Saturday, 15 July 2017

HDB Journey #1: Buying a Resale without an Agent

First thing we did after K's PR application was successfully completed (took about 2 months) was to start looking for a resale.

Our reasons for buying a resale was simply that 
1. we couldn't (didn't want to) wait for BTO, which will take approximately 3 years to be ready even if we get our balloting number on the first try
2. BTOs are damn small and we wanted something spacious.

We initially engaged an agent, but after the first day of 'house shopping' with her, I decided to venture out on my own.

Why we didn't go with the agent:
Our case was quite a unique one, K just got his PR status, his CPF wasn't ready, and the agent was quite clueless about whether our case could go through, and if so, what are the limitations. K is also a Korean and the agent wasn't even sure if we could purchase our HDB under the 'others' category when he's the PR and I'm the SC (we could).

I had to be the one to research online about the HDB rules and regulations, and K had to call up HDB to ask on his own.

Also, the agent brought us to only 2 houses in one day, and the time (I feel) was not fruitfully utilised. Moreover, the 2 houses (Executive Apartments) she brought us to were owned by 'other' races, but they were asking for the market rate. From our understanding, usually houses owned by non-Chinese have a lower selling price because the buyer pool is smaller. But she kept trying to convince us that it was a good buy at $830k.

Step 1: Obtaining your HLE or IPA from the bank:
We applied for the HLE (which takes about 2 weeks to process) and realised that it was a no-go for us. Since K just got his PR, his CPF does not have any money and the HLE was still calculated based only on my income. Although HLE loans you up to 90% of the retail price, it is still dependent on your income, so we decided not to wait for a new HLE and went for a In-Principal Approval at the bank instead. They loan up to 80% of the price.

Step 2: looking for houses

After looking through propertyguru and finding that there are other suitable (big) 5 rooms in the same area, I decided to schedule my own viewing.

We had a specific area that we wanted, and specific conditions that we would like.

Some of our requirements were:
1. it has to be big
2. it cannot have weird layouts (you'll be surprised how many HDBs are not squarish in layout)
3. it has to be walking distance to the MRT and interchange
4. the price should preferably be below $600k

What I did was to comb through the area that we wanted block by block. So I'll click on the individual blocks to see all the suitable listings, then contact the agents myself.

The appointments were scheduled at most half an hour apart (since the units were so nearby) and we could see like at least 7 houses in a day.

It's a very time consuming process. After a while, you forgot which agent is for which house so I had to do up a timetable with the following information:

1. agent's contact number
2. unit address
3. asking price
4. price/sqf
5. lease of years remaining
6. last transacted price

useful website included property guru and

On that HDB link, you can find a lot of useful information such as the make up of the block, the ethnic ratio, the last transacted price, number of years remaining and so on.

In total, we viewed about 15 houses.

Step 3: Our decision:
Even I was surprised by how quick and decisive we were.

Fate is funny sometimes, our final choice was the first house we viewed on our own. And somehow that became the standard. All the subsequent houses we viewed were either too small, too old, too stuffy, not bright enough, not windy enough, etc.

Our first viewing on our own was on 2 April, we made up our mind and went back to place the deposit on 8 April, in just 6 days.

The asking price was $600k, which was very high compared to the last transacted price of $538k. We were hoping to get it at maximum $550k but ended up we agreed on $580k.

We didn't want to risk losing the house over $30k, and since it was the only house we liked after viewing so many we decided to just take a leap of faith.

During the signing, you have to pay the option fee of $1000. The agent for the seller will issue the Option to Purchase and you have 21 days to exercise the option.

Step 4: Buyer to submit valuation request the next working day
This step is VERY IMPORTANT. Upon request, the valuer will contact the seller directly and arrange for a valuation within 4 working days. The report should be ready in about a week.

For our case, our valuation was $550k, which meant that the extra $30k is the COV which we have to pay in cash.

Step 5: Letter of Offer from the bank + Resale Checklist
Complete the resale checklist online.

Obtain the letter of offer from the bank. We only went to OCBC to ask but we decided to go with them anyway. We were too busy so we also didn't have time to go compare rates. Their rates sounded reasonable so we just took it up.

Our final loan amount was also lowered because it was based on the valuation report (letter of offer will be based on valuation report or asking price, whichever is lower).

Step 6: Exercising OTP + resale application
We didn't wait the full 21 days before going back. We confirmed on 8 April and went back on 24 April to exercise the OTP. We had to pay another $4000 during the session.

During the session, you can also complete the resale application and set the date for the first appointment, usually 6 weeks later.

Step 7: First appointment
Our first appointment was set on 23 June, since all earlier slots were taken up alr.

It was a super eventful day because our signing was scheduled for 8.45AM, but K was stuck in Taiwan because he didn't manage to get onto the plane.

Luckily the HDB officer was kind enough to let us proceed first with all the documents completion, then held on to the file for K to sign in the afternoon.

After the signing, we went up to the lawyer's office (same building) to hand over the cheques for the remaining 20% and lawyer fees.

Step 8: Second appointment
Our second appointment will be on 4 August, but since the lawyer will be representing us, we were not required to be present.

I will update this space again after the completion. But so far it hasn't been difficult, anything that we were unsure of we could check with the seller's agent, who is very eager to clarify our query too as it means closing the deal for him. So all in all, we saved the 1% agent fee and I'd say that buying a resale on our own without an agent is totally doable.

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