ASKING SEAN

[@nicklou255]

I think you are referring to GDC (gross development construction) rather than GDV (gross development value), GDV is the total value of the development contributed by the purchasers, GDC usually is about one third of the GDV because the remaining two third will be the developer gross profit and the land cost. The 2nd part you mentioned about the land issue, I believe it has nothing to do with the change of the government unless the projects are yet to obtain any approval during the KM and BP submission. All the outstanding payment including the authority processing fees, ISF, land matters, penalties (if any) need to be settle before BP approval, Once it is approved, the government has no right to on hold or withdraw the development because with the BP approval, the developer should have already obtained APDL straight away. When you talked about the bridging loan, most of the small scale developers don't have any asset to do bridging loan with the bank, in order to do so the first thing they need to ensure they get at least 30% purchasers as a form of collateral with the bank. Please note that the bank loan is mostly to secure the GDC during construction. To me that could be the reason why developer refuse to sign the SPA unless they get enough percentage of purchasers to secure the deal, I believe no point for the developer to continue the development when the demand is only 10% or less, If I were the developer, I will use the cash to secure the land rather than develop it because land price (appreciate), where empty units (depreciate) because of the high interest rate. without signing the SPA either purchaser or developer, there will be no legal obligation.

[@iherng]

Hi Nick. First of all, thank you so much for helping me clarify the issues further. I really appreciate it. Yupe, you're partly right on the GDC part because I don't think the developer's profit and land cost is 2/3 of the equation already. The latest profit margin I did back in my days as the developer are single digits percentages and land cost is already JV. For 2nd part, you're absolutely right. But what if your land is suspected for fraud as our previous KL mayor is a multi millionaire for selling fried bananas. Anyway, these are just my guess as I don't even know which project it is hahahaha=) Yupe. That's accurate that small scales developers don't have any assets to do bridging loan but this particular developer came out of nowhere and grew amazingly in a short period of time. But again, I'm just stating the obvious. When the previous BN government changed to Pakatan Harapan, a few developers were absolutely quiet instantly. Just saying... Again, I really appreciate your input very much. Now I know I can continue do this inpromptu as I have such amazing knowledgeable audience backing me up=)

[@nicklou255]

@@iherng Thanks Sean for your sharing, yeah the 1/3 rules of thumb is really outdated, I remember back in 2008 some developers taught me about the general equation of their profit/construction cost/land cost, gone were the days where the land cost and construction materials were fairly cheap, now not anymore, this is also to explain to the audience that not many developer can earn big bucks in real estate, some council ISF charging rate is RM1mil/acre, definitely not much profit to earn for sure. I'm not in the real estate but I'm pleased to learn more from you, hope can continue the sharing of thought ya!

[@viisnuprasath6817]

Hi sean, so does this mean that we should look out for stamping date before signing the SPA? Quite worried as I will be signing one soon and it is for own stay purpose, we wouldn't want to go through delays like that. And if there isn't date stamped or signed by dev, do we have the right to demand before signing the SPA?

[@calebfwm]

great insights thanks Sean

[@iherng]

Glad you enjoyed it =)

[@huuhaaNightz]

Another possibility is developer have yet obtain APDL. Thats why the delay of signing SPA.

[@iherng]

Thanks Billy. That might be one, and that APDL delay might be due to some unforeseen circumstances I guess. I really appreciate your sharing=)

[@vineshrajoo2805]

Another informative episode.

[@iherng]

Thanks for watching Vinesh!!

[@izzmalaysia8007]

I HATE THIS. Why are the majority of the developers are out to screw the buyers?? So corrupt! Why cant we be transparent to the buyers like overseas. No wonder buyers are sooooo sceptical to every developers! They act like mafia gang trying to steal money from buyers!

[@iherng]

This usually happens to non public listed developers lah... Personally I think we have evolved a lot and I do agree that's very unfortunate for buyers. As usual, thanks for watching Izz. Hopefully you're safe at your hospital=)

[@patoises]

hmmm, I think the point was it is the government that is corrupt, not the developers. smaller developers suffer more than larger ones who have the "relationship" or money to give kopi money

[@maxleong91]

very informative, thanks Sean! but out of curiosity, what happens to the deal if say really got land issues? i.e. those are selling at RM500k and up but need to impose low cost (3:32), or dev does not want to pay 5% of the ISF (3:39)? like, what will happened to the SPA that Leong had signed terminate ka? but dev haven't signed anything and termination they dont have to pay also but Leong have to pay termination fee to the bank (i think 2k)?

[@iherng]

Hi Max. I think they can just return all the money to the buyers if they don't want to develop the land. As for the termination fees with the bank, I'm not sure whether it's required since the deal didn't go through. The norm is panel bankers will provide the end financing, so I don't think they will charge these buyers when the project is cancelled lah...

[@maxleong91]

@@iherng just to share from my ex-boss' experience. she found a house (soft-launch) and the location, layout fulfils her requirements. thus she placed her booking fee. few months down the road (yes, months), when the day she signed the SPA, the original layout all changed. katanya the initial submission didn't go through and have to redesign and resubmit. she can opt for cancellation but no refund for booking fees (RM10k)... and because of that she bought a RM450k house that she didn't like... 🙊

[@cindyleong8712]

@@maxleong91 Just wondering which developer is that...

[@kohlee888]

👍🏻