Jul 15 2014, 12:35 AM
QUOTE(bearbearwong @ Jul 15 2014, 12:27 AM)
A property consultant who wants to remain anonymous says a package which comes with air-conditioners, electrical products like washing machines, refrigerators and “free” legal fees increases the overall house price.
“This happens in the primary market when a buyer buys from the developer. The selling price is a package comprising a discount, electrical products and legal fees. The buyer thinks the legal fees are being absorbed by the developer. In reality, all these products and fees have already been factored into the price of the house,” he says.
Based on two different examples, a condominium and a double-storey landed unit, the source says a closer examination of both reveals that the extras tend to push up prices (see chart).
“Buyers are happy when they are given a discount. But this discount is actually factored into the price of the house. In the sale and purchase agreement, the price of the house is stated as RM800,000, the gross price. He gets a loan based on this gross selling price. He will be paying less if the loan were to be based on the net selling price,” he says.
Consider scenario 1 for a double-storey house. The house is sold for RM800,000. If the free stuff and discount were to be removed, the net price is actually RM756,500, a difference of RM43,500.
The monthly mortgage payment under a BLR of 6.6%-2.4% is RM3,369. Under the new rates, it is RM3,762, a difference of RM393.
If one were to take a loan based on net selling price under the new rates, he will be paying RM206 less, that is RM3,556.
Under scenario 2, the net selling price of the house is RM797,100, a reduction of RM43,900 from its launching price of RM841,000. The monthly mortgage payment is a difference of RM207. Over a 35-year loan tenure, these differences in BLR and gross/net selling price calculations will be considerable.
The basis of selling a house based on gross price, instead of the net price, results in the next launch being priced higher. It has a snow-balling effect for subsequent launches.
He forgot DIBS interest.“This happens in the primary market when a buyer buys from the developer. The selling price is a package comprising a discount, electrical products and legal fees. The buyer thinks the legal fees are being absorbed by the developer. In reality, all these products and fees have already been factored into the price of the house,” he says.
Based on two different examples, a condominium and a double-storey landed unit, the source says a closer examination of both reveals that the extras tend to push up prices (see chart).
“Buyers are happy when they are given a discount. But this discount is actually factored into the price of the house. In the sale and purchase agreement, the price of the house is stated as RM800,000, the gross price. He gets a loan based on this gross selling price. He will be paying less if the loan were to be based on the net selling price,” he says.
Consider scenario 1 for a double-storey house. The house is sold for RM800,000. If the free stuff and discount were to be removed, the net price is actually RM756,500, a difference of RM43,500.
The monthly mortgage payment under a BLR of 6.6%-2.4% is RM3,369. Under the new rates, it is RM3,762, a difference of RM393.
If one were to take a loan based on net selling price under the new rates, he will be paying RM206 less, that is RM3,556.
Under scenario 2, the net selling price of the house is RM797,100, a reduction of RM43,900 from its launching price of RM841,000. The monthly mortgage payment is a difference of RM207. Over a 35-year loan tenure, these differences in BLR and gross/net selling price calculations will be considerable.
The basis of selling a house based on gross price, instead of the net price, results in the next launch being priced higher. It has a snow-balling effect for subsequent launches.
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