Buying Guide

1. Considering Factors
2. Selecting an Agent
3. Property Market Information
4. Financing for the intended Property
5. Making an Offer
6. Appointing a Lawyer
7. Option to Purchase
8. Sales and Purchase Agreement
9. Home Inspection
10. Completing the Sale

Considering Factors

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Selecting an Agent

A professional property agent in Singapore will assist you and protect your interest throughout the purchase, secure the offer for you at the best possible price. He/she will also ensure that all documents are in order and you are dealing with the rightful owner of the property.

Most property companies share the same database of property listings in Singapore. Therefore use only ONE agent at a time. If you approach many agents at the same time, very likely that they will show you the same property. Much confusion and embarrassment will arise if you engage many agents. Using ONE agent, you will save valuable time for yourself and the agent. He/she will then understand your needs and requirements better after a few viewings.

It is advisable to engage a single agent to handle your transaction as multiple agents might cause confusion and lack of commitment. When only ONE agent is appointed to handle your property he/she will be more committed to expedite the process. He/she will also ensure you get the right price and all small details are covered prior to purchase. Only if they are incompetence, unresponsive or not showing the correct property you wanted, then start to look for another agent.

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Property Market Information

Find out updates on Property Market, trends on price, rental, vacancy, supply and stock of private residential properties island-wide. You may also visit URA website for property market updates.

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Financing for the intended Property

You may wish to discuss with a banker or mortgage broker before you sign any contracts to determine the maximum loan amount that you may obtain. Real estate agents can also refer you to a bank or mortgage broker if you do not already know one.

• Compare Interest Rates and Special Terms.
• Obtain a pre-approved mortgage.

The approval and mortgage amount you get will depend on your income and capacity to service the monthly repayments, your age, employment history, credit history as well as the valuation of the said property by the bank. Singaporeans can usually borrow up to 60%-80% of the property value for your first property. Foreigners can usually borrow up to 50%-70% of the property value.

**for Singaporean, if you are financing your purchase with your CPF funds, you should take note that there are limits on their use for property purchases. If your CPF has a substantial amount you may not need much cash to pay for the property. Information on the use of CPF funds is available from CPF website.

In addition to the purchase price you will have to make provision for the stamp duty and lawyer’s fees. You can request your lawyer to give you an estimate of such stamp fees, costs and disbursements that will be incurred in the purchase, CPF charge and mortgage.

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Making an Offer

Once you have found a property that you like, discuss with your agent with regards to the asking and market price for the property. Compare that property with those that you have viewed. Ensure that all important points have been discussed and agreed, including any repairs or changes prior to purchase, what stays and what goes, any special requirements from both side and the anticipated schedule.

Before you decide to sign any contracts, you should

• (Ownership) Check that the seller(s) is the owner of the property.
• (Eligibility to Sell) Ensure that the seller(s) is eligible to sell the property. For a private property mortgage to a bank, if the seller is selling the property below his buying price, and is unable to pay the shortfall on his bank loan, the bank may not allow the transaction to go through.
• (Bankruptcy) Ensure that there is no receiving and adjudication / bankruptcy orders made to the seller(s). If seller of the property is a bankrupt, the seller need the written consent of the Official Assignee to sell the property. The Official Assignee may request for all money, including option money to deposit to be paid to them.
• (Financing) Ensure that you have sufficient funds available to complete the purchase. Any deposits paid for reserving the property will be forfeited if you cannot go through with the transaction – unless the cancellation is due to conditions stated in the contract.

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Appointing a Lawyer

In engaging a lawyer you should clarify the scope of services to be provided as well as the fees payable. The lawyer will look into the overall phases of the purchase process that include the following:

• Review the terms and conditions of the contract to ensure that your interest is protected and explain these terms and conditions to you.
• Conduct searches on the title of the property to ensure that you will be given title to the property that is identified in the contract and which you have negotiated to buy.
• Send routine queries to various government departments to ensure that are no adverse regulatory notices or government schemes that will affect the property you wish to purchase.
• Pending completion of your purchase, your lawyer will lodge a caveat against the title to the property – this serves to notify the public (and any third party interested in the property) that you have a valid interest or claim to the title of the property arising from the contract for the sale and purchase.
• If you are using a bank loan to finance this purchase, your lawyer will also liaise with the Bank’s lawyer who is responsible for preparing the mortgage to secure the loan. In some cases, your Bank will also appoint the same lawyer to represent its interest.
• Your lawyer will be responsible for liaising with the Bank and the CPF Board (or their lawyers) to ensure that your Housing Loan and your CPF Funds are in place and ready for drawdown to order to complete the purchase within the agreed completion period.
• Complete the Sale – this is a technical term referring the payment of the contracted sale price (from you as the Buyer) in exchange for the signed conveyance of title called the “Instrument of Transfer” which effectively transfers the ownership of the property from the current owners to yourself (as the new owner).

The legal fees for purchasing a Private Residential Property are usually between $2,000 to $4,000.

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Option to Purchase (OTP)

Upon signing the agreement, 1% of the purchase price is placed as a good faith deposit. The ‘Option to Purchase’ gives you a 14 day exclusivity period to decide on purchasing the intended property.

If you fail to honor the agreement within the stipulated deadline, the Option will expire and the seller is entitled to keep the 1% option money and sell the property to any other buyer.

In the event of unforeseen circumstances and the 14 day period is not sufficient, ask your lawyer to write to the seller’s lawyer to request for an extension. If you keep quiet, the seller might exercise his or her right to forfeit your deposit money.

**Offer to Purchase
If you do not wish to have the grace period given by the option, you can always make a binding offer directly – ‘Offer to Purchase’. If the seller accepts the offer by signing the ‘Offer to Purchase’, you can directly proceed to the Sales and Purchase Agreement. At this point a deposit of 5% or 10% of the purchase price is usually given to the seller.

The ‘Option to Purchase’ agreement is obtained from the seller’s lawyer or estate agent; you should therefore go through it with your lawyer or estate agent before signing. An Option or Agreement/Contract for the purchase would state:

• the title of the property;
• the mode of payment;
• discharge of encumbrances;
• schemes and other matters affecting the property e.g. road widening;
• vacant possession;
• the date of completion;
• delay in completion;
• other special terms.

Whatever form the legal contract takes, these terms must be present in order for the contract (for the sale of property) to be legally enforceable:

• Identification of the property offered for sale
• Price
• Completion Date

The contract must be in writing and signed by the owner(s) or his authorised representative.

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Sales and Purchase Agreement

If you decide to purchase it within the stipulated deadline, you will need to put up another another 4% or 9% of the purchase price (whichever was agreed in the option) known as Option Exercise Fee to accept the OTP which will then form a valid sale contract, known as Sale and Purchase Agreement. The two payments (Option fee and Option exercise fee) then form the down payment, which is 5% or 10% of the agreed sale price. The balance of the payment must be settled on or before legal completion date.

After the ‘Option to Purchase’ or ‘Offer to Purchase’ has been exercised (before legal completion), your lawyer will do the necessary steps to complete the sale. Many purchasers will arrange for their architects, interior designers and/or contractors to come in during the interim to prepare the ground works for the eventual moving-in.

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Home Inspection

The ‘Option to Purchase’ should clearly state a permission to inspect the property before completion of the sale.

You should have a thorough home inspection performed by a qualified and certified home inspector. A home inspection will uncover flaws in the construction and condition of the home (e.g. foundation cracks, termite infestation, etc) that are not obvious to the naked eye.

You should check everything that the seller has agreed to sell with the property – all the fixtures and fittings (e.g. air conditioning, kitchen appliances, etc).

If there are any problems, you can ask the seller to fix them before you sign the Sales and Purchase Agreement.

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Completing the Sale

Once your bank has released the balance sum to the seller, its time for you to collect the keys and move in. However, you may perform a final inspection with the seller or the seller’s agent to ensure the property is what you expected and paid for.

Use the inventory list to check the items in the home, if there is any discrepancies found, you may ask the seller to rectify the problems or compensate you.

(Entire Process Time: Usually between 8 to 12 weeks)

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