Details of Interest When Buying a Second-Hand Condo
17 Aug 2021
buy sell rent tips
The factors of location, personal liking and necessity are generally well-thought over by a potential buyer of a second-hand condo, and advice about these factors are rather prevalent. What of other crucial factors one needs to know when buying a second-hand property at a condominium? Today, Plus Property brings you some details of interest that are worth your attention.
Detail of interest 1: Seller’s background and reason for selling
The buyer should roughly get to know the background of the seller regardless of whether the purchase was being made directly with the latter or through an agent. Start by having a chat with the seller, and possibly get an opinion from anyone else who may be acquainted with or work in the same circle as the seller.
If an agent is the medium in coordinating between buyer and seller, ask the agent in detail about the seller. The main aims of going over the background of the seller are to consider his/her credibility and the value for money presented by the selling price.
Each type of seller has a different set of pricing tendencies. An investor who is selling would place emphasis on profit and may set the price rather high, whereas the ordinary seller is more likely to set the price nearer to that of the market.
In the case of selling investors, the buyer might try to learn their selling history and any pattern or tendency they might have, within a practical scope of inspection and without infringing on privacy.
In addition to the seller’s history, the buyer should inquire about or inspect the seller’s reason for selling.
Keep in mind that the main focus in this task centres not just on the seller, but also on the condition of the unit and the condominium itself, the characteristics of next-door neighbours, the performance of the juristic person and a number of other crucial components which affect a person’s decision-making on whether or not to live in this property.
Even when buying from an investor, the buyer would want to clearly find out the reason for the sale. Some rooms may have been let out before and certain events may have transpired that resulted in the seller deciding to release it, for example.
Detail of interest 2: The irksome deposit and the unsympathetic seller
Much like when buying a brand-new condo room, an issue that frequently cause worry for buyers of second-hand condos is whether or not the deposit will be returned in the case of a failed sale and purchase process. The answer to this may be separated into two instances:
1. The buyer backtracks on decision – deposit is not returned
The buying process for a second-hand condo is identical to that for a brand-new one in almost every respect. That is to say, once the buyer and seller reach the decision to deal in the property, the two have to produce a sale and purchase agreement that dictates on which day the sale (ownership transfer) will take place in earnest.
As the parties have yet to conclude the transaction (as they wait to do so on the transfer date, which per agreement may arrive in 1 or 2 months or some other specified time period), both must allocate a guarantee (= the deposit) that binds the seller from releasing the property to another party and the buyer from purchasing a different property instead, in the run-up to the day of ownership transfer.
In the instance of the buyer backtracking – say, Buyer A has already committed to a sale and purchase agreement with Seller B and presented the deposit for the purchase of a condo in Ekkamai. Buyer A then finds himself preferring another property in a condo next to the electric train, belonging to a Seller C.
The buyer would then need to accept the fact that his deposit with Seller B will not be returned, as the money will be considered the opportunity cost of Seller B, who would have lost opportunities to sell to other parties – and possibly make a higher profit – while she was waiting to complete the transaction with Buyer A.
2. The buyer tried but failed to secure a mortgage – deposit may or may not be returned, depending on the agreement
This instance presents an awkward situation where both parties are likely to feel they have wasted time and opportunity. The buyer does not get a home, and the seller must work to find a new buyer. At present, arrangements concerning whether the deposit will be returned to the buyer, in the case of the mortgage not being approved, are usually made on the day the sale and purchase agreement is signed.
A seller who is not in a hurry or who is not adamant about recouping his/her opportunity cost may be willing to return the deposit. An investor who is selling or an owner who wants to quickly let go of the condo may sometimes arrange a ‘promotional’ condition stipulating the return of the deposit money upon instances of the mortgage not being approved.
All in all, it depends on the circumstances and the negotiation between the buyer and seller.
Detail of interest 3: Debt-free certificate from the seller
When buying or selling a second-hand condo, the document of arguably the highest importance is the debt-free certificate from the seller. The document guarantees the seller is in a ‘state of being free of any common expense or financial obligation owed to the condo juristic person’. Transfer of the property cannot take place if this certificate is not submitted on the date of ownership transfer.
Although the responsibility of securing the certificate falls on the seller, the buyer might help remind the seller and take this opportunity to inspect whether every obligation has been completely paid by the seller. Check to see if the debt-free certificate contains the correct signature of the manager of the juristic person and is not a forged document.
Detail of interest 4: Accuracy of the condo deed
Another matter of paramount importance when buying a second-hand condo is thoroughly inspecting the condo title deed, abbreviated in Thai as ‘Or Chor 2’. The buyer will generally receive a copy of the title deed on the day the sale and purchase agreement is made and can take this copy to the Department of Lands to check whether or not it is forgery, whether the land plot is the correct one, and whether there is inadequacy in the area of the condo unit or any abnormality.
Detail of interest 5: Direct dealing or buy through an agent?
Some who are looking to buy a second-hand condo may think expenses could be saved by carrying out the dealings in person. This would be true for the commission fee that may be incurred by enlisting an agent or a broker. But proceeding on your own requires time, as well as acquaintance with paperwork that may prove bothersome or inconclusive.
There is also a risk of encountering fraudsters who may, for example, try to sell you rooms they did not own, forge agreement conditions to your disadvantage, or sell at an excessively high price.
Buying a second-hand condo through a broker has the effect of hiring competent professionals to pick out credible sellers and deliver a selection of rooms, drawn from a vast portfolio, that match the buyer’s requirements to the greatest extent possible.
A broker will also provide in-depth comparative information that is not available publicly, engage in price negotiation on behalf of the buyer, and deliver several other advantages that help to make buying a second-hand condo a quick process.
Key takeaways: what you need to know when buying a second-hand condo
• Check the seller’s background and reason for selling
• Be thorough about conditions for a return of the deposit upon the mortgage not being approved or a failed transaction
• Remind the seller to prepare the debt-free certificate, and check whether it contains the correct signature from the condo juristic person
• Verify the accuracy of the title deed with the Department of Lands
• Buying through a broker saves time and takes away many risks
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