How to sell and buy your private property concurrently

Whether you are upgrading or right sizing, the hassle of selling and purchasing your next property can be a daunting task. One thing that owners often overlook is the planning of their timeline.

Do it right and you save on both cost and time, get it wrong and you may be looking at having to rent a place (minimum of 3 months rental, if you can find one) while having to move twice.

Let’s look at how we can plan your timeline and the exact dates which you need to take note of when selling your current property while buying your next house concurrently.

Before selling, do take note of the following points:

1. Marketing strategy

Have you and your agent discussed how best to market your property?

2. Market research

What are your unit’s unique selling point? How does it compare to others in the vicinity?

3. Stamp duties payable, if any

Any seller stamp duties incurred?

4. Bank loan redemption penalties, if any

For some banks, there may be a 1.5% early redemption penalty which you have to take into consideration.

5. Extension of stay needed, if any

How long of an extension do you need to make sure you do not end up without a roof over your head.

When buying (points to take note):

1. IPA

Make sure you have an In-Principal-Approval from the financial institute for any loans before going on your house hunt

2. Financial calculations

Have you already calculated what are your expected sales proceeds and how much are you comfortable with forking out for your next property purchase? Can add in link to valuation video

3. Property search

What are your requirements? Which type of property best suits your needs?

Stage 1

Assuming all has been done and you have already found a buyer and a potential house you would like to purchase next. Following is the breakdown of what to do next, starting from Day 0.

Sell side:

Day 0 will be the option date where you receive the 1% option fee and issue the option to purchase (OTP). Do note that the option period can be negotiated. As a market practice, buyer will have 14 days to exercise the option before it expires.
During this period, be ready to open your doors for the buyer’s valuer to enter the house to do a valuation for their bank loan.
This will be a good time to also engage a law firm to represent you and help you with the paperwork in this transaction.

Buy side:

This is when you will have already started looking for a potential new home to purchase.

Stage 2

This is where the tricky part starts. We recommend waiting till your buyer has exercised the OTP to your current house on Day 14 before you proceed to get an OTP for the buy side.

This is to avoid in the unfortunate event that your sell side buyer fails to exercise the OTP. In this case you will be faced with the very real possibility of having to exercise your sell side OTP and incur Additional Buyer Stamp Duties (ABSD) or to forgo your 1% option fee if you cannot find a new buyer to exercise the OTP for your sell side in time. (see if can split it up)

Sell side:

Day 14 – Collect the remaining 4% exercise fee when your buyer exercises the option. Prepare to pay any stamp duties within 2 weeks, if any. Wait about 8 to 12 weeks for completion.

Buy side:

From Day 15 onwards after your sell side has exercised the OTP, it will be a good time for you to pay the 1% option fee to purchase the OTP for your buy side. Engage a law firm and get letter of offer from the bank.

Stage 3

After exercising, it usually takes about 8 to 12 weeks for completion. If there is an outstanding loan on your current property, expect about 10 to 12 weeks for completion. The important note here is to make sure there is 3 weeks between buying and selling completion to allow for ample time for CPF funds to return to your OA to fund your purchase of the new house.
If you are unsure how to navigate this part of the timeline do reach out to RedProp to discuss how we can ensure you have the 3 weeks of ample time.

Sell side:

Expect to wait up to 12 weeks for completion on Day 98.
2 to 3 days before completion, proceed to do an inspection to ensure condition of the house.
Once completion is done this is where extension starts.
Be sure to state in the extension agreement who is liable for the maintenance fee as well as property tax.

Buy side:

Expect up to 12 weeks for completion on Day 113.
Pay the remaining 20% down payment (cash/CPF) before loan disbursement starts during completion.

Stage 4

The last stage of this journey is where you reap the rewards of all the planning and work done in the past few months (can delete this part to shorten). With the planning done right you should have ample time from Day 113 to Day 188 to do up your renovations and move in comfortably to your new house without having to rent.

Sell side:

Before handing over on Day 188, conduct an inspection for your buyers to ensure that condition of the place is as per during completion.

Buy side:

Start your renovations once completion has been done and move into your new place!

Congratulations, you are finally able to enjoy your new house and start a new phase of life! While this is a general guide, every client’s need may differ. There are a multitude of ways to adjust different factors to suit each client.

For example, while we recommend only purchasing an option on your buy side after the buyer has exercised on the sell side, we could negotiate and adjustment with the option fee required to cover any cost that may be involved to protect you in the case of any unforeseen turn of events (this one should put in the respective sections?). If you have any queries as to what is best for you, do reach out to RedProp for a more in-depth discussion on your own journey.