Making an Offer on a Subsale Property: Letter of Offer, Earnest Deposit & Negotiation
An earnest deposit in Malaysia is usually 2%–3% of the agreed price, paid when you sign the Offer to Purchase (also called a Letter of Offer); you top it up to a 10% total when you sign the Sale and Purchase Agreement (SPA). That one-page offer decides whether you get your money back if the loan fails, how long you have to sign, and what the seller must hand over, so it deserves a careful read.
Short answer
An earnest deposit on a Malaysian subsale is market practice, not law: usually 2%–3% of the price when you sign the Offer to Purchase, topped up to 10% at the SPA. Pay it into a registered agency’s or the seller’s lawyer’s client account as stakeholder, never a personal account, and insist the offer makes the sale subject to loan approval with a full refund if the bank says no.
Key numbers at a glance
| Earnest deposit | 2%–3% of the price (some law firms say 1%–3%) |
|---|---|
| Top-up at the SPA | Balance deposit brings the total to 10% |
| On a RM500,000 home | 2% is RM10,000, with RM40,000 more at the SPA |
| Who holds it | Agency's or seller's lawyer's client account, as stakeholder |
| Deadline to sign the SPA | 14–21 days from acceptance (sometimes working days) |
| Key refund clause | Subject to loan: state the margin, deadline and full refund |
| Is the offer binding? | Essential terms plus a paid deposit may make it binding |
| Check before paying | The negotiator's REN or REA number on the LPPEH register |
Key points in 30 seconds
- Market practice is a 2%–3% earnest deposit on the offer (some law firms quote 1%–3%), topped up to a 10% total deposit at the SPA.
- Pay it into a registered estate agency’s client account or the seller’s lawyer’s client account as stakeholder, never a personal account.
- Insist on a subject-to-loan clause that states the margin, the deadline and a full refund if the bank rejects you.
- You typically have 14–21 days from acceptance to sign the SPA; backing out without a valid reason usually forfeits the deposit.
- On a RM500,000 home, a 2% earnest deposit is RM10,000 and the SPA top-up is RM40,000, with RM450,000 normally financed.
What is an Offer to Purchase on a subsale, and is it binding?
When you decide to buy a subsale (secondary-market) property, the agent usually prepares a short document called an Offer to Purchase, Letter of Offer or Offer Letter. It names the buyer and seller, identifies the property, and sets the price, the earnest deposit, the deadline to sign the SPA and any conditions. Once the seller signs to accept, it records the deal you have struck.
Many buyers assume nothing counts until the SPA. That is risky. Malaysian lawyers point out that an offer letter containing the essential terms (parties, property, price, key conditions), backed by a paid deposit, may be treated by the courts as binding, and a “subject to contract” label is read in context rather than as an automatic escape hatch. Treat your signature on the offer as a real commitment.
Before you offer, run the checks in subsale due diligence. Booking a new launch works very differently; see booking a new property.
How much is the earnest deposit, and who holds it?
The subsale deposit structure is market convention, not statute. Most law firms and portals describe a 2%–3% earnest deposit when the offer is signed and a balance deposit at the SPA, making 10% in total; at least one firm quotes 1%–3% for the earnest portion. The remaining 90% is paid within the SPA completion period, usually mostly from your bank loan.
| Stage | 2% earnest deposit | 3% earnest deposit |
|---|---|---|
| Sign offer: earnest deposit | RM10,000 | RM15,000 |
| Sign SPA: balance deposit | RM40,000 | RM35,000 |
| Total deposit (10%) | RM50,000 | RM50,000 |
| Within completion period: bank loan | RM450,000 | RM450,000 |
Who holds it? Pay into the client account of the seller’s registered estate agency (an REA’s firm) or the seller’s solicitors, to be held as stakeholder until the SPA is signed. Never transfer to an individual’s personal account. Check the negotiator’s REN or REA number on the LPPEH register first; see how to verify a property agent.
You’ll also need cash for legal fees and stamp duty after the SPA. Estimate the total with the buying costs calculator or read how much money you need to buy a house.
Leave the subject-to-loan clause out of the offer and a rejected loan makes you the party in default. On a RM500,000 home, a 2% earnest deposit is RM10,000 and a 3% one is RM15,000, and all of it is exposed. Even a negotiated part-refund costs months and legal fees. The clause is one line, and it should also state the margin, the deadline and a refund without deduction.
Ask Louis directly
Before you sign or transfer anything, send me the offer form and I'll check three things: the loan clause, the deadline to sign the SPA, and who the deposit is actually being paid to.
I'll verify the other agent's REN or REA number on the LPPEH register for free, pull recent transacted prices in the same block or taman, and send you a cash breakdown for the price you're offering.
What should a subsale letter of offer include?
Short as it is, every line of the offer can turn into a dispute later. I ask clients to tick each of these before signing:
- Full names and IC/passport numbers; the seller must match the registered owner on the title (geran), and every co-owner must sign.
- Full address, title or parcel number, plus any car park or storage lot included.
- Price, deposit amount, who receives it and that it is held as stakeholder.
- Subject-to-loan clause: the margin (for example 90%), the deadline, and a full refund without deduction if the loan is rejected.
- Deadline to sign the SPA (commonly 14–21 days) and what happens if it passes.
- Vacant possession, or sale subject to an existing tenancy.
- Fixtures and fittings included, ideally with photos.
- Arrears the seller must clear before completion: maintenance charges, assessment (cukai taksiran), quit rent (cukai tanah) and utilities.
- Which lawyers act for each side.
- Special conditions: state consent, developer consent, or an existing loan to be redeemed.
Is the earnest deposit refundable if the loan is rejected?
Whether you get the money back depends on the wording of the offer, not on what the agent said. Typical treatment:
| Situation | Usual outcome | Watch out for |
|---|---|---|
| Loan rejected and the offer has a subject-to-loan clause | Full refund | Submit the rejection letter within the deadline; without the clause you may lose it |
| Loan approved at a lower margin than expected | Depends on wording | If the clause only says “loan approval” with no margin, the seller may refuse to refund |
| Buyer backs out without valid reason or misses the SPA deadline | Usually forfeited | Some offers let the seller keep only part; read the clause |
| Seller backs out or sells to someone else | Refund in full to the buyer | Any extra compensation clause in the offer applies |
| Title search reveals a problem (caveat, arrears) | Negotiated per the clause, usually refundable | Make a satisfactory title search an express condition |
If your loan is at risk, read why home loans get rejected and get a pre-assessment before you offer.
How to negotiate a subsale price in Malaysia
Negotiation works when it rests on evidence. These are the steps I use with buyers in Johor Bahru and Kuala Lumpur:
- Check transacted prices, not asking prices. Recent sales in the same block or taman beat portal listings; see where to check transacted prices.
- Get a bank valuation view early. If valuation comes in below the price, you fund the gap in cash, and that gap is a legitimate negotiating point.
- Price the defects. Leaks, termites, appliances needing replacement: bring contractor quotes rather than saying “too expensive”.
- Understand why the owner is selling. Sellers who need speed or certainty may trade price for a quicker completion.
- Negotiate everything at once. Price, furniture, handover date and tenant arrangements together, so nothing gets added afterwards.
- Put your offer in writing with an expiry date, so it can’t be shopped around indefinitely.
- Keep your exits. Loan and title-search conditions protect the deposit when you’re competing for a unit.
Subsale offers for foreigners and Singaporean buyers
If you are a foreign buyer (Singaporeans included), state consent has to be built into the offer. In Johor the commonly cited minimum price for residential property is RM1 million (RM2 million for landed homes in designated zones), the state approval levy since 1 July 2025 is 3% of the price or RM30,000, whichever is higher, and stamp duty on the transfer (MOT) for residential property is a flat 8% from 1 January 2026. The full rules are in foreigners buying in Johor and who may buy what.
- Make the deal conditional on state consent, with a full refund if consent is refused.
- State that the completion period runs from the consent date, not the SPA date, in both the offer and the SPA.
- Banks typically lend foreigners 50%–70%, so plan for a larger cash top-up; see home loans for foreigners.
- If you can’t be in Malaysia to sign, consider a power of attorney.
Six common mistakes when paying a subsale deposit
- Paying into a personal account. Recovery is hard if things go wrong; use a firm’s client account.
- No loan condition. Buyers discover after a rejection that the offer has no refund clause.
- Not checking the owner. The person signing isn’t the registered proprietor, or only one of several co-owners signs.
- Verbal promises. Furniture, repairs and handover dates agreed only in conversation.
- Too short a deadline. The loan isn’t approved within 14 days and the deposit is stuck.
- Underestimating cash. Forgetting legal fees, stamp duty and any valuation shortfall on top of the 10%.
From offer to SPA: what happens in the 14–21 days
Law firms and portals commonly cite 14–21 days (sometimes working days) from acceptance to signing the SPA. Loan and legal work must run in parallel:
- Days 1–2: pay the earnest depositPay into the agency or lawyer’s client account, get a receipt, and send the signed offer to your banks and lawyer.
- Days 1–7: apply for the loanApply to two or three banks; each will arrange a valuation. See the home loan documents checklist.
- Days 3–10: title searchYour lawyer searches the title for the registered owner, charges, caveats and any restriction in interest (sekatan kepentingan).
- Days 7–14: loan letter of offerCheck rate, lock-in and conditions; see the bank letter of offer explained.
- Days 14–21: sign the SPA and pay the balance depositThe deposit reaches 10% and the completion period starts (for titles needing state consent, usually from the consent date). Clauses are covered in the subsale SPA guide.
What happens after the SPA is in the subsale transfer process. More guides are in the subsale hub.
Related questions
Does a bigger earnest deposit help me win the unit?
Rarely. What a seller actually wants is certainty that you will complete, so a loan pre-assessment, proof of funds and a tight, clearly dated offer carry more weight than an extra 1%. A larger deposit mainly enlarges what you lose if the deal fails: on a RM500,000 home the gap between 2% and 3% is RM5,000. If you want to sharpen the offer, shorten your deadline to sign the SPA instead.
What happens to my deposit if the bank values the property below the price?
The deposit does not come back automatically, but your cash requirement grows. Banks lend against the valuation, not the agreed price, so the shortfall is yours to fund in cash as the differential sum. That is why the loan clause should state a margin, for example 90%, rather than just ‘loan approval’: approval at a lower margin may still count as approval. See property valuation and transacted prices.
What should the offer say if the property has a tenant?
It has to say explicitly whether the sale is subject to the tenancy or with vacant possession. If a tenant stays, the offer should cover the tenancy expiry, the rent, who transfers the tenant’s deposits and how rent is apportioned after completion, with a copy of the tenancy attached. If you want to move in, state that the seller must deliver the unit empty and what happens if that fails, rather than relying on a verbal assurance.
Is the offer valid if only one of two co-owners signs?
Usually not. Every registered proprietor on the title must sign, and a missing signature stops the deal at the SPA or at transfer. Ask the agent for a copy of the title before you sign, and check the owners’ names, identity numbers and how many there are. An owner overseas needs a power of attorney arranged first, and a deceased owner’s share needs the estate order before the sale can proceed.
Frequently asked questions
How much is the earnest deposit for a subsale property in Malaysia?
Market practice is 2%–3% of the price when you sign the offer, with some law firms quoting 1%–3%. You then pay a balance deposit at the SPA so the total reaches 10%. It isn’t fixed by law, so the amount is negotiable, but it must be written into the offer letter.
Can I get my earnest deposit back if my loan is rejected?
Only if the offer letter says it is subject to loan approval. The clause should state the loan margin, a deadline, and a full refund without deduction if the bank rejects the application. Without it, the seller may treat you as backing out and keep the deposit.
Who should hold the earnest deposit?
The seller’s registered estate agency’s client account or the seller’s lawyer’s client account, holding it as stakeholder until the SPA is signed. Don’t pay into anyone’s personal account, verify the agent on the LPPEH register first, and keep the receipt.
Is a letter of offer legally binding in Malaysia?
It can be. Lawyers note that an offer containing the essential terms, supported by a paid deposit, may be treated as a binding contract, and a “subject to contract” label is interpreted in context. Treat signing the offer as a real commitment rather than a reservation.
How long after the offer do I sign the SPA?
Typically within 14 to 21 days of acceptance, depending on what the offer states. In that window you need loan approval, a bank valuation and your lawyer’s title search. If your loan may take longer, negotiate a longer deadline or an extension right up front.
What if the seller backs out after taking my deposit?
Under typical offer terms the seller must refund the deposit in full, and any compensation clause in the offer applies. Because an offer with essential terms may be binding, you can also ask a lawyer whether to press the seller to proceed with the sale.
Sources & verification
- Donovan & Ho — Cash Flow & Timing of Sub-Sale Property Purchase in Malaysia
- C K Lim & Partners — Subsale Conveyancing FAQ
- PropertyGuru — Earnest Deposit Malaysia 2026
- Naqiz & Partners — Enforceability of a Letter of Offer (client alert, Jan 2021)
- PropCashflow — Sub-Sale Property Malaysia: Step-by-Step
- PropertyGuru — Understanding the Property Closing Process in Malaysia
- KC Group — Stamp Duty Malaysia 2026 (first-home exemption)
- The Star — Johor to raise levy on property bought by foreign interests (18 Jun 2025)
- RDS Partners — Key stamp duty changes from 1 January 2026
Verified: 2026-09-20. This guide is general information, not legal, tax or financial advice. Rules and rates change — confirm in writing with your lawyer, bank or the relevant authority before you sign.
More in this stage
Louis Koh
11 years in Malaysian property · Johor Bahru & Kuala Lumpur · English & 中文
I help local buyers and cross-border buyers from Singapore with new and subsale property. Every figure in these guides is sourced; when a rule changes, I update the page and date it.
Stuck on this step? Ask me directly
Send me your situation — new or subsale, budget, state, and where you are in the process — and I will tell you what to do next and what to watch for.
I'll verify the other agent's REN or REA number on the LPPEH register for free, pull recent transacted prices in the same block or taman, and send you a cash breakdown for the price you're offering.
Louis Koh · 11 years in Malaysian property · +60 10-906 6685 · replies 9am–10pm MYT