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20180906 Leasing expiring soon, what should you do?

20180906 (Thu)

When you have an appointment to sell a property which leasehold title expires in 20 years, what should you do?

There is only one quick answer – say yes to the instruction. Take the listing first to secure a job.

Next, try to talk to the owner. If the owner does not understand the reasons for the expiring lease, just leave it aside. Come back in another time to explain.

The expiring lease of 20 years is a major obstacle for the new buyer to do two things:

1. To obtain a good market value.

2. To obtain bank credit facility.

Unless the prospective buyer wants to buy with cash, there is bank requirement for valuation and such expiring lease will render a lower value (pls check with your valuer for reasons of lower market value). If it was a property which the seller asked for a premium, this would worsen the price pressure.

When the bank does not want to loan, the difficulty of the sale will drag on the purchase. Usually, a cheap property (like RM150,000) should be okie. Even a single storey old house of RM200,000, this might not be a major problem. People may pay cash! BUT, most people need to obtain a mortgage, and when the lease is short, banks do NOT want to give loans!

Tomorrow we will see the problem of lease renewal and loan disbursement.

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