How to make an offer on a property in Malaysia
Making an offer on a property in Malaysia isn’t just about telling the seller how much you are willing to pay for it. You also need solid negotiation skills, an understanding of the process and knowing your limits. Having a good real estate agent on your side can make the biggest difference to your offer and peace of mind.
- Work with your agent
When you find yourself falling head-over-heels for a property, don’t prance around and shout it from the rooftops. That only makes the seller think you’re willing to pay more. Instead, play cool, think rationally and work with your agent. A good agent will guide you and smooth the way for you in many ways, like:
– Find out any offer terms that will make the seller accept your offer.
– Prepare your offer and help you to strategize for a competitive edge.
– Arrange a property inspection to root out any issues early before you’re under contract.
- Understand the offer process
Generally, the offer process in Malaysia follows a standard formula such as:
– Find a property you want to buy and tell your agent.
– Your agent will contact the seller’s agent to find out if they are still accepting offers, if there are other potential buyers and so on.
– Your agent will advise you on a suitable offer price based on similar homes that were recently sold.
– Provide your loan eligibility information to your agent.
– Your agent will discuss the offer strategy with you which includes an initial offer with a buffer for negotiating later. This is important if there are other offers on the table.
– Your agent will then prepare the formal offer with your approval and send it to the seller’s agent.
– The seller will respond with an accept, reject or propose a counter offer.
– If an offer is accepted, you and the seller will proceed to the closing phase.
-If a counteroffer is proposed, your agent will help to strategize and renegotiate until both sides reach an agreement.
- Decide your offer price
Your agent will do a comparative market analysis to determine the initial offer price and plan your negotiation strategy. It is also important to weigh in the asking price and the market competitiveness. Avoid bidding for more than 10% below the asking price. If you are going to do so anyway, you need to increase your competitiveness in other areas like putting down a bigger booking fee.
- Package your offer right
What makes an offer attractive to a seller? It is when the price, closing timeline and terms align with what he is looking for. Here are some ways to strengthen your offer:
– Increase your earnest deposit or booking fee.
– Work with a bank that the seller prefers.
– Waive contingencies.
– Be flexible with the closing date if that will make you win.
- Deal with contingencies
Contingencies are conditions that need to be fulfilled for a sale to be successful. In many ways, it protects the buyer because they can back out of a sale if something is not right. For most sellers however, the fewer (or zero!) contingencies there are, the better. If you want to make your offer more appealing, discuss with your agent which contingencies you should waive but make sure you are comfortable with the risks involved. The most common types of contingencies are home inspection, title, financing, sale and home appraisal.
- Negotiating a counter offer
If a seller is willing to negotiate, it is generally a good sign. It means they are after more money or better terms, but they are willing to meet you somewhere in the middle. This is when you will benefit from your agent’s experience and skills in negotiating. It is best not to prolong the negotiation and try to reach an agreement with the seller as quickly as possible so that he doesn’t lose interest and goes for another buyer. During this time, either side can decide to ditch the deal at any time.
- Unfortunately, it’s a no
Experiencing a rejected offer is part and parcel of buying property. It can be demotivating to lose the house you’ve set your heart on but don’t give up. Take it as a valuable learning experience that will help you in your next try. Always gather feedback from your agent on why your offer was rejected. Sometimes it has nothing to do with you at all. Perhaps the seller changed his mind about selling. Other times it could be one of the following:
Bidding war: The seller received many offers for his property and simply went with someone else’s.
Too low: Your offer price was much less than he was looking for, but he chose not to make a counteroffer.
Financing issues: You were eligible for a loan but maybe the seller had other preferences like an all-cash buyer.
Specific terms: The seller was fine with your offer price but maybe he wanted someone who could meet other terms like a buyer who could pay 20% down payment.
- Your offer is accepted!
Once you and the seller agree with the price and terms, you will sign the Letter of Offer and pay the earnest money. Typically, in Malaysia, from this point, you have 2 – 3 weeks to sign the Sales & Purchase Agreement and pay the down payment unless a contingency of the sale is not met.
When your offer is accepted, you will enter the property closing process. In Malaysia, it can take between 3 – 5 months before the keys to the new house are officially yours. You will need to hire a lawyer to handle the legal paperwork, choose a bank for your loan and continue to follow up with your agent to make sure things are moving smoothly. At the same time, you will have to prepare your funds as you will be spending a sizeable sum of money on closing costs.