Subsale vs Resale Condo - Which Is Right for You?
As a subsale condo buyer, it might be good to explain the difference between "subsale" and "resale."
The key difference is a subsale occurs when the project is not completed. There are requirements, which the conveyance lawyers will assist, to inform the developers of the sub-sale, and a new sales and purchase agreement between the developer and the sub-sale buyer will be entered. A resale occurs after the project is completed and the developer is not involved in the transaction.
After decoupling our Executive Condominium (EC) after 5 years, I had the experience of buying a sub-sale condo as we wanted something new (e.g. not stayed before) and close to completion. A new launch takes too long to complete and a resale has already stayed before and is unacceptable so we explored sub-sale.
If you haven't read my pitfalls of sub-sale, my expectation of a new unit was almost wrong as the project was completed faster than the sub-sale completion date and the original buyer could collect keys and stay a few days if they wanted. Below is the definition of sub-sale from the URA's Home Buyer Guide.
Sub-sale of Unit in URA Home Buyer Guide
If you wish to sub-sell the unit after signing the Sales & Purchase Agreement (S&PA) and the sale of the unit has not been completed (i.e. the developer has not conveyed the legal title of your unit to you), you will have to inform the developer of the sub-sale.
At the request of the sub-purchaser, the developer will then enter into a new S&PA with the sub-purchaser. The terms and conditions of this new agreement will put the developer and the sub-purchaser in the same position as if the sub-purchaser were the original purchaser in the original S&PA.
Pros and Cons of Subsale vs Resale Condo:
Pros of Subsale Condo:
Newness and Modernity: Subsale condos are often newer and come with modern amenities, making them attractive for those who prefer contemporary living.
Lower Maintenance: Since they are newer, subsale condos typically require less immediate maintenance and repairs, reducing initial costs.
Warranty and Developer Support: You have the advantage of 1-year defect liability period for the developer to fix any defects in construction and appliances, as well as developer support for any issues that may arise before MCST takes over
Higher Potential for Appreciation: Subsale condos may have a higher potential for appreciation in value over time, especially if the real estate market is on an upward trend.
Immediate Occupancy: You can typically move in immediately after the purchase, avoiding delays associated with construction.
Cons of Subsale Condo:
Higher Price: Subsale condos tend to be more expensive than resale condos because of their newness and modern features.
Limited Negotiation Room: Prices for subsale condos may have less room for negotiation, as they are often based on current market conditions and there is no room for negotiation on the conditions of the unit since it is uncompleted
Developer Reputation: You'll need to rely on the developer's reputation and track record, which may not always guarantee a smooth experience.
Pros of Resale Condo:
Variety and Character: Resale condos offer a variety of choices, including older units with character and unique features that newer condos may lack.
Lower Initial Cost: Resale condos are typically more affordable than subsale condos, making them an attractive option for budget-conscious buyers.
Negotiation Flexibility: Sellers of resale condos are often more flexible in terms of price negotiations, potentially allowing you to secure a better deal.
Transparent Inspection: You can physically inspect the unit before purchasing, giving you a clear understanding of its condition.
Mature Neighborhoods: Resale condos are often in established neighborhoods with existing amenities and services.
Cons of Resale Condo:
Maintenance and Repairs: Older resale condos may require more immediate maintenance and repairs, which can be costly.
Market Appreciation: The potential for property appreciation may be slower in resale condos compared to subsale units, especially if it is on the tail end of Bala's curve.
Delayed Occupancy: You may need to wait for the existing tenant or owner to vacate the property, causing potential delays in moving in. This can be a pro if you are using it as a rental investment unit.
Sub-Sale and Resale Condo Compared
Ultimately, the choice between a subsale and resale condo depends on your priorities, budget, and specific unit and market conditions. It's important to conduct thorough research, inspect the condo unit, and consider your long-term goals before making a decision.
These terms refer to different stages of ownership and can have distinct implications for potential buyers. Here's a breakdown of the key differences between subsale and resale condos:
|Aspect||Subsale Condo||Resale Condo|
|Ownership Stage||The original buyer is selling||Previously owned by others or the original buyer|
|Condition||Typically new or nearly new. The developer is obliged to fix defects within the 1-year defect after completion||Varies, depending on usage and maintenance|
|Price Determination||Current market conditions, but usually cheaper than completed||May be influenced by age, condition, and location|
|Occupancy Status||Usually vacant for immediate occupancy||May require time for a tenant or previous owner to move out|
|Developer Involvement||Developer responsible for warranty, defects, and project management||No developer involvement, responsibility falls on the seller|
|Risk of Delays||Potential for construction delays in the case of new developments||No construction-related delays|
|Unit Inspection||Limited inspection opportunities, often based on plans and show units as unfinished||In-person inspection possible|
|Certainty||More uncertainties regarding the quality of construction and project delivery||More transparency and certainty in the purchase process|
|Market Reputation||Rely on the developer's reputation and track record||More dependent on the individual unit's condition and the seller|
|Investment Potential||Potential for appreciation in value, especially in new developments||Investment potential may depend on market conditions, age, and location. Should follow Bala's Curve when leasehold decays|
|Motivation to Sell||Sellers may have various motivations, such as investment turnover||Sellers may be motivated by personal reasons|
|Property History||Typically no prior occupants or usage||May have had one or more previous occupants|
|Immediate Satisfaction||Immediate occupancy and enjoyment of new amenities||May require some updates or renovations to suit personal preferences|
Finding Undervalued Resale Condo Unit
Another concern is that finding undervalued resale condo units is harder than it seems. For example, a four-bedroom Marina Bay Residences 30th-floor unit made a whopping 2.4m loss in October 2023!
The condition and future value of a resale property can be one of the main challenges and concerns for potential buyers. Here are some common issues and considerations:
Current Condition Assessment:
Maintenance and Repairs: Resale condos can vary widely in their condition. Some units may be well-maintained, while others might require substantial repairs and updates. It's crucial to conduct a thorough inspection to identify any maintenance or repair issues.
Hidden Problems: Older resale condos may have hidden issues, such as plumbing or electrical problems, structural concerns, or mold. These issues can be costly to address, and they may not be immediately apparent during a viewing. The Sail @ Marina Bay was also a unit with some issues that most won't know unless you stay in it.
Assessing Future Value:
Location: The future value of a resale condo can be influenced significantly by its location. Factors like proximity to amenities, public transportation, and the overall desirability of the neighborhood can impact property value over time. Unless there are new developments, most potential developments would be priced in.
Market Trends: The real estate market is subject to fluctuations. Consider the historical and current trends in the area to make an educated guess about the property's future value. Local real estate experts or data can be valuable resources.
Renovation and Maintenance: Investing in renovation and proper maintenance can help enhance the future value of a resale condo. However, it's essential to consider the costs and potential return on investment for these improvements.
For info, the Bala's curve followed the age of a leasehold left and is used by SLA in valuation:-
In the world of real estate, making informed decisions is key so hope this post helped you as I shared my past experiences.
Sky Hoon. Read Full Bio
Website Owner, Twitter-er
He has been trading since 2008. He started this blog to share the journey about option trading. He dabbled in stocks, bitcoin, ethereum (in Celsius Network), ETF (lazy Dollar Cost Averaging) and also built websites for fun. He used this as a platform to share my experiences and mistakes in trading, especially options which I just picked up.