As real estate salespersons, we often meet many DIY buyers who are attempting to buy a HDB resale flat in Singapore without an agent.
There are some DIY buyers who were very keen in the HDB units we were marketing but missed the opportunity to secure the unit because they were unprepared in terms of the paperwork.
According to HDB, there have been an increasing number of home owners engaging in Do-it-yourself (DIY) resale transactions without engaging a property agent. (https://www.straitstimes.com/singapore/faster-resale-transactions-on-revamped-hdb-portal)
From 2010 to 2018, the percentage of DIY resale transactions grew from 11 to 28 per cent!
If you decide to be a Singapore HDB DIY buyer, here are some tips that can help you in your buying process in the Singapore HDB market!
However, be prepared to put in a lot of time and energy into this whole process as there are many things to be done and done right.
Step 1: Register Your Intent to Buy
Your journey to buying an HDB resale flat starts with registering an Intent to Buy on the HDB Resale Portal.
Do note that if you are purchasing the flat together with other applicants like your family or partner, only one of you need to register. Also, no one else can register on your behalf, so you will need to do-it-yourself!
The applicant(s) need to be eligible to purchase resale flat under any one of these HDB eligibility schemes:
- Public Scheme.
- Fiancé/Fiancée Scheme.
- Single Singaporean Citizen Scheme.
- Joint Singles Scheme.
- Non-citizen Spouse Scheme.
- Orphans Scheme.
- Conversion Scheme.
- Comply with the Ethnic Integration Policy (EIP) at the time of submitting Resale Application
Thus, the quickest way to check on this is to register for the Intent to Buy.
Once the registration is completed, you can see if you are eligible to buy an HDB resale flat, which grants you can get, or whether you can apply for a HDB concessionary housing loan.
Do keep in mind that your registered Intent to Buy is valid for only 12 months. Once it expires, you will need to re-apply again.
Step 2: Plan Your Budget
The next step will be to find out what kind of HDB flat you can really afford and what is your budget.
The key thing to know what is the minimum average monthly household income needed when considering what type of HDB flat to buy.
Assuming if you would be taking an HDB housing loan and would put down a 10% downpayment…
You will need to calculate how much Enhanced CPF Housing Grant you would get with respect to your household’s monthly income bracket.
To find out what is the maximum monthly instalments you are allowed to pay, do apply the Mortgage Servicing Ratio of 30%.
To find out more about what is the Mortgage Servicing Ratio (MSR), you can watch the video here:
On the other hand, if you are taking a bank loan, you will need to fork out 5% cash, 20% cash or CPF & 75% loan.
Any shortfall in loan will have to be topped up by cash or CPF in line with the usage rules.
**Note: this is only a very summarised guide, for a more in-depth calculation, you will have to base it on your own scenario.
Things you need to consider:
- How much Central Provident Fund (CPF) funds and cash do you have?
- Which housing loan to take? Bank loan or HDB Loan?
- If you need a home loan from HDB, you will need an HDB Loan Eligibility (HLE) Letter.
- Do note that you are required to have a valid HLE letter before the sellers can grant you the Option to Purchase (OTP). Once approved, HDB will grant the HLE letter within 14 days.
- If you are looking at a bank loan, be sure to apply for an In-Principle Approval (IPA) from the banks first. The amount of time needed varies from bank to bank.
- Check how much grants you are eligible for.
- Payments involved such as:
- Application Fee
- Option Fee
- Downpayment
- CPF Valuation Limit and Withdrawal Limit for Balance of Purchase price
- Buyer’s Stamp Duty (BSD)
- Legal Fees
- Home Protection Scheme (HPS)
- Fire Insurance
- Cash Over Valuation (COV)
Step 3: Look for the HDB Flat of Your Dreams
Once you have ascertained your budget, you can start looking for the flat of your dreams.
You can find property listings from the numerous online property portals like:
PropertyGuru
99.co
Carousell
ST Property
SRX Property
iProperty
Edgeprop.sg
You can choose from any flat on the island that is within your budget!
Here are some things you need to consider:
– If you want to, you could get a house near your parents which also entitles you to the HDB Proximity Housing Grant (PHG) (up to $30,000).
– You will also need to check if there any Ethnic Integration Policy (EIP) and Singapore Permanent Resident (SPR) Quota restrictions on the flat in the block you are considering.
– Keep in mind that CPF usage and HDB loans will be pro-rated based on whether the property’s remaining lease can cover the youngest buyer till age 95.
– The amount of CPF that can be used depends on whether the remaining lease can cover the youngest buyer until age 95:
– Also, NO CPF can be used if the property’s remaining lease is less than 20 years. This will apply to any HDB flat applications and CPF withdrawal applications received on or after May 10, 2019.
Now for this step, most of your time will be spent doing property viewings.
When viewing the resale flat that you are interested in, you will need to look out for things like:
– Location and direction the unit faces.
– Condition of the flat (extent of renovations needed).
– Layout of the flat
– Issues which you may be concerned with, e.g. neighbours, etc.
Step 4: Negotiate With The Seller and Sign the Option to Purchase (OTP)
Usually the price you see on Singapore property listings are negotiable unless otherwise stated.
Once you and the seller agree on the price, you can make an offer to the seller who will offer you an Option to Purchase (OTP).
Example of an OTP.
The OTP is a legally binding contract between you and the seller which guarantees your right to purchase the HDB flat at the agreed-upon price. For the next 21 days, the seller cannot sell the unit to anyone else.
You can then proceed to sign the Option to Purchase (OTP) which should be printed out.
You will also need to pay the option fee to ‘book’ the flat. The option fee can be up to a maximum of $1,000.
Do note that once you have paid the option fee, you will need to exercise the OTP within 21 days or the option fee will be forfeited if the OTP is not exercised.
If you do not exercise the OTP, the seller is free to sell the flat to anyone else after 21 days.
Step 5: Submit a Request For Value
Once you have signed the OTP, the next step would be to submit a request for value of the flat you are buying online on the HDB Resale Portal.
You need to do this one working day after the Option Date (found on the OTP).
Do note that the whole home valuation process will take five to seven working days after submitting the Request For Value.
Step 6: Exercise the OTP and Pay Option Exercise Fee
Once the valuation is out, the next step would be to sign on the OTP and pay the exercise fee which should not be more than $5,000 (including option fee).
Step 7: Submit the Resale Flat Application to HDB
The next step is for both parties to submit their part of the resale application to HDB.
This is a contractual agreement between you and the seller and the timeframe is stated in the OTP as agreed upon.
A vital thing to note is that once either party has submitted the first portion of the resale application, the other party needs to send the corresponding portion within seven calendar days.
If this is not done, the application will expire and you will need to start over with the whole application process.
Step 8: Attend Resale Completion Appointment
Once both flat seller and buyer have submitted their resale applications, HDB will start processing the whole application.
In everything is in order, HDB will then inform both seller and buyer by SMS and/or emails within 10 working days.
You can also check the application progress status on the HDB Resale Portal.
This transaction will be completed about eight weeks after HDB’s acceptance of the resale application.
Within these eight weeks, both parties will need to endorse all documents prepared by HDB via the HDB Resale Portal and settle all the necessary fees online.
You will also need to arrange for a final inspection of the flat.
Once the documents have been endorsed, an in-principle approval for the resale will be granted.
After this, HDB will arrange for a Resale Completion Appointment at the HDB Hub. Both sellers and buyers will need to physically attend to complete the resale transaction.
However, if you have engaged private solicitors, your solicitor representative can attend the resale completion appointment on your behalf.
The seller will then handover the keys to the flat.
Now there could be certain exceptions, as some sellers might require a 3 months extension after the completion.
Usually, a mutual agreement will need to be signed if you are agreeable to grant the seller a 3 months extension of stay after the completion.
As much as we would love to be comprehensive about everything when it comes to buying a HDB flat, the truth is that there are many different scenarios or situations that may occur.
In the end, it all boils down to whether both parties are agreeable.
While being a DIY buyer may seem like a good idea, engaging a trustworthy Property Agent has its perks as well.
For example:
- Financial Planning: Good property agents will help you plan out and strategise your finances. They will also advise on you on what kind of flat you can afford. (Here at Let’s Talk Property, we go the extra mile to ensure that there is a safety net fund in place for our clients to ensure financial stability in the long run)
- Information Advantage: Good agents should have the tools and resources to help you make an informed decision. They should also have a good feel on the ground and look out for any pitfalls that you as a buyer may face.
- Negotiations: Good property agents are skilled in negotiations and will do their best to ensure that you get the best price possible while ensuring that your best interests are protected.
- Paperwork: There are legally binding contracts and administrative tasks to be done right to ensure a smooth transaction. A good Property Agent will take care of the paperwork for you and do it right.
Conclusion
At the end of the day, engaging the right agent will go a long way in ensuring that the entire buying process is smooth and successful.
However, if you are confident enough, you can also attempt to do it on your own.
Property transactions are not an easy task which is why there are agents that exist to help you in the first place.
Remember, the key thing is not just to engage an agent but to engage someone that you are comfortable to work with and has your best interests at heart.
Wondering if it’s the right time to buy, sell, or wait it out?
These decisions can be tough, and there isn’t a one-size-fits-all answer.
But don’t worry, that’s where we come in!
At Let’s Talk Property, we are here to provide clarity to you and guide you step-by-step in your real estate journey!
Whether you’re a first-time buyer or a seasoned investor, we hope to partner with you to create a clear plan that’s tailored to your unique needs and provide objective guidance to help you make the best real estate decision.
So, if you’re looking to buy, sell, or just want to chat about your real estate options, we’re here for you!
With our extensive on-the-ground experience, you can trust us to provide a top-notch real estate experience that’s both informative and stress-free.
Do contact us for a sharing session!
Speak With UsBest Regards,
Let’s Talk Property
Dillon @ 9389 1992
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