04| 3 Essential Checks When Purchasing a House from the Developer: Unveiling the Secrets to a Smart Investment

Once we have reached a point of financial readiness and decided to embark on the journey of purchasing a new house from a developer, there are three crucial things we must know before proceeding any further. These steps will help us navigate the treacherous waters of property buying with greater confidence and a touch of humor.

#1. Investigate the developer's background.

Developing a housing project is no walk in the park. One of the greatest risks when buying from a developer is the dreaded scenario of them abandoning their projects. Why, you ask? Well, it could be due to mismanagement, financial woes, inadequate planning, or simply poor marketing and sales skills. To avoid falling victim to such a calamity, it is essential to dig deep into the developer's background before making any hasty decisions.

So, how do we go about checking their background, you wonder? Start by visiting the Ministry of Housing and Local Government (KPKT) website to see if the developer's name pops up in any blacklist. But that's not all! Dive into the wonderful world of social media and forums to gauge the workmanship and quality of their previous projects. Consult the wise folks who have bought units in old projects, and don't forget to have a chat with your trusty property agent. It's like being a detective on a mission to unearth the truth!

#2. Assess the developer's financial position.

Ah, finances, the root of all developer troubles! Many projects bite the dust due to financial woes. If you're dealing with a developer listed on Bursa Malaysia, take a gander at their company's balance sheet. Analyze whether they're overleveraged or not. However, if you find yourself purchasing from a non-listed developer, fear not! Ask about the number of panel banks associated with the project. The more, the merrier, as it signifies a stronger financial position. Banks love to cozy up to financially stable developers. On the other hand, if panel banks are scarce, exercise caution, my friend. The developer's financial reputation may not be as robust, and you don't want to be caught in the crossfire of financial instability. Stay vigilant!

#3. Is the development covered under the Housing Development Act (HDA)?

Ah, those fresh-faced developers entering the market! No track record, no successful developments—quite the risky business. When dealing with such rookies, obtaining information can be like chasing a unicorn. However, fear not! The law shall come to our rescue. The Housing Development Act (HDA) ensures that developers must deposit funds into a stakeholder account upon obtaining a license. Furthermore, all collections from homebuyers must be banked into said account. This account undergoes annual audits by a third party until the development reaches completion. The HDA also guides developers in preparing the Sale and Purchase Agreement (SPA), promoting accountability, transparency, and a zero-tolerance policy for misinterpretation. We love clarity!

But what if we're buying a house that falls outside the warm embrace of the HDA? Well, my friend, that's a risky endeavor. Without legal protection, we expose ourselves to potential disaster. Imagine the financial and psychological toll of something going awry. So, let's exercise prudence and think twice before diving into such a high-stakes purchase.

By following these three steps and engaging in a delightful dance with developers, we can mitigate the risk of stumbling upon an abandoned project. Let the adventure begin, armed with knowledge, wit, and a dash of humor!