Selling
Before You Sell, Find Out What Your Next Home Costs
When your home goes up in price, the bigger home you want has probably gone up too. Before you put your home on the market, work out what you can buy next and how much cash and CPF you’ll have after the sale.
Start with the home you’re buying next
Before we talk about what your home could sell for, I’ll ask you what you’re buying next. Which area, how many bedrooms, which school you want to be near, and when you want to move.
Then we look at what homes like that have sold for in the last few months. I use transacted prices for this, so we’re working from what buyers really paid.
Now you have two prices: what your home could sell for, and what the next one costs. The difference is what you’ll need to find from savings, CPF or a bigger loan.
Work that difference out before you sign anything with an agent, including me.
What a higher sale price does to the amount you need to find
Say both homes go up by 10% in a year. The numbers are made up to show the arithmetic.
| Price | Today | A year later |
|---|---|---|
| Your home sells for | $1.2M | $1.32M |
| Your next home costs | $1.8M | $1.98M |
| You need to find | $600,000 | $660,000 |
Your home is worth $120,000 more; you need $60,000 more to buy the next one. Rising prices help most when you’re buying something smaller, or selling without buying again.
So if someone tells you now’s the time to sell, ask them how much more you’ll need to find for your next home.
Work out your cash proceeds
Here’s the same $1.2 million sale, worked through. The numbers are made up.
| Sale price | $1,200,000 |
|---|---|
| Minus your outstanding home loan | −$400,000 |
| Minus the CPF you used, plus accrued interest | −$300,000 |
| Minus agent’s commission and legal fees | −$29,000 |
| Minus seller’s stamp duty | $0 |
| Cash proceeds | $471,000 |
The CPF refund may be available for your next home, subject to the CPF rules that apply to you.
Your cash proceeds only reach you when your sale completes, usually a few months after your buyer signs. The next home needs cash from you much sooner than that.
| Buyer’s stamp duty on $1.8M | $59,600 |
|---|---|
| 5% of the price, as the cash part of your downpayment | $90,000 |
| Cash due within weeks of signing for the next home | $149,600 |
In this illustration, you need $149,600 available for the initial cash payment and buyer’s stamp duty. Confirm the payment dates before committing. If your sale proceeds arrive later, arrange the funding or adjust the purchase timing with your lawyer and bank.
With the assumed 75% loan approved, the bank funds that share according to the purchase payment schedule. The other 20%, $360,000, can be paid in cash, CPF or both. Here your $471,000 in cash proceeds and $300,000 in CPF cover it, with money left for renovation and moving.
Do these sums with your own numbers before you put your home on the market.
Sources: MoneySense housing-loan limits and IRAS buyer’s stamp duty. Figures are illustrative; confirm your own payment schedule before committing.
Should you sell first or buy first?
If you sell first, you know exactly how much you have before you commit to the next home.
Having the initial cash ready helps, but your bank must also confirm the loan amount and conditions. Plan the sale and purchase dates together before committing.
If you need your cash proceeds to pay it, you have to wait for your sale to complete. You can ask your buyer to let you stay on for a few months after completion; some buyers agree to this, but you can’t count on it.
If you buy first, you get the home you want before someone else does. You can ask the seller for a longer option period, which gives you more time to sell your current home before you have to commit to the purchase.
Ask your bank to confirm your borrowing limit and minimum cash payment before signing for the next home. Coordinate loan discharge and purchase dates with your lawyer.
If you still own your current home when you buy, you’ll usually pay ABSD on the new one. Some married couples can claim it back if they sell the first home in time; check you qualify before you count on that refund.
Whichever you do first, the dates have to line up. If you miss a contractual purchase payment, you may lose money already paid and face other consequences. If your sale completes before you have somewhere to go, your family has nowhere to live.
Getting these dates right is a big part of what I do when I help someone sell. It’s why I plan your sale and your next purchase together, from the start.
If you can’t afford the next home yet
Sometimes we work through all of this and the next home costs more than you can cover this year. You’re short on cash, or the loan you’d need is bigger than the bank will give you.
You’ve found that out before paying any commission, and while you still live in your home.
From there, you can wait and save, look at a smaller home or a different area, or stay and renovate the one you have.
If you decide to wait, write down how much you’re short in dollars. You’ll know exactly what you’re saving towards, and you can redo the numbers in a year.
Before you speak to any agent about selling
Bring three numbers: what your next home costs today, your cash proceeds after the sale, and how much cash is in your bank right now.
If you don’t have them yet, that’s where I’ll start with you. We’ll talk about what to list your home at once we know you can afford the next one.
Questions people ask me about this
Is it a good time to sell when property prices are high?
It depends on what you’re buying next. If you’re buying something bigger, its price has probably gone up too, and you may need to find more money than before. High prices help most when you’re buying something smaller or selling without buying again.
How much cash will I have after selling my home in Singapore?
Take the sale price and subtract your outstanding loan. Then subtract the CPF you used plus accrued interest, which goes back into your CPF account. Then subtract agent’s commission, legal fees and any seller’s stamp duty. What’s left is your cash proceeds.
Should I sell first or buy first?
Selling first tells you exactly what you can spend. If the 5% cash downpayment and stamp duty for the next home are already in your bank, you can buy while your sale goes through. If you need your sale proceeds to pay them, you’ll have to wait for your sale to complete. Before buying first, confirm your loan eligibility, minimum cash requirement and payment dates with your bank and lawyer.