How to Buy an HDB Resale Flat Without an Agent And Save on Fees in 2024: A Step-by-Step Guide
Joel Koh●
Sometime last year, my family and I moved from a Housing and Development Board (HDB) resale flat in the Northeast to a more central HDB flat.
As we were about to engage a property agent for our HDB flat purchase, I met a friend and told him about our plans. This was a turning point, as my friend strongly advised us to buy an HDB flat without an agent and save on the ~one per cent commission charged when you engage a property agent.
Although one per cent may not seem like a lot, hear me out.
To get an idea of how much you can save, I took the average of the median prices for four-room HDB-flats in all the towns for Q1 2024. I arrived at a value of $580,000, which means that you will save about $5,800 in property agent commission fees.
Imagine if this money could be used to renovate your home and build a mini-cinema room:
Intrigued by his proposition, I researched the whole process and found that I was not alone.
According to HDB, a rising number of people are engaging in Do-it-yourself (DIY) resale transactions or buying and selling their HDB without property agents.
This upward trend will likely continue with the launch of the HDB resale flat listing platform.
However, fair warning: You will have to put a lot of time and energy into this process.
If you are still not deterred, here is a beginner-friendly step-by-step guide to buying an HDB resale flat without a property agent!
Property Agent Commission in Singapore
Regarding commissions for property agents, The Council for Estate Agencies (CEA) Singapore does not regulate or set guidelines for commission rates. This allows the market to drive competitive pricing in the industry. The fee you pay property agents is a percentage of the transaction price of the flat for their services.
For HDB resale flats, the seller usually pays about two per cent in commission to the agent while the buyer pays about one per cent.
What You Are Losing Out on by Buying an HDB Resale Flat Without a Property Agent
When you decide to forgo a property agent, you will forfeit the services a good agent provides:
- Financial Planning Advisory: Property agents will consult your finances and advise you on what kind of flat you can afford. (P.S. You can also check out this Property Affordability Calculator.)
- Information Advantage: Researchers at the Singapore Management University have found that “agent buyers have more information advantages in a less informative environment, and high-ability agent buyers have even more information advantages.” In other words, they can help you find a ‘diamond in the rough’ based on your set criteria
- Comparative Market Analysis (CMA): They will help you do CMA on the shortlisted properties to get the best price
- Conduct Background Checks on Property/Seller: They will check to see if the property or the seller is up to scratch and look for signs of harassment by unlicensed moneylenders.
- Price Negotiation: They will help you negotiate with the seller or the seller agents representing the seller for a better offer.
- Paperwork: The buying process can be a bit complex as you have to sort through all the legalese for the legally binding contracts and make sure everything is in place. A good agent will do the paperwork right for you.
If you are willing to put in the time and energy and are confident enough to do the above-mentioned things, you can save quite a bit by not hiring a property agent for your HDB flat purchase.
Without further ado, let’s dive into the process!
Step 1: Obtain a HDB Flat Eligibility (HFE) Letter
Your journey to buying an HDB resale flat without a wizened property agent’s help starts with applying for an HDB Flat Eligibility (HFE) letter on My Flat Dashboard to comprehensively understand your housing and financing options before starting your home-buying journey.
This letter will provide upfront information about your eligibility to purchase a new or resale flat and the CPF housing grants and HDB housing loan amounts you qualify for.
You can also request an In-Principle Approval (IPA) from participating financial institutions when you apply for the HFE letter.
Applicant(s) need to fulfil the following criteria:
- Eligible Applicants/Family Nucleus: You meet the criteria for at least one of these HDB eligibility schemes: Public Scheme, Fiancé/Fiancée Scheme, or Orphans Scheme.
- Citizenship: At least one applicant for the flat must be a Singapore Citizen, and at least one other must be a Singapore Citizen or Singapore Permanent Resident (SPR).
- Age: You must be at least 21 years old if you are widowed or orphaned, or 35 if you are unmarried or divorced.
- Income Ceiling: There is no income ceiling for resale HDB flats.
- Property Ownership:
- You do not own or have an interest in any other property locally or overseas.
- If you plan to buy a non-subsidised HDB resale flat without grants, you must not have disposed of private property at least 15 months before applying for the HFE letter.
- You have not previously purchased a new HDB/DBSS flat or Executive Condominium (EC), nor received any CPF Housing Grants before, or you have only purchased one of these properties and received one CPF Housing Grant before.
- Ethnic Integration Policy: You will also need to comply with the Ethnic Integration Policy (EIP) at the time of submitting the Resale Application
But, the most straightforward way to check this is to apply for an HFE letter. Once registration is complete, you can see if you are eligible to buy an HDB resale flat, which grants you can get, or whether you can apply for an HDB concessionary housing loan.
HFE Letter Application Time and Validity
The processing time for the HFE letter is approximately one month after HDB receives all the necessary information and documents. Due to high application volumes, processing may take longer before and during a sales launch month. You will receive an SMS notification once the outcome is available. If you plan to purchase a flat, applying for the HFE letter early is advisable.
In addition,
Your registered Intent to Buy is only valid for nine months from the issue date. Once it expires, you will need to reapply.
Step 2: Plan Your Budget and Confirm Financing
The next step is to determine what kind of resale HDB flat you can really afford and budget accordingly:
You will also need to consider:
- Available Central Provident Fund (CPF) funds and cash
- Which housing loan should you take (bank or HDB loan)?
- If you need a home loan from HDB, you will need an HFE letter. Please note that you must have a valid HFE letter before the sellers can grant you the Option to Purchase (OTP).
- If you are considering a bank loan, be sure to get an In-Principle Approval first. Then, you will need a Letter of Offer (LO) before you exercise the OTP
You may concurrently request an In-Principle Approval and LO from participating financial institutions when applying for the HFE letter
- Check how much in grants you are eligible for.
HDB Resale Flat Cash Outlay
You must use cash for the following payments:
- A deposit to the seller, limited to $5,000, divided into two parts:
- (1) Up to $1,000 for the option fee
- (2) The remaining $4,000 when exercising the Option to Purchase (OTP)
- A portion of the downpayment if you are taking a bank loan and/or have insufficient CPF savings.
- Any amount not covered by CPF savings and the eligible housing loan amount.
Please note that if you take a second HDB loan to buy a resale flat, you must use part of the cash proceeds from selling your current or previous flat. This amount will be deducted from your second HDB loan.
Additionally, you will need cash for other expenses, such as furnishings, renovations, and various costs and fees, including:
- Resale application administrative fee
- Processing fee for Request for Value
- Fire insurance
- Administrative fee for Temporary Extension of Stay by flat sellers
- Legal fees.
CPF Funds Resale Flat Outlay
Your CPF Ordinary Account (OA) savings can be utilised for:
- The downpayment, either fully or partially, depending on whether you are taking an HDB loan or a bank loan
- Partial or full payment for the flat purchase upon key collection.
- Monthly mortgage instalments.
However, there is a cap on the total amount of CPF savings you can use for your flat purchase. Once this limit is reached, you must pay the remaining amount in cash.
If you opt for an HDB loan, you have the option to retain up to $20,000 in your OA. The rest of the CPF OA balance must be used for the flat purchase before securing the HDB loan.
As of 10 May 2019, the total amount of CPF savings that can be used for your flat purchase and/or monthly mortgage instalments depends on whether the remaining lease of the flat can cover the youngest buyer until they reach the age of 95:
| Remaining lease of property at the point of purchase* is at least 20 years and can cover the youngest buyer until at least the age of 95 | New rules on total use of CPF |
| Yes |
|
| No |
|
*For HDB flats, the point of purchase refers to the flat application date.
The amount of CPF that can be used depends on whether the remaining lease can cover the youngest buyer until age 95:
This change will help buyers set aside CPF savings for their housing needs during retirement (e.g. a replacement property).
With the update, NO CPF can be used if the property’s remaining lease is less than 20 years.
If you want to find out how much CPF savings you can use for your resale flat, check out this calculator from CPF!
Step 3: Source for the HDB Flat of Your Dreams
Once you have nailed down your budget, you can look for the flat of your dreams. You can find property listings from the numerous online property portals like:
- 99.co
- Carousell
- HDB Flat Portal’s Resale Flat Listing (RFL): Note that you will need a HFE letter to access full features
- PropertyGuru
- ST Property
- SRX Property
- iProperty
- Edgeprop.sg
Also, the best part about buying a resale flat (compared to a BTO flat) is the freedom. You can choose from any flat on the island — within your budget of course.
Here are some things you need to consider:
- Your Needs: For example, you might want to get a house near your parents which also entitles you to the HDB Proximity Housing Grant (PHG) (up to $30,000).
- Ethnic Integration Policy (EIP) and Singapore Permanent Resident (SPR) Quota: You will also need to check if there any EIP or SIP restrictions on the flat in the block you are considering. You can use this tool from HDB to check this.
- Balance Flat Lease: CPF usage and HDB loans will be pro-rated based on whether the property’s remaining lease can cover the youngest buyer till age 95. Buyers who purchase a home for life will face fewer restrictions on their CPF usage.
For this step, your time will be spent doing property viewings.
When inspecting the resale flat, you will need to look out for things like:
- Location and direction the unit faces
- Condition of the flat (extent of renovations needed)
- Signs of unlicensed money lending activities
- Any upgrading programmes announced for the flat, and if the upgrading cost has been settled
- Issues that you may be concerned with. For example, you might want to talk to the seller’s neighbours or the people living around the area to learn more about the place.
You must also inform your seller that an agent does not represent you.
Step 4: Bargain With The Seller and Sign the Option to Purchase (OTP)
Generally, the prices you see on Singapore property listings are negotiable, so do not be afraid to bargain armed with the recent transacted prices of resale flats in the location you are keen on. These prices reflect the market conditions at the time of the transactions. You may refer to them to set your offer price.
Once you and the seller agree on the price, you can make an offer to the seller, who will offer you an Option to Purchase (OTP):
The OTP is a legally binding contract between you and the seller which guarantees your right to purchase the HDB flat at the agreed-upon price. For the next 21 days, the seller cannot sell the unit to anyone else.
You can then sign the Option to Purchase (OTP), which the seller should print out.
You must also pay the option fee to ‘book’ the flat. The fee can range from $1 to $1,000 (it is also negotiable).
Do note that once you have paid the option fee, you are obliged to exercise the OTP within 21 days, as the option fee is forfeited if the OTP is not exercised.
If you do not exercise the OTP, the seller can sell the flat to anyone else after 21 days.
Step 5: Submit a Request For Value
The next step would be to submit a request for value of the flat you are buying online on the HDB Flat Portal. You should do this one working day after the Option Date (found on the OTP).
Do note that the whole home valuation process will take five to seven working days after submitting the Request For Value.
However, you can skip this step if you are not utilising your CPF savings or any housing loan to finance the flat purchase.
Step 6: Exercise the OTP and Pay Option Exercise Fee
The next step would be to exercise the OTP and pay the exercise fee which should not be more than $5,000 (including option fee).
Note: If you applied for an IPA for your bank home loan while requesting the HFE letter, you can convert the IPA into an LO at this stage before exercising the OTP during the Option Period.
Step 7: Submit the Resale Flat Application to HDB
The next step is for both parties to submit their part of the resale application to HDB.
This is a contractual agreement between you and the seller. The timeframe can be extended with mutual consent.
According to HDB, both buyers and sellers will need to:
A resale application is considered complete only when the HDB receives both the buyers’ and sellers’ parts of the resale application along with the required supporting documents. If not, the application will expire, requiring both parties to start over and pay the application fees again. These fees are non-refundable.
Step 8: Acknowledge Resale Documents and Pay Fees for Resale Approval
You are almost there!
Upon receiving a complete resale application along with all supporting documents from both the buyers and sellers, HDB will verify the eligibility of both parties and accept the resale application within 28 working days. HDB will then prepare the necessary documents for endorsement by both parties, which will be ready approximately three weeks after the application is accepted. Both the buyers and sellers must acknowledge and endorse the resale documents and pay the required fees.
Once the documents are endorsed and the fees are paid, HDB will grant an in-principle approval for the resale transaction.
Step 9: Attend the Resale Completion Appointment
The resale completion typically occurs around 8 weeks from the date HDB accepts the resale application, which is the earliest possible completion date. If you need to delay the completion, discuss this with the sellers and provide written confirmation (signed by both parties) via MyRequest@HDB.
After this, HDB will arrange a Resale Completion Appointment at the HDB Hub. Both buyers and sellers will receive SMS notifications regarding the appointment, and the details can also be accessed by logging into My Flat Dashboard.
Please note that sellers and buyers must physically attend to complete the resale transaction. If you have engaged private solicitors, your solicitor representative can attend the resale completion appointment on your behalf.
The seller will then hand over the keys to the flat.
And there you have it, you have successfully bought an HDB flat all by yourself. Congratulations!
Got Any More Questions About Buying an HDB Resale Flat?
Head on over to our HDB Resale Seedly Community page! Our Savvy community members are here to help.
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