As a first time buyer, before owning the house, it would be a wise thing to do by hiring a home inspector. It is vital to get a home inspection as this is where you would know and protect your rights of the house and can easily report a problem of the building. With that being said, this is where the defect liability period, DLP comes in handy. Based on the Housing Development Act here in Malaysia, all new property has a DLP of 24 months. Within this time, the homeowner of the property will inspect for any damage, defects as well as faulty workmanship. The homeowner must file a written complaint to the Developer and/or Management Office if any faults are discovered in the property in order to have them fixed for free. The moment when your new property is ready for key collection, the developer will provide DLP in case of defects in the property. Think of it as the warranty you get when you buy a washing machine or any of the appliances, but unlike the washing machine, you cannot exchange the property for a new one when a massive problem occurs. Just to paint a picture, it may take somewhere between 2 to 6 hours to complete a thorough inspection for a home that is about 1,200 square feet. You should evaluate every area of your property to look for damage, whether it be a significant flaw like a major fracture in the ceiling or a minor one like uneven painting. Owners must keep in mind that not all property flaws are obvious; some are subtle and concealed, which is why it's crucial to conduct a complete inspection of your new house with the help of qualified inspectors.
After the inspection, you realized there is something wrong with the new property. You have to inform the homeowner as they will lodge a written report to the Developer and/or Management Office. Firstly, the developer would usually provide a form for you to fill in the defects list. Before you hand it over, make sure you make a copy for yourself or take a photo of it. The developer then rectifies the fault in the period of thirty days from the date of receiving the said written report. Once done, they will contact you to make another inspection.
With the 24-month DLP, you as a homebuyer, need to know your rights when it comes to building quality. You have to bear in mind that the issues you face are not without recourse and to demand quality for the amount of money that you are paying for the property. Based on the National House Buyers Association (HBA), first-time homeowners have filed hundreds of complaints over the years, expressing dissatisfaction with the state of their brand-new homes or the way defects were fixed during the DLP. The same issues are consistently brought up by numerous owners in various housing complexes. Construction flaws can range from intricate structural problems that endanger a building’s structural stability to simple items relating to the aesthetics. If you are in a situation where the developer is being unresponsive to you, what you could do is to team up with the neighbours who face the same issues in getting their home defects fixed. The key goal is to persuade the real estate developer that you are serious about having the issues fixed correctly. The Ministry of Housing and Local Government's Enforcement Division of the National Housing Department is where the homebuyers can jointly file a complaint in the hopes that it will step in and call a meeting with all parties involved.
A second-hand home sold on the secondary market is referred to as a sub-sale home. Essentially, you are buying a property from an existing owner if you are buying a sub-sale. This means that you are buying from another homeowner rather than directly from the developer. Here is what you need to know about the procedure for purchasing a sub-sale property.
Firstly, it would be advisable to hire an agent to find property. It is very important to appoint a good agent for the buying process. Secondly, you must know the budget you want to splurge for your new home. The down payment required to buy a sub-sale property in Malaysia is 10 percent of the total cost of the property. First, when signing the Letter of Offer or Booking Form, the buyer will provide an earnest deposit equal to 1-2% of the purchase price. When you sign the Sales and Purchase Agreement, SPA, the remaining down payment of 7-8% and the stamp duty payments will be due. Other expenses that you should take into account include stamp duty, legal fees, the cost of mortgage insurance, and appraisal fees. If the home does not suit your taste, you should have money set aside for renovations and upgrades. According to experts, you shouldn't spend more than 10% of the value of your property on improvements. Besides that, you should also find out the age of the house and also the remaining duration of the land tenure since sub-sale properties do not come with a DLP. Thus, it is very important to look out for any problems before making the final decision.
Other than that, inspect the property thoroughly since some sub-sale homes may come with faults that can be beyond peeling paint. Some of the significant issues that may be kept just out of sight include structural changes caused by soil movement, concealed plumbing leaks, outdated wiring, and decaying wood. This is to avoid possible pest and insect problems in the future. Also, a small tip: visit the property when it is raining heavily so you could see whether there are any leaks.
As a second hand seller, first and foremost, you need to decide the worth of the property. By hiring a property agent or appointing a professional valuer, you could get an accurate idea of the value of your property, hence, increasing your probability of getting your house sold. In addition, you should also be aware of the market value of your house. Having the price based on the market value would help the buyer to get an adequate loan to purchase. Most loan packages only provide a 90% margin of funding. For example, the loan is for RM 90,000 and the property costs RM100,000, the buyer pays a cash deposit equal to the difference, or RM 10,000. Imagine that you set a price of RM150,000 without checking the market value, the buyer is burdened by having to pay RM60,000 in cash. The legal fee and stamp duty have yet to be added. These might cost up to 5% of the sale price. It is likely that purchasers won't make a purchase. Even if they have the means, they won't pay considering the market offers greater deals.
Besides that, you have to bear in mind to estimate your budget for repairs of your current house to be sold or be invested. The question is, how do you estimate how much you should budget for home repairs? The 1% rule of thumb is a great way to start. This involves setting aside 1% of the home’s purchase price for repair and replacement costs. However, the rule of thumb is not applicable for everyone. Some other aspects such as the condition and age of the property would influence how much you can save for the repairs.