Hi,

I plan to buy one condo. The selling price is RM220k and the market value is RM250k.
I try to nego with owner so the SPA can go up to RM250k, but owner refused.

This is my question. Since now no more RPGT (Real Property Gain Tax), why owner still refuse ?
Any disadvantage to the owner if SPA top up from the actual purchase price ?

Please advice.

.. what's "market value" in your definition?

Market Value - The higher price can go for this particular unit. I check with valuator and banker, my SPA can
go up to RM250k.

Do you know whats the reason owner refuse?

that's a deceiving "market value" based on hearsay..
most banker that you deal with are simply front-liners.. selling loans

if you really want to know what goes into deciding a worthy loan figure on that property.. go seek out a real banker who approves credit/loan facilities or have a say at credit policies in the bank.. you'd be surprise.

if a valuator "tells" you something.. it's merely hearsay.. pay them a couple hundred bucks and have a copy of valuation report.. and you'll see something interesting.

.. the funny thing is, peculiar rather.. is the reason as to why a person sells below evaluation? you may have found yourself a "pot of gold" there.. either that the market value is illusionary/out-dated.

the more peculiar thing is.. why on earth would you want to topup that figure on the spa? i have a feeling that you're trying to extract more money/cash out from this deal, from the bank.. not sure if this is the best way to do it, but there're other ways to achieve that extraction

This post has been edited by lwb: Jul 14 2009, 02:19 PM

i think due to tax issue

U should ask what are the advantages if the owner top-up SPA purchase price.
Why would the owner do something for the benefit of you if he/she got nothing in return??

Yes. I top up SPA price is because I can get higher loan. Eg. SPA Price = 250k x 90% = 225k loan.
My objective is to extract more money to cover my stamp duty, lawyer fee etc.. By another word, I want
to buy this house without any single cents pay out. Mainly I buy this house for rental return.

Other than top up SPA price to get more loan, any other way we can extract more money ?

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Added on July 14, 2009, 3:11 pmThe owner also not sure why don't want allow me to top up the price. Probably worry for any potential
trouble.

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Added on July 14, 2009, 3:11 pmNow no more real property gain tax. This should be out of picture.

This post has been edited by invest2229: Jul 14 2009, 03:11 PM

... ehehee dirty little bugger (another leveraging to the hilt). no offence, it's a strategic move if you can orchestrate it well.

... but i have a feeling that you're not familiar with the rules of the game (ceteris paribus there could also be a strategic reason as to why your potential seller refuses.. and there's a workaround, hence, the rule of the game to arrive to a win-win situation.)

This post has been edited by lwb: Jul 14 2009, 03:19 PM

Just like trojant said, seller gain nothing in the process so why seller must agree to top up the SPA which is not the actual figure he/she is getting? Bare in mind, top up in SPA figure while actual selling price is different is actually not legal to do so.

This post has been edited by cherroy: Jul 14 2009, 03:20 PM

It is not legal and people are being prosecuted in Singapore.

So far I have not heard any being prosecuted here in Malaysia.

To increase the SPA price would meant more legal costs to be incurred as all the legal cost is tied back to that price.
Unless you're willing to pay on behalf of the house owner the legal cost charged to him.

This post has been edited by b00n: Jul 14 2009, 03:45 PM

*** sorry for ruining the party but since our moderator, cherroy has hinted that this act may be "not" legal, continuing the discussion may cause the thread to be closed and banned by the moderators

To achieve win-win situation, you are saying to nego with seller, overall to compensate owner with extra $$$ ?
Please clarify if I'm wrong..

Anybody here to top up SPA price for property investment ?

i got a feeling that this thread is one step nearer to kena boon-asai..
boon's gonna drop that c-bomb on you.

clarifying with you here will disclose the grey areas of dealings..

This post has been edited by lwb: Jul 14 2009, 03:57 PM

Sorry, I'm not sure whether this is not legal. That wise would like to understand and clarify this strategy over here
and hope expert here to advice.

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Added on July 14, 2009, 4:00 pmHi,

Sorry, I'm totally new to this forum.

Appreciate we can have side discussion. Please drop me your email or MSN, I'm interested to chat with you further
on how I can make that special deal. BTW, my email it_like@yahoo.com

Thanks.

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Added on July 14, 2009, 4:02 pmUnderstood it will incur more on legal cost. But my objective is to reduce the cash out to the minimum possible.

This post has been edited by invest2229: Jul 14 2009, 04:02 PM

boon,

fire in the hole? your precision(timewise) c-bomb got me a on a double-take a few times.. salute you, man! *lol*

Buying from Developer lor...

SPA states RMxxx,xxx but after that develper give 10% discount, thus no need to give downpayment lor...

So consider legal????

This post has been edited by eugene jk: Jul 14 2009, 04:13 PM

of course it is legal as developer will issue a Credit Note (CN) to the buyer.

oh.. is this workable ?

Legal cost may not increase at all.

For my case:

Market rate RM120k
RM100k cost
Loan RM100k
SAP stated RM120k

In the event SAP stated RM100k, tax will still base on RM120k market rate.
Just in case the seller decide to pull something dirty, I got a cover letter stating selling price is only RM100k and not RM120k stated in the SAP.
That letter cost me RM250.

What if I buy from owner and not developer ? I can't giving this 'excuse' right ?

definitely it's more workable than scheming the grey areas.. (but your agenda and brutus's agenda are differing.. so how to close the gap?)

This post has been edited by lwb: Jul 14 2009, 04:25 PM

I wouldn't say whether or not it's legal or illegal.
Again, there could be abuse and dispute in this matter if both didn't really reach a fruitful agreement.

Like mentioned before, to jack up the price in the SPA; the seller would need to foot a higher legal cost. Are you willing to pay on his behalf?

2ndly there might be some implication when dispute arises. Since it's stamped and all, the seller actually have the right to request and demand for the amount stated in the SPA where you're not going to win in such dispute cases.

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Added on July 14, 2009, 4:26 pmaw...jason posted before me while I'm typing while on phone.

This post has been edited by b00n: Jul 14 2009, 04:26 PM

if i put myself in the shoes of the seller, i will do it, only if i am desperate to dispose the property.
like what is mentioned earlier, no advantage to the seller to mark up the price in the snp

Sorry to ks you. (kill steal)

The letter is the prove you might be doing thing dirty/illegally.

Please don't divert it too far, otherwise mod has no choice to close it. Discussion and exploring and knowing what is the issue, still ok, further into some grey area especially can be illegal one definitely no no.

This post has been edited by cherroy: Jul 14 2009, 04:32 PM

But this is protect buyer if playing dirty.

Whether the letter hold ground when there is dispute in court case still don't know/sure.

As the letter can be seemed non-legitimate as well.

The letter if produced in court might worked against buyer as cheating the bank to get a higher loan MOF.
Used the word "might" as we do not know what's the verdict yet.

All being said, it's just how willing are you to take up the risk and cost that is highlighted.

Of course, there is still another way to get a full loan.

Purchase the property with cash and re-furnish the place.
Get an evaluation with a higher price and re-finance it.
Ongkl have done it if you visited his blog, he got the cash by working with other investors.

Do note also, re-financing a property will prevent you getting the tax advantage of counting interest payment as an expense. Also stated in his blog.

Boon, good sharing. Thanks !

My friend just sharing with me, if to extra more cash, another legal way is to refinance after SPA. But
this will incur extra cost (but very subjective, some bank offer zero entry cost). This is legal and can get
extra cash. Any comment on this idea ?

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Added on July 14, 2009, 5:09 pmIf the purchase property below market value, then can consider to refinance again. Not sure anyone doing this ?

This post has been edited by invest2229: Jul 14 2009, 05:09 PM

His property is not purchase below market price but at market price.
He put a lot of money into renovating / furnishing to push the value up.
Hence getting a higher loan.

Zero cost loan maybe the answer but I have not done that before.

This post has been edited by jasonhanjk: Jul 14 2009, 05:45 PM

chief, the above seems bizarre. Whats the point of pushing the value up if he has to put plenty of his own cash as well?


Btw TS, can tell you right away that what you intend to do here is defo ILLEGAL. Should you are caught, implications could be quite severe.

well pai..

this purported deal is 12% off market rate.. (and you still can't believe that a property that sells below market rate?... thus i said "it's a pot of gold" no less.. it may not be 30% below market rate.. but it's still a steal).

.. sometimes.. shit happens and gold's dropped


renovation don't necessarily push up the price of a property.. some can run counter-intuitive to the appreciation of the property concern (furnishing is less likely to affect the price.. the weightage is just too minor)

This post has been edited by lwb: Jul 14 2009, 11:26 PM

Return of Investment of Cash on Cash Return exceeds 20%.
His rental per month increase to RM1300 fully furnish from the normal RM600 non furnish.

I bought the same apartment as his, literally his my neighbor.

The link to his blog.
http://reijb.com/increase-return-investment-property/

mate, its not that I dont believe that a prop can be sold at 30% below market rate, but 30% below developer's price is something that I've yet to see for a good property. That was your earlier claim, right?

in fact 30% below market rate is not uncommon, in fact went to an auction this year for something that is almost 40% below market rate, didnt get it though...

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Added on July 14, 2009, 11:50 pmhm, COCR exceeds 20% is not too bad, but how much was his total acquisition cost + reno + furnishing?

This post has been edited by Pai: Jul 14 2009, 11:50 PM

RM125k cost for the apartment.
Furnishing cost, legal and brokerage fees to RM14,000 and RM5700 respectively.

I did check with my banker about top-up SPA price, and they said nothing
wrong and she told me most people are doing this.

- Bank will most welcome if you take higher loan from them.
- Lawyer will most welcome because they can charge you much base on the price
- Government will earn more on the Stamp duty.

So, seem everyone also happy with this, then why does this illegal ?
Just try to understand more..

On the side note.

Singaporean buyers mark up the selling price so that they can withdraw more money from their CPF. While giving a portion to the agent.

This infuriate the Pay And Pay government.

seems that you're quite "lurus" in this manner..

firstly.. the so called "banker" you're referring to.. are frontliner/customer-facing/sales people. these people know little and have no say towards the eventualities of your loan applications..

secondly.. you're still looking from a buyer's point of view. the successful collusion of such deal requires the seller's buy in, and that's the funky part of the deal.


... oh yes.. 30% below developer's price and purchased from the developer itself. affirmative.

This post has been edited by lwb: Jul 16 2009, 12:35 PM

I suggest you check on what are the implications that might arrise if the bank discovered that you lied n provide false information during your loan application.

another "cheap" advice to you, ts..

if you really need that extra boost(aka top up) just to make money out of this property.. perhaps you may want to re-look the numbers again.

don't get me wrong.. i believe in efficient use of capital.. but when it comes to measures such as this, something tells me.. the numbers are really 'ketat'..

btw, have you heard of something called 'bridging loan'?

Just people doing it, doesn't mean it is legal. People speeding in highway beyond 110km/h is like a norm, a lot of people doing and get away with it, right? But it is not right in the first place, get it?

Whenever you signed the dotted line on legal documentation, it just means that whatever stated information in the contract is correct and exactly what is happening in real deal. So if the actual deal or situation is different in the contract, it is deemed cheating already.

Here is another legal method, seller finance.

Normally you as a buyer, would need to fork out 10% and the bank pay the other 90%; to the seller.

What you need to do is ask the seller to pay for that 10% first and pay him back using installment. The SAP price still remain the same but you manage to borrow 100%.

jason, how does this benefits the seller?

Take a loan from the seller, pay him back in 5 years time with 5% interest or even higher.
It's definitely better for the seller to put the money back in the bank for 2.5% FD and he got his property sold.

This post has been edited by jasonhanjk: Jul 17 2009, 08:28 PM

wonder if any seller in MY would take this option.......they must be dem desperate. Need to more for legal fees somemore...

Pai, dat fella read too much richdadpoordad d laa...in la la land..

But at least is another option ... but I will not do it this way..

The author this time is not Robert Kiyosaki, it's Dr. Dolf De Roos from Australia.

Robert will emphasize a lot on coming up with that down payment.
He believe if one cannot fork out that money, there is something wrong with his / her financials.

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Added on July 19, 2009, 10:00 amYou mean the legal fees for the seller?
Which are?

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Added on July 19, 2009, 10:02 amYou may need to ask the lawyer how to draft out this agreement between you and the seller.
Go get good competent advise.

This post has been edited by jasonhanjk: Jul 19 2009, 10:05 AM

I got different opinion. Even I got cash, I will not dump all into one single investment. I will minimise the cash out
for my investment to the minimum, then I will use this cash for other investment. I think this is the best and faster
way we can get more properties with short period.

The fastest buying record I know is 20 unit in 18 months.
and
The youngest investor to buy a house is age 17.

Just remember to have some reserve in case it went wrong.