Generally people buy a residential home to live in before moving on to property investments, so for someone who is looking to buy a residential home to live in, what are the option out there?
When deciding to buy a house you'll have to make a decision early on, whether you're looking for a primary, secondary or auctioned property but what actually do these terms really means?
Buying a primary property means you're buying a brand new properties directly from the developer, whereas secondary or sub-sale means you're buying a previously owned property from a private owner meanwhile an auctioned property is when a bank sells off a foreclosed property where the previous owner has defaulted on the payment. So, which type of property stretches your Ringgit the most?
PRIMARY OR NEW PROPERTIES
# You're required to prepare a standard of 10% in down payment (given if buyer eligible for 90% margin of finance)
# Then another 10% of value for legal fees, stamp duty and others (although sometimes borne by developer)
# You're required to make tiered payment which means buyer like you only need to pay the interest in installments and it increases until the full payment upon completion
# Depending on the developer, the usual discounts available are - early bird, Bumiputera, staff discounts or member privilege
# Some newly developed properties come partially or fully furnished
# However, there are some risks that you might be looking at :-
- Abandoned projects
- Delay in delivery
- Unable to sell until completion
- Stiff competition of sale and rent in the delivery period
- Intangible and unit, surrounding may differ from what was promised
SECONDARY PROPERTIES
# Probable higher down payment due to the property value
# Higher acquisition cost for Sales and Purchase Agreement, legal fees, stamp duty and others
# Full repayment is immediate
# No discounts but buyer may be able to negotiate with the seller
# Renovation is needed especially for older property
# Almost every type of property comes with a risk and in this case, you might overlooked some defects in the house such as termite problems, electrical wiring or piping decay, all requires a substantial amount of cash to repair
AUCTIONED PROPERTIES
# Initial payment could be more than 10% of the asking price, depending on any outstanding bills and payments from the previous owner
# Full repayment is immediate
# No discounts but most of the time it will be below market price
# Renovation is needed as most auctioned units are badly maintained or left vacant for a long time
# Risks in purchasing an auctioned property could be :-
- Problem in vacating the unit from previous owner or tenants
- Unable to have a full view of the unit before buying
- Price may not be below market value
[ THE VERDICT ]
Depending on one's needs, each type of properties has their own pros and cons. For example; for a flipper, an auctioned property under the market value will be perfect. As for someone who is just out to the working field with lesser cash in hand, a primary property will be great in mitigating the upfront payment needed and lastly for feels comfortable to know what they're getting into, secondary property will be the best options.
I'm sure everyone have their own preference when it comes to property but what about you guys? Share all you thoughts with me & until we meet again, have a glorious week ahead lovelies, adieu~
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