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Buying a property is probably the biggest investment a person will undertake in his life. As such, much care must be exercised before you contemplate a purchase decision. The buyer should first of all decide on a budget, taking into consideration what is affordable to them before embracing on an actual purchase.

There are several costs associated with the purchase of a property in Malaysia, the main ones being:

1. Earnest Deposit which can range between 2% to 3% of the purchase price which you pay when you sign the Letter of Offer.
2. Down payment on the purchase which is usually 10% of the purchase price (less the Earnest Deposit you paid) which you pay upon signing of the Sale and Purchase Agreement (SPA).
3. Balance purchase price, which is the balance 90% of the purchase price. You pay when you complete the transaction.

 Other incidental costs associated with a property purchase are:

1. Valuation fee – You may be required by your mortgage provider to undertake a valuation of your property between the loan and can be disbursed. 
2. Bank processing fee – Subject to each lending institution.
3. Stamp duty – Loan Agreement (0.5% of your loan amount).
                      – Memorandum of Transfer (MOT).
    

   Property Purchase Price (RM)	Fees (% from purchase price)	Stamp Duty
   First RM100,000	1%	RM0 - RM1,000
   RM100,001 to RM500,000	2%	RM1,001 - RM9,000
   RM500,001 to RM1,000,000	3%	RM9,001 to RM24,000
   RM1,000,001 and above	4%	From RM24,001

   
   According to Budget 2021, Malaysian government announced stamp duty exemptions for first – time homebuyers. 100% exemption will be given to both instrument of transfer and loan agreement for the purchase of a first home worth not more than RM500,000. 50% exemption will be given for home with from RM500,000 to RM1 million.
   
   The exemption will be for the Sale and Purchase Agreement between January 2021 to 31 December 2025.

4. Legal fee – On SPA and Loan Agreement
    

   Property Purchase Price (RM)	Fees (% from purchase price)	Legal Fees
   First RM500,000	1%	RM500 (Minimum) - RM5,000
   RM500,001 to RM1,000,000	0.80%	RM5,001 - RM9,000
   RM1,000,001 to RM3,000,000	0.70%	RM9,001 - RM23,000
   RM3,000,001 to RM5,000,000	0.60%	RM23,001 - RM35,000
   Exceed RM7.5 million	Negotiable (maximum 0.50%) from RM35,001

    
   Loan Legal fee – fixed 0.5% from loan amount 

Most people will require financing from a lending institution. We recommend the buyer first secure financing from the bank before embarking on the purchase.  You should check with the bank on your loan eligibility. The bank will usually require you to submit the documents such as a copy of your IC, latest EA form, CCRISS or CTOS report, recent three months’ payslip and banking transactions to check your financial situation and determine the amount of loan you will be eligible for. 

Ultimately, having that pre-approved home loan will give the buyer an idea of the price range of properties that he/she should consider. It also boosts the sellers’ confidence that the buyer has the financial resources to make a purchase.

We cannot stress on the importance of engaging a REA to help you in your purchase. Your REA will be able to guide you through the complexity of a property purchase. They will also bring to the table much local knowledge of the property market in the specific areas you are looking at which may not be commonly known in public. Moreover, the buyer will benefit from their knowledge of the area, negotiation skills and guidance throughout the home buying process.

You should discuss your requirements with your appointed REA. This would enable him to understand the needs and neighbourhood which will make it easier for you to choose a suitable property.

After the selection of a few potential properties, the real estate agent will arrange for you to view each of the properties. At the viewing, you are encouraged scrutinize each house carefully and take notes. You should also be aware of things such as structural defects, leaking roof, how busy the street is, etc. 

Once you have decided on a property, you should discuss with your REA and make an offer on the property to the seller. The seller will either accept, reject or propose a counter-offer. 

There is usually room for negotiations on both prices as well as sale terms. A counter-offer is quite a common scenario in Malaysia and your REA will have the expertise to conduct a skilful negotiation to enable both parties to have a meet of minds. During the negotiation, you would be well advised to look beyond just the price and should consider other terms of the sale which can be as important as the price. It is up to both the buyer and the seller to negotiate and agree to decide what will make them walk away feeling satisfied of the terms and conditions.

After having both reached at a final agreement on the purchase price and terms of the sale, it will bow be time to enter into the closing process of the sale. The standard procedure will be as follow:

1. Preparation of Letter of Offer by the REA
2. Sign the Letter of Offer and pay the Earnest Deposit of 2-3%. This money will usually be held by the real estate agent in their client’s account.
3. Appointment of a lawyer to draft the terms and conditions of SPA.
4. Apply for a loan and review all the offers from the banks, pick the one with the lowest interest rates, the most reasonable fees, the highest loan amount it offers and the best service. The bank may also order a valuation of for the property.
5. Sign the SPA and pay the down payment. This usually happens between 2 – 3 weeks after signing the Letter of Offer. During this time, the lawyer will proceed with the necessary documentation.
6. Sign the loan agreement and other documents. 
7. Payment of balance purchase price. At this point, the buyer’s lawyer will ensure all the remaining payments and documents are in order before the balance purchase price is transferred to the seller’s lawyer. This will usually be around 3 months later. 

The vacant property and the keys must be handed to the buyer within the timeframe stipulated in the SPA. Before accepting the keys, you should request for utility receipts that will show that all outstanding bills have been paid and fully settled.