Mortgages In Malaysia: Book Review

Book Review: “Mortgage In Malaysia – A Primer” by Chang Joon Leong, MSc, PhD (Cantab)

Hey all, Jan Phang here, and this is my maiden book review for BookPod.org :)

Finding the right mortgage lender in Malaysia is more than just signing up for the first one with the promo for you. It’s not even about signing up for the one recommended by your closest friend!

negotiator

According to Chang Joon Leong, a respected financing expert specializing in Malaysia property, mortgage lenders are like boyfriends; you have to find the one that best suits your needs and your capacities as a homeowner and borrower; what worked for someone else might not exactly work for you because mortgage, really, is a personal experience. No two mortgages are ever the same simply because your situations and your incomes vary from one person to another and the mortgage companies in Malaysia are very much aware of that.

Impact Of The Malaysian Budget On Real Estate Financing

With the recent conclusion of the Budget we can expect more curbing measures in Malaysia property, and real estate financing will indeed take a hit in 2014. Already, banks are projecting a slowdown in the approval of housing loans – see this news article. It’s hard not to feel disheartened! ;)

I like Maybank - they provide really good housing loans!

I like Maybank – they provide really good housing loans!

Just as much as you’re willing to spend time on finding the right house for you (and I recommend good places such as Sentul and Mont Kiara where properties are nice, not-very-expensive and abundant), so should you do when it comes to finding the right mortgage lenders to partner with. Of course, this also presumes that you’re a good, responsible landlord. :)

You have to find one who can make you feel comfortable – those who can actually explain every single thing to you in a language that you can easily understand. After all, you’d be spending at least ten years of your hard earned money with them so they better be someone you’re fully comfortable with. I have a client who bought a unit in the KLCC enclave (he is really in love with condominiums and apartments in KLCC!) after reading my recommended website on KLCC properties – he went for a unit at the Binjai On The Park which cost a mint. He managed to do that by securing a rather good housing loan from Public Bank. More on that later…

Luckily, it does not take a rocket scientist to figure out how to find the right mortgage lender for you. Here are some tips:

  • Ask your agent and your friends. While I suggest asking your agent (and if you don’t have one, call me!), don’t stop at her/his referral though. Most brokers partner up with mortgage lending companies anyway so it might be free advertising for them. Ask your agent but don’t stop there; ask your other friends. The best ones to ask are those who have been with the same lenders for multiple home purchases. That can only mean that they are very much satisfied with what they offer for loaners.
  • Take the time to get pre-approved by several mortgage lenders. There is hardly any payment needed for getting a pre-approval; it may take you some time but it will give you a good glimpse at which one offers the best conditions, loan types, as well as amnesties for when problems arise. Take note of the incentives they offer too! It may help you reach a good decision.
  • Visit your local bank. We like Maybank, CIMB and Hong Leong Bank. Most, if not all, banks offer mortgage loan services too. The great thing about it is they mostly have offers for their loyal clients. So go ahead and checkout if they have anything special to offer for you in terms of mortgage; after all, it would be very convenient for them that you do most of your banking with them. Apart from payment schemes, what you have to look for in banks’ mortgage offers are discounts and lower interest rates simply because you are a regular client. That does not mean, however, that you have to get mortgage from the same institution that holds your money. There’s no absolute written rule on that.
  • Go online. Apart from most investment firms these days having their own updated and interactive websites, tons of financial and real estate analysts have comparison sites and blogs about which company and what loan. Get a free insight on your local mortgage lender without having to leave your house! There are also lots of scammy websites which dupe people into entering their private details – be careful as these sites get paid on a “lead generation” basis by unscrupulous companies by about RM1 per lead. Scumbags!

That does not seem so hard does it? Good luck and take your time while at it!

-Jan Phang (an experienced real estate negotiator specializing in Mont Kiara, Sentul and Kajang properties). :)

BookPod Brief: Socialist Worker’s Home Inspection Guide

Book In Review: Socialist Worker’s Home Inspection Guide by Ronald Marshall Lee, MSc, PhD, DBA

Janny Pang here again with yet another summary of a book related to Malaysia real estate.

According to Mr Ronald Marshall Lee (previous books include Malaysian Home Renovation 102 and The Idiot’s Guide To Winning Malaysia Property Auctions), apart from getting different types of home insurance for your house, a home inspection is the foremost way for buyers to protect themselves from a wrong house purchase. The last thing you want, after all, is paying for a house that’s infested with rodents or is a carbon monoxide time bomb waiting to happen. This is similar to what Mr JL Chang has said in his book which I have also summarized earlier.

The thing about home inspections is that, there is no ‘’one-inspection-fits-all” kind of inspection. A general inspection can only do so much, that when he finds something not quite right with one part of your  unit, he would refer you to another, more specific type of home inspector to identify whatever specific issue you may have in your house.

Home Inspections You Don’t Need – From A Socialist Worker’s Point Of View

According to Mr Lee, there are so many types of home inspections out there, some of them you don’t really, exactly need (and more importantly, you don’t really need to spend on). Here are 5 glorious examples of these rather unnecessary home  inspections:

  1. Square footage. To solve discrepancies on actual home size and public records, some people choose to hire a specific inspector to re-measure the house and get its exact size. But while this may be helpful for when disputing the house size with your home seller, hiring a separate inspector for this might be unnecessary. Your home appraiser – which your seller will have to hire anyway – can do the exact same job for no extra fee.
  2. Wood destroying pests. One of the biggest problems that you can encounter in buying a house is a pest problem, especially those that threaten not only the cleanliness and orderliness of your future home, but of its stability as well. That is why many home buyers are on the lookout for wood destroying pests. But you don’t need a wood-destroying pests inspector for termites and other similar pests. A regular pest control inspector can do the job, and still find out about other pests that may be living in the house.
  3. Arborist. Unless you’re one to maintain a full blown garden, or is transforming part of your land into a mini-farm where vegetation is of utmost importance, you might not really, really need for an arborist to inspect your house. An arborist is one that tests the health of the vegetation around the house, something that seems necessary only if you’re the green thumb kind.
  4. Appliance inspection. You don’t really need it because of a number of reasons: (1) you can do it yourself and (2) it does not really get in the way of everything. Unless your appliances are directly attached to your electric system, where a failure or problem on the device can cause damage to your entire electric system, you don’t need some expert to tell you that your washing machine turns slower than when it was first bought  ten years ago. Here, Mr Lee gave an example of a famously a non-problem in Kiaramas Sutera as reported in the mass media about two months back in the Malaysian mass media.
  5. Radon inspection. Radon is known to be one of the most common cancer-causing chemicals. But while it is important to get your house tested for presence of this unseen chemical, hiring one specifically to test for radon may not be very practical. There are home inspections that test for numerous chemicals including formaldehyde, lead and asbestos as well as radon. Go for these instead of a specific radon inspection. The results would be the same but the cost would be more worthwhile.

 

Lost Civilization: DIY Considerations

OK, today I am going to take a break from doing book summaries to talk about something which has been lingering in my mind for some time now. :)

DIY is on the rise anywhere (see the phenomenal launch of HomePro in IOI City Mall in Putrajaya just last December) and on anything that even home selling has become popular for DIY projects. And what’s not to love about FSBO? It’s exciting, it’s very fulfilling, it allows you complete and total control over how to sell any property without having to worry about arguing or discussing endlessly about the best way to sell the house, and best of all, you don’t have to worry about commissions. That last bit always gets the job done for most homeowners.

But if it is that awesome and if it saves you tons of money, then why isn’t everyone doing it? Well, apart from it gets the real estate professionals out of business, there are at least five other serious reasons not to sell your own home without an agent.

FSBO Is Time Consuming…

It takes time. And I mean lots of time. Selling a house is not just about showing off your home to potential buyers or fixing your front yard to make it look pretty and appealing. Selling a house means putting up ads, working on the papers, talking to your lender, talking to inspectors and getting repairs done and a whole lotta waiting. And by a lot, I mean a LOT. That’s not even the worst part of it. Selling your home on your own means always being available to accommodate buyers who want to look at your house. If you have a day job, or has a kid who’s at a demanding age, it might not be the best time to sell your house alone. I used to sell bungalows (like Mirage On The Lake) and it really took a toll on me.

Special note: taking criticisms might not be easy as the owner of the house. When you’re selling the house with an agent, you are encouraged to be out of the house during showing and for two good reasons: (1) your presence would intimidate the buyer, as it may feel like an invasion to be snooping around someone else’s house (especially so when your unit is of the Arcoris type) and being watched while at it, and (2) you might not be brave enough to take in whatever bad stuff they say about your house. Selling FSBO won’t save you from either of these, especially the 2nd reason.

It might cost you money or some opportunities. Your relative inexperience could prove costly, especially in the areas of home inspection, paperwork, and a ton of other things. And without access to exclusive listings, you home sale ad is so limited to whatever ad listing you can possibly get a hold of. And even those, without the same connections that other pros have, everything might be sold to you much, much more expensively.

You might not know what to do in worst-case scenarios. Things might just fall a little out of hand, and without the expert experience and training of the pros, it might just not be the easiest thing to do for you to fix. And these problems, left unattended, might end up costing you more than you can afford.

It’s Not For Everybody…

Sales-pitching might not be your thing. Not everyone is born for sales. It takes some talent, hard work and maybe even practice to get past convincing your buyers enough to put their money on your property. And if you’re bad at it, nor have the patience to do it, you might be putting your house at risk of staying a bit too long on the market and lose a significant amount off its market value.

But if you already decided on that, you might be interested on reading some Tips for Buying a House without A Buyer’s Agent to get some more ideas. This idea is not exclusively mine, of course – there are some agents who are actually calling for owners to sell for themselves! Don’t believe me? Watch this video below -

Agree? Disagree? Email me :) jannypang@bookpod.org

No Agent? No Problem

OK, this is my follow up post to the article on FSBO which I have wrote earlier. BookPod.org reader LC Lew had emailed me,

That’s fine if you’re selling. What if you’re “buying” solo? – LC Lew (lewlc@outlook.com)

Here’s my answer:

LC Lew, Brave are those who sell their Malaysian house without an agent, but braver are those who face the risks, the work, and the confusion that is buying a home sans the aid of a pro real estate agent. Buying a Malaysian house without an agent is one of the rather odd moves that buyers these days take; with all the perks and practically zero-fees that come with hiring a purchasing agent, it is indeed odd. Like the proverb we used to say in Malay when we were kids, “Buah cempedak di luar pagar, ambil galah tolong jolokkan, tentu dapat buah cempedak itu.” Truer words have never been said!

But should you be one to decide that going on solo on your house buying endeavor, some tips might come in handy. Home buying is, after all, not something that you do regularly, and definitely not something you get used to.

So here are some tips to help make your house purchase a much easier one, even when you have to buy it on your own.

  • Make sure you are buying at an ideal market. Unless your house move is urgent, it is best to wait until the market is pretty much in your favor as a buyer. You’ll reap the benefits someday should you decide to resell the house and plan to make a profit out of it. Make yourself knowledgeable of the movements in the real estate market. See this article:)
  • Get a pre-approval before anything else. Find the right mortgage lender for you – it does not have to be your bank nor the first mortgage company you find. Take time  find the right one that suits you, study the offers and the setbacks, and get a pre-approval. The pre-approval helps you narrow your search down.
  • Hire a good real estate lawyer. Without a buyer’s agent to walk you through the purchasing process, the best expert you have on the matter is a real estate lawyer. Trust me, they are worth every single penny you spend. Ask them about practically everything that concerns your purchase, especially when it comes to your contracts.
  • Get a Good Faith Estimate. This is a good and more or less accurate summary and estimate of your closing costs. You can go directly to your escrow agent for this. This is important if you’re going for “exotics” like  Kiaramas Cendana in Mont Kiara or Dedaun in Ampang.
  • With your pre-approval narrowing down your search, list down and categorize the other things you want for your house. List down the location, the size of the house, the price, etc. These will all help you narrow down your search even further.
  • Make use of all sorts of listings. With your listing practically limited with your equally limited access to real estate listings, make sure you try to access every single one that you can access. Look on Facebook, the Yellow Pages, Yahoo listings, and various real estate brokers’ websites.
  • Negotiate. Don’t hesitate to negotiate. Sellers know that negotiation and bargaining is part of the deal so take your time and learn the basics of negotiations.
  • Write a good offer. With the help of your real estate lawyer, make sure you have for yourself a written offer that protects you during the whole process. Call your lawyer for this.

I hope you like my answer, LC!

 

BookPod Summary: Don’t Be Duped Into Thinking That You Need An Agent! by Shane Leong

Note: this is a book summary of “Don’t Be Duped Into Thinking That Yoy Need An Agent!” by Shane Leong, published by Randall House in 2010. Shane was previously a BodyPump instructor based in Subang Jaya before he was relieved of his position because of low reviews by his class students (“I guess I was a crap instructor”).

Shane became a real estate investor after he was fired as a BodyPump instructor back in 2009. To make a living, he became a property guru to teach others who to be rich from buying and selling properties. He published this book in 2010. You can get a copy of this book at MPH or Times the Bookshop (it’s not available on Amazon yet).

According to Shane, just as much as there is a growing number of home owners getting into home selling without hiring the services of a real estate agent (FSBO), so are many home buyers doing so without agents a.k.a. buyer’s agents as well. And indeed this is quite surprising, considering there is no commission or service fee to worry about; with the commission being the biggest factor in sellers deciding to forego hiring an agent. Buyer’s agents earn from splitting the commission with the seller’s agents, or get a bit of the commission from the seller if the house was sold FSBO.

“Why would anyone want to let go of the benefits of having a buyer’s agent services for free anyway?” Shane ponders in his book.

Do you Really Need a Buyer’s Agent?

Stupid stock photo provided by Shane Leong

For one, not a few people feel somehow pressured at the thought of having someone else waiting and watching your every move. Some home buyers just want to go house hunting and home shopping on their own accord, at their own pace without having to consider someone else’s supposed expert opinion. Others just feel like home buying is quite an easy task since most of the responsibility lies in the seller and feel that they don’t really have to do a lot to get a house. That, or maybe they have been there enough times to know what they are doing.

But what about you? Do you really need a buyer’s agent or can you pull off a home purchase without one? Here’s the checklist that Shane provides in his book -

Yes, you need a buyer’s agent if:

  • You don’t have time to go through tons of listings. With an agent, all you need to do is let them know your budget and what you want from a house and they can pull out their listings and give you a number of options.
  • You’re new to the place. If you’re looking to buy a house in a new city, you definitely need an agent. They know the place better, plus give you tips on which properties are closest to your workplace or your kids’ school.
  • You’re in a hurry. Quick buys almost always need an agent. They know where to find exactly what you’re looking for so you don’t have to waste time moving around the city and the suburbs in aimless circles.
  • You’re clueless about home buying. First timers are discouraged from buying a house on their own. The technical stuff, especially the paperwork can be tad overwhelming!

No, you don’t need a buyer’s agent if:

  • You know the city. IF you’re only moving two streets away, or just trying to move closer to work and you know every nook and cranny of the city, you don’t need a tour guide;
  • You know what goes on in a home purchase. Experience is a pretty good teacher and if you’ve had tons of it, you are likely knowledgeable about what happens in a home purchase.
  • You have tons of time for house hunting. If you have weekends or afternoons to spare just to drive around your preferred location, plus evenings to browse online listings and posting ‘Looking For’ ads, you also have the time to learn the more challenging parts of home buying.
  • You know who you’re buying the house from. If you’re buying the house from a friend or a relative, and you only need papers for formality’s sake, save your friend from the hassles of having to pay for commission and do the technical stuff yourselves. Just hire a good attorney and you’re set.

Some other resources attached to Shane’s book in the appendix:-

Get a copy of Shane’s book today – it’s a good read! THREE STARS OUT OF FOUR!

Additional review notes from Stephanie Large, Thomas Loh and Derrick Kong T.L

BookPod Summary: Short Sales by Fadzil Jib

Guest BookPod Summary by Bruno Van Winkle (brunovenus@live.com) – “Short Sales: A Contemporary Analysis” by Fadzil Jib (audiobook version available at Audible)

When facing an impending foreclosure, not a few people turn towards short selling their Malaysian house to avoid it and avoid the bad remark on their credit record. But while a short sale seems like a quick way out, it may not exactly be the best one out there. For all its benefits presented, it also comes with tons of setbacks.

For one, you would never get back all that you’ve paid for so far for the house. Equities are almost always nulled; and more likely than not, the earnings from your house go directly to the balance you have on the house. And if that isn’t enough a setback yet, short selling your house does not do much to make your credit record any better anyway. Sure it could spare you the foreclosure and the seven-year ordeal of anyone whose Malaysian house got foreclosed, but your credit record would still put you as a high risk client with chances of getting higher interest rates in your future mortgage loan applications.

Short Sale Alternatives – List Provided By Fadzil Jib

So you ask, is there a way to get out of foreclosure without going into a short sale? Here are the “Five Fadzil Options” that you could try according to Fadzil:

  1. Try a loan modification. Not everyone qualifies for a loan modification but it is worth the try. The thing about loan mod is that you have to apply for it as soon as you are experiencing the first signs of financial problem. Apply for a loan mod directly to avoid having to pay fees for loan mod agencies.
  2. Try owner financing. Owner financing is selling your house, with the permission of the lender, while leaving the rest of the Malaysian house’s mortgage obligations to the new owner. Yes, surprisingly, some people are more than willing to pay for a house that’s been underwater. This is possible through lease option and can be very beneficial if you live in a house that has a positive value projection.
  3. Pay off the remaining amount in your mortgage. If you can’t pay off on the monthly, but you have the capacity to pay off your balance (you either have some money left, or your remaining balance is small), you may be better off just ridding yourself of the remaining mortgage balance and getting a much smaller home that you can more easily afford.
  4. Rent your house and buy a smaller one. You could have the option of getting your house on a buy-to-let (with the permission of your lender), or move out entirely and put your house out for rent. The rent on your house might be enough to pay off the mortgage rent of the house while staying in a house that you can more easily afford.
  5. Apply for a government refinance. Most if not all governments have a program or two specifically for those who are challenged financially and can’t keep up with their mortgage. So try out at your local housing department or an equivalent local agency that deals with these kinds of problems. They probably have something for you out there. Note that Government Refinances (for Malaysia) are not available for Type IC-A properties like Sastra and Avare KLCC.

Foreclosure, more often than not, only happens when you act out too late and things get out of hand. “Act fast to save your house!” Fadzil says.

Bruno’s Ratings: TWO STARS OUT OF FIVE

BookPod Summary: “Doing It Yourself In The Malaysian Context” by Teddy Chan Dai Loke

This is a book summary of “Doing It Yourself In The Malaysian Context” by Teddy Chan Dai Loke published by Gan Yin Fa Sang in 2012. Feedback welcome – feedback@bookpod.org

Selling your Malaysian home by yourself is a huge roller coaster of emotions. It can be fun and exciting the first moment especially when you are selling something as exotic as Horizon Residences KLCC (mostly just the first moment) and extremely frustrating and stressful the next moment (actually, more like towards the end). Oh, and don’t get me started on the wait. That agonizing wait between marketing your house and getting your very first potential customers and that even more agonizing wait of getting an actual serious buyer over the tons of looky lou’s in between can be the best test of patience any human person can ever hope to have. And please, all the technical crap related to selling a home can be a real pain in the neck.

But there is one aspect of it all that can help redefine the level of being grueling of this whole FSBO experience. That, my dear friends, is no less than marketing. How you market your home will define how quickly you can sell your home and how much better you can attract the serious buyers as well as how to effectively shun away looky lou’s without risking jail time. How you effectively market your home, too, helps you sell your house more closely to the ideal price you’re selling it for.

So here are some really great tips about marketing your home effective as a FSBO seller:

  1. Network! You don’t have the network size of a professional real estate agent; what you do have are an intimate circle of family and friends who would be more than willing to be tagged in your Facebook ad about the house, and would gladly help you hand over flyers at the school fair, and would more than willingly tell their other friends who are looking for a house that yours is up for sale. Make the most out of this opportunity to network and branch out your adverts!
  2. Let your house look the part. Your house should look ‘for sale’ right from the outside all the way to the inside. Have a huge sign on your front lawn that says the house is for sale – but don’t let that sign ruin the works you’ve made on your front lawn. Prep up your house with a all the necessary glitz and glamour that homes should have to go through when being opened for showing.
  3. Talk the talk. You know your house full well, so use that very intimate and personal knowledge about the house to convince your buyers about why they should buy the house.
  4. Market aggressively and wherever  and whenever you can. Without having to forgo sticking to your marketing and overall home selling budget, advertise wherever and whenever you can. Post mini-ads on your car, give out streamers, add people on Facebook, get a Newspaper ad, and always update your listing and pair it up with the best visuals to go with it. You need to get your house sold, then you exhaust all means possible. Explore the cheap and free ones especially on the internet, but be very careful especially with sites like Craigslist. Practice good and prudent judgment every time!
  5. Have special offers on the house. What does the house come with? What are the payment options they have? Can they do buy-to-let on the house? Come up with legit and safe gimmicks and make sure you let your potential buyers know about it. This will make your home sale standout from the rest of the home sales around.

JANNY’S RATING: THREE STARS OUT OF FOUR (VERY GOOD). ALSO READ “SHORT SALES” BY FADZIL JIB

BookPod Summary: “Foreclosures: It’s Like Loving A Mentally Ill Mother” by Jeremy Wong

BookPod review and summary of  “Foreclosures: It’s Like Loving A Mentally Ill Mother” by Jeremy Wong (first self published in 2007, re-published by Pearl Random in 2010). If you need a copy, head down to MPH or email Jeremy Wong at jeremy@jeremywong.com

Foreclosure, being one of the biggest nightmares of every Malaysian homeowner, can bring out the worst in people. We’ve heard about people who went really desperate and have gone as far as vandalizing their foreclosed Malaysian homes just for the sake of getting back at their lenders. That, and trying to make themselves feel good and having released their anger and frustration in practically the easiest albeit the least moral way.

But see, foreclosure need not be the end of the world for you.

Being kicked out of your house really should be the worst and last thing to possibly happen to you at the height of your financial rut and you don’t even have to get that far. And trust me, your mortgage lending company does not want to get that far either. – Jeremy Wong

Thing is, a foreclosure does not happen in a snap. There are several stages of a foreclosure, from the several notifications to the many other meetings and talks that you are allowed to have with your mortgage agent. So there should be no reason or you to absolutely lose your home when you are least ready.

To avoid making things worse than they are, there are things that you should not do. Here are some of them according to Jeremy

  1. Don’t wait for the final notice of foreclosure. The very reason why your lender lets you know that you’re in danger is to give you enough time to get your act together, to explain things, and to make them understand what your current scenario is. So the moment you get the first notice, run off to your lender and discuss with them the options that are available to you.
  2. Bankruptcy should not be your first solution. Filing for bankruptcy sure will halt the foreclosure, but it has more adverse effects than it can possibly help. Filing for bankruptcy should be reserved as your last resort.
  3. You should not vandalize your Malaysian house. Just because you are frustrated and angry does not mean that you should go about ruining the house that you once called home. The thing is, it can do more damage to your credit and background report that would make it more difficult for you to get a new mortgage in the future.
  4. Don’t entrust your foreclosure situation to some ‘middle man’. If you have to talk to anyone about your foreclosure situation, and if there is absolutely anyone – anyone – who can fully help you with your foreclosure, it is your mortgage agent. The last thing you want is to fall victim to scammers and con-artists whilst you are in the middle of your financial problems in trying to save your house.
  5. Don’t sell all your other possessions just yet. Get into pawning your wife’s old jewelry only in the direst of your situation. You can use your other possessions and present them as assets to your mortgage agents and let them know that you still have something to give to save your house. This will prove useful sooner or later.

And perhaps, the most important of things that you should never do when you’re facing foreclosure is to lose hope. You have more options than you think and you can more easily get out of it than it seems.

JANNY’s REVIEW: FOUR STARS OUT OF FOUR (EXCELLENT)

PS: I’ve got a unit at Hampshire Park selling for cheap as the couple is getting divorced (only RM728 PSF). Email me at jannyp@remax.com if you’re interested.

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