It is currently a buyers’ market and as a seller, the odds of selling your property in your favour are stacked against you. On top of the numerous property viewings and negotiations with possible buyers, you will also have to spend considerable time and effort dealing with and educating yourself on taxes, housing policies, and contract clauses. While these are necessary for you to know in order to safeguard your rights as a seller, as well as for regulating the industry, the myriad details can be overwhelmingly confusing for most people.
Here are a handful of top questions that one should ask to guide you towards a successful sale:
Will the agent’s commission from the sale of my property be lower in direct proportion to the slow property market?
While it is expected that finding the right buyer for one’s property would be tough in this market, the downturn doesn’t necessarily mean that agents will be paid proportionally lower fees. Currently the benchmark fee for agents is set at 2% of the property’s selling price, whether it is an HDB or a private residential. This commission is for the agent’s efforts in working through all the steps when selling a property, with the understanding that these efforts will result in a sale that is mutually beneficial to seller, buyer, and agent. These steps include but are not limited to providing assistance during property search, providing financial advice when necessary, and ensuring that all the legal requirements are accomplished. In fact, during a market downturn, agents representing property sellers would have to exert more effort than usual in order to accomplish a sale, and thus it can be argued that the commission should be higher instead of lowered.
How much levy will I pay when I sell my HDB after it has turned five years?
The resale levy to be paid usually depends on what your first property is and the type of property you will be purchasing after. This is applicable in cases when your first subsidized BTO flat or EC is being sold and you intend to purchase from a developer another subsidized BTO flat or Executive Condo. The levy will also be required for sellers that took a CPF Housing Grant to purchase from the open market a resale flat.
Paying the levy is not required if the next property is a private condominium, a DBSS, a resale HDB flat, or Executive Condo whose land sale was launched prior to 9th December 2013. The levy amount will depend on the size of the first property that was subsidized. Generally speaking, the larger it is, the higher the levy to be paid.
Should I wait for my condo to T.O.P before selling? And when should I sell if I wish to avoid incurring charges?
As a rule of thumb, The Seller’s Stamp Duty (SSD) will be incurred if you dispose of your property before the end of the holding period. The SSD calculation is based on a percentage of the property’s market value or a percentage of the purchase price, whichever is higher. The SSD was initially implemented as a deterrent from open market speculations especially when the property is still not completed. Thus, if you wish to avoid this SSD fee, it is recommended to keep the property for no less than four years from the date of signing the purchase and sale agreement.
I am setting my sights on a condo in my area that is about to TOP next month but the Minimum Occupancy Period (MOP) of my current HDB will only be over after three months. Will I still be able to apply for this condo?
HDBs are built with the intention of being the buyer’s residence and not as an investment, which is why the MOP was imposed. This compulsory regulation imposed on HDB unit owners prevents price inflation of flats in the resale market from flipping properties. MOPs mostly last for five years, starting from the date that the keys to the flat were collected. If you are selling, find out your exact MOP directly from the HDB.
With this in mind, selling of HDB and subsequently buying another one or a private property will not proceed if the MOPs are still to be fulfilled. That said, there is a leeway provided where property owners are allowed to place their unit on the market one or two months before the MOP date. This provision was set with the time needed to sell a property during a slow property resale market in mind.