The Ultimate Guide On How To Sell A House In Malaysia

Are you trying to figure out how to sell a house in Malaysia? I’ll show you how. This guide covers everything, from determining the proper price to smoothly handing the keys to the new owner. Let’s make selling your home a breeze!

For Malay readers, check out Panduan Dan Cara Jual Rumah Di Malaysia.

Step 1

Determine The Right Price For Your House

Before you sell your home, figure out the right price. At this point, keeping your feelings and emotional attachment to the house in check is essential.

Getting too emotional might make you set the price too high, and nobody buys it. Or you might put it too low and end up losing money.

How do you do that? Well, first things first…

1) Check the market value of your property

When you set the house price according to the market, you’re helping potential buyers secure sufficient loans to purchase a home. Most loan packages only provide a 90% margin.

For example, if the house is priced at RM100,000, the buyer can get a loan of RM90,000, and the remaining RM10,000 is paid in cash as a house deposit.

Imagine not checking the market price and setting it at RM150,000. In this case, the buyer must pay you RM60,000 in cash (House price RM150,000 – loan RM90,000).

And that’s not even considering the extra costs for lawyers and stamp duty. Likely, buyers won’t make the purchase. Even if they have the cash, they’ll look for a better deal in the market. After all, who wants to buy a house at an unreasonable price, right?

2) How to check the market value

How do you check the market price?

1. Engage a professional valuer. The valuation is accurate, and you’ll receive a valid appraisal report. However, keep in mind that you have to pay for their services.
2. Talk to a loan officer. Bank officers have good relationships with valuers. However, their prices are just estimates, and getting a response from them as a seller might be difficult. The primary clients of bank officers are agents and home buyers, not homeowners.
3. Consult a real estate agent. Agents or property negotiators can give you advice based on past property transactions or comparisons with the current market.

I can also assist you with a free check. Refer to the following link: Check Home Market Price.

To check selling prices/market prices, you need to provide the following information:

• Type of house
• Address
• Lot size and house dimensions
• Lot position (intermediate, corner, or end lot)
• Number of rooms
• Details of renovations, if any

If you have made changes to the house, especially structural changes, you must obtain approval from the authorities. Otherwise, the renovation costs won’t be considered.

Alright. Now that you know how to check market prices, I want to tell you the most essential thing in this article. When selling a house, you must…

3) Research competitor prices and market demands

Almost all properties are sold at equal or below market value in today’s market. But why aren’t most of them selling? Is it due to a lack of marketing? No. The answer is…

…market prices do not determine whether a house can sell quickly. Instead, it would be best if you considered your competitors’ prices.

For example, if the market price for your house is RM500,000 and a competitor is selling at RM400,000, it’s evident that your home will be challenging to sell.

Potential buyers will purchase the cheaper one first. This is one of the culprits for the oversupply of unsold property in the current market.

Knowing this, we can conclude that the formula for setting the home price is as follows:

Selling price = market price or competitor's price, whichever is lower.

If you follow this formula, I guarantee your house can be sold in a matter of time.

So now, how do you check competitor prices?

Check advertising platforms like Mudah and research nearby houses’ highest and lowest prices. Make sure the house features are similar.

In addition, you also can ask nearby real estate agents about current transactions to gauge demand.

Then ask yourself, is your price competitive? Houses priced lower than yours will undoubtedly sell first.

Okay, now you understand how to set the price. Can you sell now? Not yet. You should…

4) Consider factors that can affect the price

Several factors can affect the selling price. Avoid setting the price too high if:

1. The house is in a problematic area. For example, a place near a sewage plant, power station, garbage dump, landslide/flood area, or quarry site.
2. The house needs repair. Selling a home with significant damage, such as cracks or leaks, will be difficult.
3. The house is on the top floor of an apartment. There is little demand for this unit type, especially apartments without elevators.

5) Consider a margin for negotiation.

You should also set the price slightly higher than you want to sell to ensure you have room for negotiation. Remember, buyers will still negotiate even if the house price is already low.

Step 2

Calculate the Costs of Selling a House

When selling a house, you have to bear some selling costs. You need to know the expenses involved to calculate how much profit you’ll get from selling your home. The first cost is…

1) Legal costs

You can choose to hire a lawyer or not be represented as a seller. Hiring a lawyer yourself is better because they will look after your interests. But the cost is relatively high. You can use a lawyer fee calculator to make an estimate.

On the other hand, if you choose not to be represented, you will save on lawyer fees. But you must still pay the buyer’s lawyer to handle the ownership transfer process. This cost is around RM3000.

Usually, you need to pay legal fees after you and the buyer signed the sale and purchase agreement. Don’t worry about the payment. You can deduct it from the deposit.

2) Lock-in period penalty

Next is the lock-in period penalty. The lock-in period penalty is a fee that the bank charges if you sell your house within a specific period set by the bank after you obtain the loan. This period is usually three to five years.

How much is the penalty? It’s around 2% to 5% of the principal debt. For example, if your original debt is RM500,000 and the penalty rate is 3%, you’ll need to pay a penalty of RM15,000.

Check your loan offer letter or contact the bank to learn more about this penalty. It might exist, or it might not.

3) Real estate agency fee

If you use a real estate agent’s services, the real estate agency fee is 3.18% of the selling price, including service tax. So, if you sell a house for RM100,000, the agency fee is RM3,180.

Like legal costs, you only pay the agency fee after signing the sale and purchase agreement. The amount also comes from the deposit the buyer pays. So you don’t have to take money out of your pocket upfront.

4) Real Property Gains Tax (RPGT)

When you sell a house, the government will impose a tax on the profit you make. We call this the Real Property Gains Tax (RPGT).

The tax rate imposed by the government depends on how long you have owned the property. In 2023, the property tax rates for individuals and permanent residents are as follows:

• Sale in the first to third year: 30%
• Sale in the fourth year: 20%
• Sale in the fifth year: 15%
• Sale in the sixth year and after that: none.

For example, if you buy a house in December 2023 for RM150,000 and then sell it for RM250,000 in June 2024, the RPGT rate is 30% because the sale occurs in the first year.

In this case, your profit is RM100,000 (RM250k – RM150k), and the tax payable is around RM30,000 (30% x RM100,000).

Note: This is a rough estimate. There is a more accurate method to calculate property tax where you can deduct certain expenses/exceptions as specified in the act. Please consult your tax consultant.

RPGT can be high, but you can use some strategies to get exemptions or reduce the amount.

Make a once-in-a-lifetime exemption.

The government allows you to make a total RPGT exemption for residential properties. However, you can only use this exemption once. After signing the sale and purchase agreement, inform your lawyer to apply for the exemption.

If you have multiple properties, use this exemption for the property where you’ll save the most tax.

Claim deductions for property purchase and sale expenses.

If you cannot use the once-in-a-lifetime exemption, an alternative way is to reduce the amount of tax.

You can reduce tax by claiming deductions for certain government-approved expenses. These costs include legal fees, agency fees, management fees, repair costs, renovations, and others.

You must include supporting documents and inform your lawyer to make deductions in the tax calculation.

Step 3

How to Calculate the Profit from Selling a House

When selling a house, estimate how much profit / net sales proceeds you will receive to ensure you meet your plans after selling.

Here’s how to calculate that:

Net sales proceeds = Selling price – Costs of selling the house – Remaining loan

In the previous section, I’ve explained how to determine the selling price and the costs of selling the house. Check your loan statement or contact your bank to find out the remaining loan.

For example, let’s say the selling price is RM500,000. The cost of selling is RM50,000, and the remaining loan is RM250,000. In this situation, the net sales proceeds you will receive is RM200,000 (RM500K – RM50K – RM250K).

In addition to estimating your profit, you also need to…

Step 4

Plan the Sales Timeline

Why do we need to know the sales timeline? Some of us may need to know the timeline to plan for the following:

• When to vacate and move to a new home
• When to expect the money from selling the house
• The right time to end the tenancy agreement if the house is tenanted.

The sales timeline for a house transaction consists of the time taken for:

• Finding a purchaser. We can’t predict this precisely. It could be quick or it could take a while. Let’s say around 3 months.
• Loan approval and legal processes. Around a month from the date of finding a buyer.
• Transfer of ownership. For freehold properties with individual titles, it is usually around three months. For leasehold properties with restrictions, it takes around six months.

So, the estimated sales timeline can be summarized as follows.

Freehold property without restrictions:

• Three months to find a buyer.
• One month for loan approval and legal processes.
• Three months for property transfer.

The total timeline is approximately seven months.

Leasehold property:

• Three months to find a buyer.
• One month to complete loan approval and legal processes.
• Six months for property transfer.

The total timeline is around ten months.

However, many situations can delay the property transfer process further. Consult your solicitor to get a better picture.

Step 5

Prepare Documents

Here are the documents you need to prepare to sell a house:

1. A copy of the identification card
2. A copy of the sales and purchase agreement
3. A copy of the title
4. Latest loan statement
5. Quit rent and assessment bills
6. Maintenance fee statement
7. Utility bills

You must submit documents 1 – 4 to the lawyer before they draft the sales and purchase agreement.

Step 6

Prepare The House for Sale

In this section, I want to explain how to prepare your house for sale.

1) Improve the first impression

Want to know how to sell a house quickly? Improve the first impression of your home. Make sure the house is tidy and in good condition.

I suggest you do the following:

• Tidy up the house so it looks spacious
• Remove or store unnecessary items
• Repair damages
• Paint the house
• Cut the grass in the yard

All of this may seem trivial. But first impression determines whether the house can be sold or not.

This is because, when buyers look at the house, they will project the home’s value in its current state.

You can’t expect buyers to imagine how good the house would be if they repair themselves. They will look for another home or ask for a much lower price.

2) Take beautiful photos

When advertising your property, quality photos can make a significant difference. They not only attract potential buyers but can also speed up the sale process.

You don’t need to be an expert photographer or have an expensive camera to take good pictures of your house. Here are some tips:

• Clean and declutter your house to make it look spacious.
• Turn on all lights and open curtains for better lighting, making your photos sharper and more appealing.
• Take pictures from the corners of the house to give a sense of space.
• Avoid taking photos against the light source, such as the window, to prevent your pictures from turning out dark.

These simple steps can help you present your house in the best possible way through photos

Step 7

Advertise Your House

In this part, I’ll tell you how to make an ad to sell your house fast.

1) Use well-known online platforms

You can use these places to put your ad:

• Mudah.my
• Facebook Marketplace
• Carousell

When you put up your house ad, use the best pictures of your house. Also, make sure all the details about your house are complete. You must at least include:

• The location of your house
• How big it is
• How many rooms and bathrooms it has
• If it’s freehold, leasehold, etc.
• If it’s a Bumi lot or non-Bumi lot
• Nearby facilities
• Your contact.

2) Keep your ad up-to-date

You need to do more than just put up your property ad and forget about it. You must review it consistently because your ad might move to page 5 after a week, and no one will see it.

If your ad has moved down, update it to ensure it’s back at the top.

3) Use a ‘For Sale’ Sign

You can also put a ‘House For Sale’ sign in front of your house. From my experience, potential buyers who use this method are more serious because they already know the area. Making this sign is also cheap.

However, consider privacy issues as well. If the house is empty, put up a sign.

But if people live in the house, it might not be needed because it could be risky. There have been times when robbers pretended to be buyers.

Step 8

Guide Prospective Buyers During Visits

Handling potential buyers can be challenging if not done right. Here are some guidelines you can follow.

1) Do a preliminary screening

When a buyer reaches out to you, there are several questions you can ask to gauge their motivation.

• Are they familiar with the area where the house is located? Usually, serious buyers know where they want their new home to be.
• Where is the location of their workplace? If it’s too far, they might not be too keen.
• Who will be visiting the house? Ensure they bring along someone who can make decisions, typically their spouse or parents.
• Have they checked their loan eligibility? Wise buyers usually do this beforehand. However, tread lightly, as financial questions can be sensitive.

Once you have a basic understanding of the buyer’s requirements, schedule an appointment with them. Ensure that the appointment is scheduled when the buyer is not rushed.

For instance, avoid lunch hours on weekdays or times close to dusk. These times are not ideal as it could be hard for buyers to make decisions.

2) Create a welcoming atmosphere

When potential buyers visit your house, switch on the air conditioner, lights, and fans to portray your home in the best light.

Also, ensure there is no trash or unpleasant odors. A fresh and clean-smelling home is much more inviting.

In addition to that, try to understand their needs. This could include their budget, their timeline for moving in, and even their furniture preferences. Here are some common buyer requirements:

• Price Negotiations: The listed price might be slightly above their budget. In this case, they might want to negotiate the price.
• Deposit Discussions: They might want to negotiate the amount of deposit they need to pay.
• Moving Schedule: They might want to move into the house earlier than the standard timeline.
• Furniture Requests: They might want certain pieces of furniture included in the purchase.

Being flexible with these requirements can increase the chances of the buyer going ahead with the purchase. Each buyer is different, and understanding their unique needs can help you sell your home more effectively.

Step 9

Sign the Letter of Offer / Letter of Intent

When a potential buyer is interested in your house, they will sign a letter of offer and then pay an earnest deposit, often 3% of the total price.

The earnest deposit is best paid to a lawyer or real estate agent. This makes the buyer feel more secure.

It’s essential to understand the terms in the letter of offer carefully:

• How will the buyer pay for the house? Usually, the buyer pays this way: a 3% earnest deposit to the lawyer. 7% of the total price when the sales agreement is signed. Balance 90% within 90 days from the date of the sales agreement or when the authorities approve the transfer.
• When will the buyer sign the sales agreement? Usually within 14 to 21 business days. This time frame should be clearly stated to avoid delays in the sale.
• What happens to the deposit if the sale doesn’t go through? To protect your interest, include a term that says the deposit won’t be returned if the buyer cancels the purchase.

Step 10

Sign the Purchase Agreement and Wait for the Transfer of Ownership to Complete

1) The buyer applies for a loan and signs the purchase agreement

Next, the buyer will send a loan application to the bank. This process usually takes 1-2 weeks to get a response. Once the loan is approved, you and the buyer will sign the purchase agreement.

Depending on your agreement with the buyer, the buyer needs to pay the remaining 7% deposit at this time.

The lawyer will then initiate the process for the transfer of ownership.

2) Assist the bank valuer

The bank will appoint a valuer to issue a home valuation report during the transfer period and visit your house for inspection.

But don’t worry. Your home’s value rarely changes after the buyer’s loan is approved.

3) Wait until the transfer of ownership is complete.

The transfer period depends on the complexity of the case and the type of home ownership. As I mentioned at the beginning of the article, the transfer of property that has an individual or strata title with ownership can be:

• Freehold without restrictions: can be completed within 90 working days from the sale and purchase agreement date.
• Leasehold: This is usually completed around 6 months from the date of the purchase agreement.

The transfer process can be slower if:

• The house is of the master title type, where the developer is bankrupt.
• The property title still needs to be perfected.
• The property has other restrictions, such as low-cost housing or Malay reserve.
• The buyer or owner uses an LPPSA loan.

4) Handover of keys

The lawyer will contact you at the end of the sales process to vacate the house. They will also get the latest utility bills to calculate the net sales proceeds. Check the calculation and ensure it is correct.

Remember to close all utility accounts. Then hand over the keys to the buyer. Congratulations on successfully selling your house!

Common Property Sale Issues

1) Loan Mark-up

Some purchasers might use the ‘mark-up’ strategy to secure a larger loan. They use this method to cover the costs of deposits and legal fees or to obtain additional cash.

This practice can result in the seller facing two additional costs: an increased legal fee and a higher Real Property Gain Tax (RPGT), both calculated based on the inflated price.

To avoid these issues, the seller can require the purchaser to bear all additional costs resulting from the mark-up. Alternatively, the seller can opt to utilize their one-time RPGT exemption.

2) Unperfected Ownership

If the developer has not transferred the property title to the seller (a process known as ‘perfection’), the seller must first obtain ownership before transferring it to the buyer.

This can adversely extend the sale duration. The seller may also incur costs for the Memorandum of Transfer and the developer’s admin fee.

Therefore, if you have a master-title property, it’s advisable to check the status of your property title with the developer and plan your sales accordingly.

3) Deposit Deductions

After signing the sales and purchase agreement, you might think you’ll get the full 10% deposit. But that’s not the case.

First, the lawyer will take out their fees and costs. Then, they’ll keep 3% of the sale price for the Real Property Gain Tax (RPGT) payment to the Inland Revenue Board of Malaysia (IRB).

You’ll get the difference back if your RPGT is less than 3%. If it’s more, you’ll have to pay the extra. So, don’t expect to receive the full deposit amount.

4) Title Restrictions

The seller cannot sell the house if there is a caveat. The seller needs to resolve these problems first.

5) Divorce

If the seller is a divorced couple, selling the property can be challenging. It’s usually best to let a court decide how to handle the sale.

But if they choose to sell without going to court, both parties must agree to sell, decide on a price, respect each other’s rights, and commit to finishing the sale.

6) Transfer Restrictions

If the property you own is a Bumiputera lot or Malay reserve, it is not permissible to sell it to non-Bumiputeras.

Similarly, if you are a Bumiputera and the property you wish to sell is a leasehold property with restrictions, it should not be sold to non-Bumiputeras as the state authority will likely reject the transfer.

This is due to certain policies that preserve Bumiputera ownership in specific areas. If the state authority does reject the transfer, an appeal can be made, but the chances of success are typically low.

Should You Use Property Agent?

A property agent can assist you in navigating the sales process and provide valuable insights to prevent potential losses. They’ll also actively promote your property to expedite the sale.

It’s crucial, however, to only engage with a registered property agent.

This ensures that your transactions are safe, as they fall under the jurisdiction of the Board of Valuers, Appraisers, Estate Agents, and Property Managers.

If you’re prepared to sell your house and require a property agent, I’m here to help. Click on this link: Property Agent Kuala Lumpur and Selangor.

Final Words

I hope this article was helpful, and wish you good luck selling! Before I end this article, here are a few others in which you might be interested:

• Can You Sell a House within 5 Years In Malaysia? Let’s Explore.
• Top 10 Strategies to Sell Your House Fast in Malaysia
• Property Agent Fee for Selling or Renting a House in Malaysia