The time has come. The HDB flat of your dreams has appeared on the resale market. You quickly get your finances in order, making sure that you can afford it… and then you realise that you have no idea how to go about buying it.
If you are like most people buying resale flats, you’ll want to save as much as you can. But you’re worried that you’ll run into problems with the paperwork and the like without the guidance of an agent. Don’t worry - we’ve helped you prepare a simple resale checklist.
How much are property agent fees anyway?
There aren’t any official or government-mandated guidelines for agents’ fees. Property agents charge a percentage of the transaction price for their services. These services include searching for sellers, conducting viewings and dealing with all associated paperwork.
If you are the seller, the fees vary between 2 to 4 percent. For buyers, this percentage is 1 to 2 percent. If you buy a 3-room flat that costs $350,000, your fees will start at a minimum of $3500.
Why hire a property agent, then?
When you hire a property agent, they take care of everything on your behalf - finding you suitable units, arranging viewings of the units, and all the paperwork that comes with it. You also get a valuable source of industry and insider advice. For some, having an experienced professional to help them out in buying their dream home is more than worth it.
When financing your house, factor in everything.
HDB Resale checklist for first-time buyers
If hiring an agent is not an option for you, or if you decide you’d rather buy your flat yourself, here’s how to go about it.
1. Check your eligibility for HDB resale flats
The first thing you need to check is whether you’re eligible to buy a resale flat in the first place. HDB has a list of the criteria that need to be met before a prospective buyer can purchase a resale flat. There are various eligibility schemes, and each has its own criterion. The conditions that apply regardless of whichever scheme you fall under are:
There are income ceilings if you want to apply for housing loans or grants. An income ceiling is the maximum income your household can earn to be eligible.
HDB flat ownership
You cannot own two HDB flats, new or resale. If you or anyone else listed in your HDB application owns another HDB property, you need to sell that flat within 6 months of buying your resale flat.
Other property ownership, whether in Singapore or overseas
Likewise, if you or anyone else listed in your HDB application owns a private property, whether locally or overseas, those properties must be sold - either before, or within 6 months of your resale flat purchase.
If you own a private property, you won’t be eligible for any loans or grants from HDB.
2. Visit the HDB Resale Portal to register your interest
There is a HDB Resale Portal where you can register your interest in buying a resale flat using your SingPass. You will also be able to conduct all eligibility checks on that portal, and it will guide you step by step through the entire process.
Once you’ve registered, your personal details from the government’s MyInfo service will be used to automatically fill up the application forms. The portal will also let you know your eligibility for any grants or loans. You can also apply for an HDB Loan Eligibility Letter via the portal.
3. Tally your cash & CPF savings, and work out your budget
The factors you’ll need to consider into your budget are:
- Your cash savings
- CPF savings
- How much you can get for your housing loan (either from HDB, or a private financial institution)
- CPF housing grants
HDB has some tools to help you in determining your budget.
- Check the recent HDB Resale Flat prices to get a more accurate estimate on the price of a particular flat
- Or use the Resale Financial Plan to calculate the various financial costs, like your loan estimates, stamp duties and any other fees. You can also look up the lease duration on the flat you want.
You will also need to set aside some cash and CPF savings for HDB’s fees, which cover admin, valuation, legal and stamp duties. Of course, you will also need to account for any renovation you want to do in your new home.
Bear in mind you will need a valid HDB Loan Eligibility letter from HDB, or a Letter of Offer from a private financial institution in order to proceed with any purchases.
4. Shop for your dream home
This is the fun part - now that you know how much you have for your flat, you can start looking for ones that fit your personal criteria and your budget.
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Dig as deep as you can about the units you fancy – its condition, the people who live next door, and the neighbourhood it’s in.
It’s also good to find out about the development plans for the district and surrounding areas. Don’t be afraid to ask for a second, or even a third viewing. Ask as many questions as you need. An HDB flat is a big financial commitment, and you’ll want to get it right the first time around.
You can also ask the owner for an indicative selling price. Check the sales histories of similar flats nearby to determine whether the price is reasonable. Consider deviations from your budget against your ability to service the mortgage.
Finally, check the ethnic quotas of the flat you are planning to buy - you may not be eligible to buy it if the quota is not met.
5. Negotiate on prices and ready the OTP
Once you’re ready and satisfied with the unit, you can make an offer to the owner. If accepted, the owner will give you an Option to Purchase (OTP). This becomes a contract between you and the seller, and is valid for the next 21 days.
This means the owner of the flat is bound by law to not sell the unit to anyone else. The fee for an OTP is usually between $1 to $1,000, and will be borne by the buyer.
If you do not proceed with the sale, the owner will be free to offer the flat to another buyer after the OTP expires. Any fees you paid for the OTP are non-refundable.
6. Get a HDB valuation report
Once you’ve gotten the OTP granted to you, you have to apply for a valuation report from HDB. This report determines the value of the unit, and is necessary for processing your housing loan.
7. Complete the HDB resale checklist and exercise the OTP
Here is the HDB resale checklist that we mentioned earlier. This checklist is a document from HDB that ensures you’re aware of the standing policies. It also helps you keep track of the progress of your application. This document needs to be completed and submitted before you can exercise the OTP.
To exercise the OTP, you’ll need to:
- Sign on it
- Pay the deposit the seller
The deposit should not exceed $5,000, including the OTP fee which you’ve paid earlier.
Once these two steps are done, both you and the seller need to submit your resale applications to HDB. Before submission, agree on a date and time with the seller to attend HDB appointments together. You’ll need to indicate this agreed timing on your respective applications.
8. Attend the HDB appointments
Once both sets of applications have been submitted, HDB will begin processing them. There will be two appointments that you both need to attend.
The first appointment will be where your eligibility is verified. You will then give authorization for HDB to act for you in the conveyancing. Finally, you will also fix the completion date for the purchase of the flat.
Before the second appointment, you should visit the flat one last time with the seller to ensure any defects are found and rectified by the seller before the handover. This last check is usually after the seller has moved out of the unit, but before the completion of the sale.
The second HDB appointment is also called the Resale Completion Appointment. You sign the mortgage document and agreement and make any outstanding payments.
After all of this, if everything goes smoothly, you will then receive the keys to the flat and the physical title deed if the seller has it. And with that, you’ve just managed to buy a resale flat all on your own.
If you need additional information on buying a resale HDB flat, read our resale HDB guide.
Looking to buy a second property? Click here for some tips.
To get more guides like this, check out PropertyGuru.