Like What You See
As with primary properties, buying a sub sale or secondary property has its good points and pitfalls too. Generally, secondary properties have
lower risk, you can touch and feel and see exactly what you’re getting into. It is right there for you to view, not just the property but the area, the
infrastructure, the neighbours, the amenities.
There are also a higher acquisition costs such as the Sale and Purchase Agreement (SPA), loan documentations, and stamp duty among others. It
also can be very challenging as you must find a seller who agrees to sell at the agreed price, which will need three parties to agree mutually, the
buyer, the seller, and the bank. Once all these are settled you can move in, which can take up to a year.
Before you can get your financing approved, banks require the property to be valued by professional valuers, and if the value is lower than the
asking price, the buyer may need to come up with a higher down payment to make up for the shortfall. The home loan’s margin of finance is
based on the market value, not the asking price.
Here is a list to illustrate the pros and cons of both primary and secondary properties to help you (re)consider and/or (re)evaluate your residential
property purchase.
PRIMARY
PROS
•
•
•
•
•
•
•
SECONDARY
CONS
Latest design
Lower entry level
High margin of finance
Fixed price
Better choice of lots/units
Developer promos e.g.
Absorbed legal fees
Capital appreciation
•
•
•
•
•
•
Off-plan
"Virgin mentality"
2-3 years for completion
Lower initial rent
Possibility of abandonment
Initial furbishing cost
PROS
•
•
•
CONS
Negotiable
Immediate rental return
Established location
•
•
•
•
Old design
Repair / Maintenance
What you see is what you get
Price increase
To summarise, both primary and secondary properties have their pros and cons. To choose the best one that suit your needs will depend on your
risk appetite, financial readiness, needs and opportunities.
PRIMARY
Upfront cash
•
•
SECONDARY
Standard of 10% down payment (if buyer is eligible
for 90% financing).
Approximately 10% for legal fees, stamp duty etc.
(sometimes borne by developer). •
•
May have higher down payment, depending on
the property value.
Higher cost for Sales and Purchase Agreement,
legal fees, stamp duty etc.
Monthly repayment • Tiered payment - paying interest in instalments and
it increases until full payment is made. • Full repayment is immediate.
Discounts • Depends on the developer, but common discounts
available are, early entry price, Bumiputera,
staff discounts, member’s privilege, 10:90 / 20:80
schemes. • NO discounts but buyer may negotiate with
seller or real estate agent.
Furnishing / Renovations • Some new properties come fully furnished or empty. • Some properties come fully furnished, partially
furnished or empty.
For older properties, renovations may be
needed.
•
Risks
•
•
•
•
Possible project abandonment.
Possible delay in delivery .
Unable to sell unit until completion and delivery.
Inflexible competition for rent and sale during
delivery period.
•
•
•
•
Possible market value inaccuracy.
Number of years left on the property (leasehold
properties).
Maintenance and repair.
Issues such as termite problem, electrical wiring,
piping decay etc.
Many young aspiring home buyers are drawn into only checking out primary market properties, thus the term “virgin mentality”, and are
disappointed when most new projects are above what they can afford. They overlook the fact that there are many more affordable homes are
available in the secondary market.
At the end of the day, it is all about what you need and buying within your own means.
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