type, this is definitely an advantage.
8. Find the right buyer and negotiate terms
With the assistance of a broker, you can provide an open visit to speed up the transaction. Finalize the list of purchasers and make sure that your broker actively urges these purchasers to take the next step, combine them with lawyers and bankers, and let them assist purchasers in pre-checking their loan eligibility and related work.
Selling a house in a slow real estate market can be tricky; you have to work harder to close the deal. Generally, attractive discounts are not the key to speeding up transactions. Building strong relationships with your potential buyers and earning their trust is the springboard for successful sales. In most cases, the failure of the transaction is not because of the price of the property, but because the buyer is not satisfied; whether it is the seller, the service provided, or any troubles they face.
Average time: The negotiation process and the sale time depend on the time when the two parties can reach an agreement.
9. When you are ready to sell, consult a lawyer
It is recommended to hire a lawyer or house transfer professional to handle the legal work of transferring property ownership. They will prepare the necessary documents for you and suggest the processes involved.
You will need to provide the signed contract agreement, which is the first document that contains all the terms and agreements. Your lawyer will obtain a redemption statement from the bank and prepare all necessary legal documents to transfer the property ownership to the buyer.
Average time: The sale and purchase transaction will be completed approximately 3 months after signing the sale and purchase agreement.
10. Sign the agreement and charge the booking fee
If both parties have prepared a lawyer, then the buyer will have to sign the agreement and pay a booking fee of 2–3% of the property price. The booking fee is the 10% deposit that the buyer must pay to you when completing the sale transaction.
Average time: from one week to one month-the process depends on the time you take to prepare the agreement and how quickly the bank processes the application.
11. Buyers apply for housing loans
If you have a cash buyer, you can skip this step. However, if your buyer is applying for a loan to purchase a property, then they need to apply first before proceeding to the next step.
When assessing the buyer’s loan application, the bank will usually send their appraiser to assess the value of your real estate and attach an appraisal report.
Average time: You have to wait 14 working days or more to know whether the bank will approve the buyer’s loan.
12. Sign the sale and purchase agreement (SPA)
After the buyer obtains the mortgage, you can sign the SPA. During this period, the buyer needs to pay you the remaining 7–8% of the sale price of the property. The remaining 90% of the payment will be paid to you through the bank within 90 days of signing the SPA date or after the state government approves the transfer agreement.
This expenditure will be divided into two stages-in the first stage, the buyer’s bank will pay your bank (seller) to redeem the property. Then, your bank will issue all relevant documents (such as the genuine title deed of the real estate and the genuine sale and purchase agreement) to the buyer’s lawyer, who can then register the title deed under the buyer’s name and create a new mortgage. After sending the documents to the buyer, you will receive the second phase of payment.
Average time: Once your lawyer sends the documents to the buyer, the buyer will sign the SPA within 14–21 working days.
13. Real estate transfer period
Freehold real estate with individual or stratified title deeds-within 90 working days
Leasehold real estate with individual or stratified land deeds-The lawyer needs 1–3 months to obtain the consent to transfer from the state government, and the transfer process takes 90 working days.
The total property rights of the freehold-about 3 to 6 months, because the process is relatively more complicated. It depends on how long it takes your lawyer to get a confirmation from the developer before he can start the transfer. In some cases, this may be a long process because the developer has not yet subdivided the master title into individual or strata title and has not yet transferred the ownership of the property to you (the owner).
The total property rights of the leasehold: up to 6 to 12 months. The time required is doubled because the leasehold title requires the approval of the state government in addition to the developer’s approval (total property rights).
14. Summarize your transaction fees
After the transfer procedure is completed, you must repay the following transaction fees to complete the transaction:
This is the real estate profit tax that you get from the sale of your real estate. If you want to sell a property with six years of ownership (or later), you must pay 5% of RPGT. If you own the property for a short period of time, the tax rate you pay is also higher, that is, you have to pay 30% RPGT for the first three years of holding the property; 20% for the fourth year of sale, and 15% for the fifth year.
However, if this is the first time you have sold a residential property in Malaysia, you can enjoy the tax pardon for the sale benefit once in your life, so you do not need to pay any RPGT. Please note that it must be a private residence and you must be a Malaysian citizen.
Real estate broker/agent fees
The agency fee for residential properties is 3.18% of the selling price, including sales and service tax (SST).
The legal fees in Malaysia are as follows: According to the price of the property: the first RM500,000 (1%); the next RM500,000 (0.8%); the second is 2 million ringgits (0.7%) and the next 2 million ringgits (0.6%) ). Assuming your real estate price is RM800,000-you probably need to pay RM7,500.
Average time: It depends on the situation. If you are ready to pay, it will only take as little as 1 day.
The conclusion is that time must be considered when selling a house. If you want to sell at a high price, you must be prepared to wait longer. If immediate disposal is the priority, then you may have to accept the reserve price.
Originally published at https://www.tlw.com.