Avoid confusion in pricing of property

LAST week, I visited a property showroom operated by an established developer to view its soonto-be-launched development project in Kuala Lumpur. I was interested in the units measuring 940 square feet which, the sales agent said, would cost about RM700 per square foot. It was expensive but I decided to explore the Sales and Purchase Agreement (SPA) requirements, loan application process, my eligibility and so on.

To me, a simple calculation would come to RM658,000, but I was surprised when the sales agent said the SPA would be for RM800,000. Upon asking why, a confusing cash-back by percentage formula was disclosed to me. This cash-back is supposed to help me satisfy the downpayment requirement or I may use it for renovation purposes.

Why is the pricing so complicated? The developer should come clean and stick to one offer price and work it through the entire loan application process in compliance with the established rules and regulation. Furthermore, there may be a higher chance for a loan to be approved for RM658,000 compared to RM800,000.

While the Malaysia Consumers Movement (MCM) commends Bank Negara Malaysia for instructing banks to use plain language in housing loan contracts to ensure fairness and clarity in the terms and conditions for retail customers and small and medium enterprises, the same should also be demanded of developers offering property for sale.

This is important to prevent consumers from falling prey to the confusing marketing strategies of developers.