When you’ve decided on selling a property – be it an exciting moment for new sellers or a bittersweet memory for those departing from a childhood home, you’ll have to pay certain fees before your property becomes someone else’s.
Costs such as property agent fees, Real Property Gains Tax, and more comes into play, and you’re in luck: we have the guide for you!
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Why do people sell their properties?
Selling your property is a substantial decision that involves careful consideration and planning. Before delving into the important fees associated with selling a property, it is essential to understand the myriad reasons why individuals decide to part with their homes.
This decision is rarely made lightly, as a property often represents not just a significant financial investment, but also a repository of personal memories and experiences.
People choose to sell their properties for a multitude of reasons, each influenced by personal circumstances and external factors. These motivations can be broadly categorized into several key areas:
Home-Related Reasons:
- Downsizing: Homeowners may sell to downsize due to financial pressure or changes in their life stage.
- Upgrading: Some sell to move into a larger or more desirable property.
- Relocation: Changes in job location or lifestyle can prompt a sale.
- Safety and Security: Concerns about safety or neighborhood security may lead to selling and moving elsewhere
Financial Reasons:
- Financial Hardship: Losing a job or facing financial difficulties can necessitate selling a property.
- Interest Rate Changes: Fluctuations in mortgage interest rates can significantly affect affordability, prompting homeowners to reconsider their current housing arrangements.
Personal Reasons:
- Relationship Changes: Separation, divorce, or changes in family structure can lead to property sales.
- Health Issues: Falling ill and being unable to work may impact a homeowner’s ability to maintain the property.
- Emigration: Moving to another country often involves selling one’s property
Life Cycle Reasons:
- Life Transitions: Births, deaths, and other life events can prompt property sales.
- Retirement: Some choose to sell and downsize after retirement.
- Changing Priorities: Lifestyle adjustments or new goals may influence the decision to sell
Understanding these varied motivations helps to appreciate the complexity of the decision to sell a property. Each seller’s situation is unique, and these factors often intersect in ways that profoundly influence the timing and nature of their decision to sell.
Simple Step To Sell Your Property in Malaysia
Selling property in Malaysia involves a series of strategic steps designed to ensure a smooth transaction and optimal financial return. Whether you’re a seasoned property owner or a first-time seller, understanding the process can greatly enhance your experience and success rate.
From settling any outstanding financial obligations to engaging the right professionals, each step is crucial in navigating the Malaysian real estate market effectively.
Below, we outline a simple guide which will provide you with the necessary insights to prepare your property for sale and maximize its market potential. Understanding real estate transactions is essential to ensuring a smooth selling process, emphasizing the need for efficient, streamlined processes, personalized attention, and professionalism.
Clear Outstanding Payments:
Before listing your property, ensure that all outstanding payments related to the house are settled. These may include:
- Quit Rent: An annual land tax paid to the Malaysian Government.
- Assessment Tax: Paid to the local council based on your property’s rental value.
- Maintenance Fees: If you own an apartment or condominium, settle any outstanding fees related to common facilities.
- Rental Income Tax: If you receive rental income, ensure you’ve paid the necessary taxes
Get a Property Valuation:
Engage a professional valuer to assess the value of your property accurately. This valuation will help you set a competitive selling price and increase your chances of finding a buyer
Set Your Selling Price:
Based on the valuation, decide on a reasonable selling price for your property. Consider market trends, location, and property condition.
Remember that an attractive price can attract potential buyers more quickly
Prepare Necessary Documents and Find a Real Estate Agent:
Compile all necessary documents, including the Sale and Purchase Agreement (SPA), title deed, and other relevant paperwork.
When selecting a real estate agent, consider partnering with a leading real estate agency that can offer the expertise of a probationary estate agent, who, under the guidance of seasoned professionals, will assist in marketing your property effectively. They can help you reach potential buyers and negotiate terms effectively, ensuring a smooth selling process from start to finish.
Remember, each step contributes to a successful property sale. Good luck with your selling journey! 🏡🌟
Important Fees To Pay When Selling Your Property:
1. Legal fees
After securing a buyer for your property, your lawyer will draft the Letter of Offer and the Sales and Purchase Agreement – they will also handle other legal matters associated with the sale.
An example of the calculation is tabulated in the table below:
| For the first RM500,000 (price of the property) – 1.0% (rate) |
| For the next RM500,000 – 0.8% |
| For the next RM2,000,000 – 0.7% |
| For the next RM2,000,000 – 0.6% |
| For the next RM2,500,000 – 0.5% |
If your selling price is RM2 million, the calculation is as follows:
| The first RM500,000 would be one per cent for RM5,000. |
| The next RM500,000 would be 0.8 per cent for RM4,000. |
| The remaining RM1 million would be 0.7 per cent for RM7,000. |
Read: ENGLISH MARKET INSIGHTS [Latest Update] The Solicitors’ Remuneration Order 2023 (SRO 2023)
2. Real Property Gains Tax
Shortened as RPGT, it is a necessary tax you need to pay to the government when you wish to sell your property – be it landed or high-rise.
By paying the tax, you’ll gain any profits from the sale of your property in Malaysia. But there will be no tax to be paid if there’s no profit to be made or when you received a loss from the sale.
But how does one calculate RPGT?
- What is your chargeable gain? [Difference between the purchase price of your property and its sale price]
- Multiply this with the relevant rate for your RPGT.
If your chargeable gain is lower and you take longer than 5 years to sell your property, the RPGT would be reduced.
Regardless of whether you are Malaysian or not, this tax applies to anyone who’s profited from selling any Malaysian properties.
You will only be exempted from RPGT if;
- A once-in-a-lifetime exemption on any chargeable gain from the disposal of a private residence
- Exemptions on the first RM10,000 or 10% of the profit gained, whichever is higher.
- When a property is transferred by way of a gift between immediate family members
3. Malaysian Property Agent Fee
Understanding the intricacies of estate agency practice and the estate agent’s written examination is crucial for those embarking on a career in the real estate sector. Gaining practical experience and qualifications, such as the Diploma in Estate Agency, prepares individuals for the Test of Professional Competence.
Moreover, those with property-related degrees may be exempt from the estate agent’s written examination, streamlining their path to becoming qualified real estate professionals. Property managers and real estate negotiators play pivotal roles in the real estate industry, contributing significantly to the success of property sales through their expertise and dedication.
There will usually be a cost incurred when hiring a Malaysia property agent from a real estate agency who will provide the all-in-one service package such as pricing and advertising your property, arranging for viewing the property, and negotiating with the potential buyers on behalf of the seller.
The registered estate agent of your choice will charge a commission – usually 2-3% of the property’s selling price and capped at 3%.
The property agent from your chosen real estate firm may also charge you for additional costs such as marketing materials and transport, but they should let you know about these charges beforehand.
Read More
5 ways to check if a Real Estate Agent license is real in Malaysia
4. Fees for renovation and repairs
Spending to make your property presentable and appealing to your target buyers will help bring up its value and get it sold in a flash!
Try a fresh coat of paint in the living room to picture how a family can spend their free time, or brand new decor in the master bedroom to entice a new couple to find their perfect home.
You’ll also want to repair minor inconveniences such as leaking pipes, wonky doors, or small cracks in the walls to ensure a satisfied buyer, not including plant and machinery.
You could also consider hiring a professional cleaning service to give it a good cleanse – ready for its new owners to move in the next day.
Essential things to prepare your property before selling it
Preparing your house before putting it on the market is crucial to attract potential buyers and secure a successful sale. Implementing a series of targeted improvements can greatly enhance the appeal of your property, making it more attractive to prospective buyers.
Here are the essential steps to follow to ensure your property is in its best possible condition:
Repair, Remodel, Redecorate:
Ensure your property looks its best:
- Repair any visible damages.
- Consider remodeling or redecorating to maximize your potential sale price
Deep Cleaning and Decluttering:
- Deep clean the entire home, including carpets, windows, and appliances.
- Declutter by removing personal items, excess furniture, and unnecessary clutter.
- Stage the house to create an inviting atmosphere for potential buyers
Take High-Quality Photos:
- Capture appealing photos of your property to use in marketing materials.
- Plan your marketing strategy to attract potential buyers
Remember, a well-prepared house significantly increases your chances of attracting buyers and achieving a successful sale. By following these steps, you can ensure that your property stands out in the competitive real estate market.
Now you are ready to sell your property!
After determining your house’s value and calculating the necessary fees, congratulations are in order as you are one step closer to finding the perfect buyer! The next step is to let people know that it’s for sale.
Try advertising it via social media or the traditional way by getting your friends and family to spread the news via word-of-mouth.
Either way, we wish you the best of luck!
FAQ
Yes, there are foreign properties in Malaysia. Foreigners are able to own 100% of the property as long as the requirements are met. Foreigners can buy all property except that of which is valued below RM 1 million.
The Malaysian Institute of Estate Agents (MIEA) made a statement that sale and purchase land & buildings cost a maximum of 3% of the sale price of the property. However, the above scale of fees shall not apply to foreign properties in Malaysia.
A property agent’s salary only depends on closed deals. An agent only earns by completing a greater number of property deals.
A property agent’s salary only depends on closed deals. An agent only earns by completing a greater number of property deals.