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Buyers, Residential

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PART 1: Finding a Property

  • Property Search: Use ZAP's property search to find properties that meet your requirements and contact sellers directly to arrange viewings by using ZAP's secure emailing system.
  • Simple Tools: ZAP has a few simple tools to make your search and inspections easier. If you find multiple properties that you are interested in, simply add them to your Interest Basket to view them later in one place (only registered users can use the Interest Basket, fortunately registration is FREE and easy). Once in the Interest Basket you can then print inspection itineraries and comment forms for the properties you have selected, as well as see an auto-populated Google Maps to view all the properties together.
  • Market Info and ZAP Resources: You can also find out how the owner's asking price compares to recent market activity by taking a look at recent transactions in your building or compare it to recent bank valuations. You can do this any time using the ZAP Mortgage Centre.
  • Do Your Homework: Caveat Emptor (Buyer Beware) means that as a Buyer you accept the property as is when you buy it. As well as having your lawyer take care of the legal due diligence, ZAP recommends doing some basic due diligence of your own once you are interested in a property including checking the building's notice boards or speaking to the building management company to ask if there's anything you should know about such as an upcoming renovation project.
  • Quick Tips When Negotiating and Viewing A Property:
    • Try and view the property more than once preferably in the day and possibly in the evening.
    • Ask what is included in the selling price for example a car park, roof top etc.
    • Why is the Landlord selling? Could you use this as a bargaining tool?
    • Look in the corners of the windows and the ceiling to see if there are any water marks or water damage?
    • Using ZAP's Resources page to find out the latest transactions in that building to compare to the asking price, and also compare it with current Bank Valuations.
    • Are you satisfied with noise levels for neighbours or the road?
    • Are pets allowed in the building?

ZAP's approach offers much safer transactions and more peace of mind than conventional agent transactions. Before anything is signed ZAP advocates introducing a lawyer to the process and centralizing the transaction around said lawyer who will handle the entire transaction at a fraction of the cost of agency fees and provide you with unbiased advice! That's right a person with years of legal training will advise and take you through all the steps for a lot less than an agent. In fact even if you are using an agent to buy a property you are required by law to have a lawyer represent you, so why not simply use them for the whole process?

Need A Lawyer? ZAP has an independent panel of lawyers which you can choose from and will assist you through the property transactions. Please note ZAP does not accept any commission or payment from lawyers on our panel.

Once you have a lawyer their first step is to inspect the Land Search to verify title and ensure there are no legal charges on the property or the building it is in.

Mortgage Options: If you do not plan on an outright cash purchase of a property then you will need a mortgage.

You have two options:

  1. Visit ZAP's Mortgage Centre and simply send us your requirements. ZAP will help you search all the major lenders to find you the best mortgage deal in town within 72 hours all for FREE. This service is open to everyone, even if you have not found your property on ZAP.
  2. ZAP's Mortgage Centre also has a list of all the main banks so you can contact and request mortgage information individually from every major lender in town. ZAP suggests checking a few at least as deals can differ substantially.

Conventionally banks can offer a loan of up to 70% of the property value and the Hong Kong Mortgage Corporation (HKMC) can offer up to an additional 25% (see www.hkmc.com.hk for details or consult with your bank). If you require the additional 25% from the Hong Kong Mortgage Corporation please note that the additional loan will incur a Mortgage Insurance Premium charge for the additional loan. Terms can vary quite significantly from bank to bank on the primary loan, as well as valuations so ask your bank / mortgage provider about this.

If both parties are agreed on terms and you have been given the green light by your lawyer after inspecting the property and Land Search, then you're ready to enter into a Provisional Sale & Purchase Agreement.

ZAP has a standard Provisional Sale and Purchase agreement, approved by our panel of lawyers. This is available below for free or simply ask your lawyer to supply you with one.

Click here to download a Provisional Sales & Purchase Agreement

Your Lawyer will help you with this but below are some notes on filling in a Provisional S&P:

  1. Deposit Cheque: The signing of a Provisional S&P should be accompanied by an initial deposit cheque, normally 3% of the agreed purchase price (but can be in the region of 2-5% if the parties so desire). It is always safest to make the cheque out to the Seller's appointed lawyer. This is a must if the seller has an outstanding mortgage on the property, but is good practice even if this is not the case.
  2. Setting Formal S&P date: The parties must sign the Formal Sale and Purchase Agreement (Formal S&P) within 14 days of the signing of the Provisional S&P. A further deposit is payable to take the total deposit amount to 10% of the agreed (i.e. if the initial deposit was 3% then the additional deposit will be 7%). Therefore, in the Provisional Sales & Purchase Agreement both parties must confirm the date.
  3. Setting Final Completion date: The Final Completion Date is flexible, but 3-4 weeks after the signing of the Formal S&P is usually considered a reasonable amount of time. A total of 6 weeks from Provisional S&P to Completion is enough to complete most mortgages including those that involve the HKMC. Your bank should advise you on this.
  4. Business Day: Get out your calendar! Completion date must be on a business day.
  5. Identification: Each party should provide the other with a signed photocopy of their HK I.D. card. This is not a legal requirement, but is good practice. If the other party is a company, please request a copy of their Business Registration (B.R.) document and use of company chop (ink stamp) upon signing.

N.B. It is possible for the parties to go straight to a Formal Sale & Purchase Agreement, however it is standard practice and recommended that a Provisional Agreement is entered into first. The Formal is a much more complex document and takes much more time for your lawyer to ratify, so the Provisional allows both parties to agree on the principal terms in a time.

  • Purchasers Applying for Mortgage: As the purchaser requires a signed Provisional Agreement to get a mortgage application underway. It is best to submit your signed Provisional Agreement to your preferred mortgage bank as soon as possible.
  • Buyer's Costs: Other costs are primarily Stamp Duty, a tax which ranges from HK$100 to 4.25% of the purchase price depending on the value of the transaction; and standard legal costs. There are no agency fees, normally 1% of the purchase price, for a ZAP purchase transaction,
    Update: The HK Government recently introduced a Special Stamp Duty (SSD) applicable to residential properties purchased on or after 20 November 2010. If a property acquired on or after that date is sold within 24 months both Seller and Buyer are held jointly and severally liable for the SSD, unless otherwise agreed.
    In practice one would expect the Seller to bear this burden. Please consult with your lawyer before signing to make sure this does not apply to the property you are interested in.

Your lawyer will guide you through the remaining steps including the Formal S&P, communication with banks and finally handing over the keys.

Final Inspections: It is recommended the purchaser saves one visit to the day before or day of completion to ensure everything is in order before the final balance is paid.

Hand Over: This can either be done in person or the lawyer can receive the keys from the seller if you desire.

TIP: If you're too busy to read this remember one thing - Use a lawyer to help you through the transaction. They are cheaper than agency fees and provide safer transactions. Click here to find out more