By GUNAPRASATH BUPALAN
LAST week’s issue of Real Reserve, we covered why you should invest in Real Estate, various profit methods, type of property that would appreciate in time and how to evaluate and estimate a property’s value. This week lets go further into it by understanding the importance of finding good real estate agents, locating cheaper properties and the acquisition of properties through auctions.
Finding a good Real Estate Agent
One of the best ways to find a property that will be worth buying would be by hiring the services of a good real estate agent. Good real estate agents know the ins and outs of buying real estate and would be able to recommend good investments.
They would know the current trends in the market regarding real estate prices, the purchasing process as well as capable in negotiating the best deal for you — hence the term ‘Real Estate Negotiator’. Reliable agents can also help speed up the negotiation process. They would also be more apt about government taxation regarding your acquisitions, the amount of rent that you can expect from such a property, the type of financing that it would require as well as how to manage the property.
When choosing the right Real Estate Agent, you should ask him or her certain questions and see if he or she will be able to answer them correctly and promptly. It is advisable that they pass this first test in order for you to consider their services.
Things to ask would be such as the amount of income the property has potential to bring in, what is the age of the property, and how much would the maintenance and maintaining cost be for the said property.
A reliable real estate agent would do his or her research beforehand and be able to answer these questions without blinking an eyelid. Also, answering these questions promptly would show you that he or she is interested in working for your interests and needs – not just your money. Some agents may even offer parts of their services for free in order for you to gain confidence with their services.
Hartamas Realty, REMAX Malaysia, Knight Frank Malaysia, Zerin Properties are all good agencies with great personalities that are always ready to help buyers and sellers.
Once hired, a real estate agent should be contactable regularly as you should be able to reach him or her at all times for updates on new developments the sale has brought forward.
Generally, real estate agents are usually hired only by the seller and not by potential buyers but if you really want to get the best deal out of the property, having your own real estate agent to assess the property value would be a good step.
Finding Cheaper Properties
If you wish to buy a property but have a tight budget, then you should look towards buying cheaper properties. Cheaper properties may equate to poorer conditions but with proper management, you may be able to turn it into a high-income generating property.
There are various reasons why property prices fall below market rates. First there is the problem with financing. This may be the major reason why an owner will agree to settle for a lower rate. If he or she cannot afford the upkeep such as the maintenance costs and other operational expenses, he or she will be forced to sell the property.
The second reason may be the death of the previous owner and the court is settling his properties.
The need to speedily dispense of the deceased properties may make it one of the reasons why it will be put up for sale at a cheaper price.
Third is the dissolution of partnerships due to irreconcilable differences between the owners.
There is also the issue with foreclosed properties, which are auctioned at lower prices and also the length of ownership that may be taking quite a toll on the owner. He may find it better to sell the property and may be thinking of retiring.
Therefore, it isn’t always the case that a property is being sold below market value because the property is in bad condition or the location has no potential. Other factors need to be considered too.
Acquisition of Properties Through Auctions
There are several things that you should know before buying properties that are auctioned in the market. Firstly, you should know that there are two different types of property auctions: those carried out by banks and those that are carried out by the courts. Mostly, properties are auctioned to the public due to being foreclosed either by the bank or by the court.
These two also have distinguishing characteristics between them that you should know in order to be able to go through the process more carefully. Auctions conducted by banks are called Loan Agreements cum Assignment or LACA; these types usually go on auction without the necessary titles hence you should be ready to cough out additional money for title processing.
Auction by the courts are called non-Loan Agreements cum Assignment or non-LACA and properties auctioned here come with titles already assigned to them. LACA requires lesser amounts of deposits than those of the non- LACA. Aside from that, auctions by the courts happen less frequent as these types of properties still have to go through a long process in order to be legally available for auction.
After winning an auction for a particular property, you should check the conditions of the property and find out who the owner might be. You can do this by going to the appropriate government agency, which deals with real estate ownerships. Check if the property needs lots or minimal amount of repairing so you can make arrangements if that can be deducted from what you have to pay.
The property should also not contain any stray occupants or any occupants at all. It will be your property now and you will have the legal right to eject anyone who is occupying your property illegally.
You may need to consult with your lawyer regarding this ejection procedure but the sooner you can get them out, the better it will be for you. Bare in mind that as the new owner of the property, you will also need to be ready to settle any payments such as assessment fees, unpaid utility bills, maintenance fees as well as quit rent that may still be outstanding.
You can get some help about acquiring real estate properties by contacting the National House Buyer’s Association (HBA). They will be able to provide you with necessary details that you need to know about buying properties especially if you are a first-time buyer. But in the meantime, you can get help from different agents, real estate help centres and government agencies which deal with buying real estate.
Study also the various difficulties or problems which you may encounter during your buying process. This includes problems such as missing titles, poor conditions of the property and the awarding of ownership to winning bidders. Being in the know before these things happen to you will greatly help you find a solution before it is too late.
Stay tuned next week for Part 3, where we will discuss the issue of financing: Should you take a Loan or purchase your property with hard cash and would it be advisable to form a holding company or purchase as an individual investor.