Why Fully-Furnished Property Valuations Fail: The Fixtures vs. Chattels Trap
It is a common and costly shock for Malaysian buyers:
“The bank valuation is lower than my SPA price, even though the unit is fully furnished.”
This valuation gap appears most often in:
- Developer units sold with “free fully-furnished package”
- Sub-sale properties bundled with appliances, décor, and loose furniture
The root cause is simple: what the seller is selling is not the same as what the bank is allowed to value.
1. What Banks Do Not Finance: Chattels (Movable Items)
Under the Malaysian Valuation Standards (MVS), a bank loan is secured only against the real property — land, building, and permanently affixed items. Movable items (“chattels”) are excluded from the valuation because they are not part of the legal collateral.
| Counted in Valuation (Fixtures) | Not Counted in Valuation (Chattels) |
|---|---|
| Built-in kitchen cabinets | Loose sofas, beds, dining sets |
| Fixed flooring, permanent lighting | Fridge, washing machine, TV |
| Built-in wardrobes, sanitary fittings | Curtains, mattresses, décor |
| Concealed ducted air-cond system | Wall-mounted split-unit air-cond (usually excluded) |
Quick Test for Agents:
If the item can be unplugged, lifted, or removed without damaging the building, the bank will not value it.
2. How the Valuation Gap Happens
When a seller or developer inflates the SPA price by including furniture or rebates, the valuer is required to strip out the non-property value. The result: valuation < SPA price → lower loan margin → cash shortfall.
Example Scenario
| Item | Amount | Explanation |
|---|---|---|
| SPA Advertised Price | RM600,000 | Full price buyer agrees to pay |
| Estimated Value of Chattels | RM50,000 | Furniture, appliances, décor |
| Valuer’s “Property-Only” Value | RM550,000 | What the bank can legally finance |
| 90% Loan Based on Valuation | RM495,000 | 90% of RM550,000, not RM600,000 |
| Buyer’s Required Top-Up Cash | RM105,000 | RM600,000 – RM495,000 |
The buyer is expected to prepare a 10% down payment (RM60,000).
The buyer now has to prepare RM105,000 — an extra RM45,000.
This is where loan cancellations, panic calls, and agent-blaming begin.
3. Agent Liability: Protecting Yourself and Your Client
When a deal collapses due to a valuation shortfall, the valuer is not blamed. The agent is.
What Professional Agents Must Do
For Sub-Sale Buyers:
“Bank valuations only recognise fixtures, not loose furniture. If the price includes appliances and décor, be prepared for a lower loan margin.”
For Developer Furnished Packages:
“Ask for the bare-unit price. If not available, understand that the valuation will be based on property-only value, not the furnished package price.”
Best Practice:
Recommend an indicative valuation from a panel valuer before SPA signing if the deal includes:
- Full-furnishing
- Large rebates disguised in SPA price
- “Zero-down payment” schemes
- Cashback structures
Final Message for Serious Agents
Your value is not in pushing buyers to sign SPA documents.
Your value is in protecting their cash flow and preventing avoidable loan failures.
Agents who explain the Fixtures vs. Chattels rule:
- Avoid valuation disputes
- Reduce last-minute loan rejections
- Build long-term trust and repeat business
A salesperson closes a deal. A professional advisor protects the client.
