This article first appeared in City & Country, The Edge Malaysia Weekly on October 18, 2021 - October 24, 2021
Selling property on the secondary market can be daunting, but it is less overwhelming when you understand the steps involved. According to PPC International Sdn Bhd managing director Datuk Siders Sittampalam, the seller should first check current market prices to determine whether his expected selling price is in line with the market. He may also seek a formal opinion from a professional valuer.
Also, he should check the rental rates in that area to be prepared to answer questions from prospective purchasers who intend to buy and let out the property.
“Then, the seller should appoint a property agent who is registered with the Board of Valuers, Appraisers, Estate Agents and Property Managers (BOVAEP) to market the property and handle all matters relating to the sale transaction. The seller needs to decide whether he wishes to appoint as estate agent on the following agency appointment — exclusive agency, sole agency, joint agency or ad hoc agency,” says Siders.
An exclusive agency refers to instructions from a client to a single firm to act on his behalf. Siders says the client may take introductions and leave the closing of the transaction to the firm. He must pay the appointed estate agency firm the agreed fees even if the transaction is not closed, so long as the estate agent has carried out his due obligations and responsibilities.
A sole agency means a single estate agency firm is engaged. The client may also wish to reserve the right to market and conclude the deal himself without the services of the estate agency firm, says Siders. “The client and the appointed sale agent shall agree on the fee based on a pre-agreed percentage of the transaction value.”
A joint agency is when more than one estate agency firm is engaged and only the firm that closes the deal gets paid. “The number of firms appointed is limited and each is aware of the engagement of the others,” he adds.
“An ad hoc agency is where the client may engage an unlimited number of estate agency firms on an ad hoc basis and fees are paid only to the firm that has successfully concluded the transaction.”
Upon securing a purchaser, says Siders, the seller should appoint a lawyer to handle the drafting of the sale and purchase agreement (SPA) and the ancillary legal documents, including the relevant title searches.
Other legal documentations required include a copy
of the seller’s identification card, a copy of the land or
strata title, current loan agreement, quit rent and assessment bill, maintenance bill for strata properties and utility bills.
Siders notes, however, that a vendor should state clearly that the sale of the property is on an “as is where is basis”, or “what you see is what you get”.
If the vendor is selling with fittings and fixtures, it is always advisable to have these items listed in the SPA.
Siders highlights that it is important for the seller to seek advice from a property agent on how to make the property attractive to prospective buyers.
“The first impression of a property during a visual inspection is important, thus some ways to make it more presentable could be cleaning the property or giving it a whitewash, if necessary, as well as removing unnecessary items. The seller can then discuss with a marketing agent the mode of marketing and advertising, or placing a signboard for sale by the estate agent will also be appropriate.”
The estate agent or seller should also be prepared to view the property with prospective buyers upon prior arrangement. “In this respect, the seller has to decide whether the keys to the premises are always held by the estate agent in the case of exclusive or sole agency, or held by the seller and made available to the agent each time a viewing is required,” says Siders.
He says in most cases, prospective buyers always think the stated price is negotiable. Thus, they are looking for bargains, especially when they have been looking around for similar properties in the market and are well informed about the prices. Therefore, the seller has to decide from the outset the base line on the selling price. Some sellers quote an asking price that is slightly above market value, but too high a price may discourage prospective buyers from showing an interest in the property.
If the buyer is interested in the property, a letter of offer will be prepared to confirm the interest of both the buyer and seller in transacting the property. Here, both parties have to be careful about the wording of the letter of offer, as it may constitute a contract that would be important in the event of a dispute prior to the signing of the SPA.
“If a dispute arises, the earnest deposit paid — usually amounting to 3% of the agreed sale price — will be forfeited by the seller or vendor if it is due to the fault of the purchaser. In this case, it would be useful to engage the services of an estate agent, who is well versed in preparing the letter of offer,” says Siders.
After signing the letter of offer, the lawyers appointed by both parties will usually prepare the SPA draft to be mutually
agreed upon and sign them accordingly. “The practice has been to pay the balance of 10% of the purchase price at the time of signing the SPA. In most cases, the purchaser would have secured a loan if he is financing the purchase via a financial institution.”
The sale of a property generally takes three months to be completed, with a possible one-month extension. The buyer will pay the seller the pre-agreed interest within this extension of time. The lawyers will handle all documentation pertaining to the sale, including the discharge of mortgage, and settle the relevant taxes and duty such as payment for stamping the documents, stamp duty and the Real Property Gains Tax on behalf of the seller.
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