Guide to Buying & Selling
House buying is as stressful as you make it. With a little bit of effort beforehand you can make the whole process run smoother by following some of our useful points in our guides. We try to take some of the stress away by informing you of the processes involved of buying or selling a property.
How to buy a home How to sell your home
The advertised price of a home is not necessarily what you will have to pay, but is a guide as to the value of a property estimated by the estate agent and agreed with the vendor. It’s human nature to want a little bit more but also to offer a little bit less, so it’s normal to offer an amount some way below the asking price. If the house is selling for £150,000 and you can afford to pay £140,000, you might want to offer £130,000. If the bid is rejected you can always go back and offer a higher price. However, if a property is particularly desirable being close to the best schools, idyllic location, etc. it may be priced deliberately low to encourage a bidding war, achieving far in excess of the asking price.
At certain times when house prices are on the rise you may find yourself gazumped, even more so if you have had an offer agreed well below the asking price. Gazumping is when another buyer comes in with a higher offer at a late stage in the process and clinches the deal (gazundering is when the would-be buyer reduces their offer at the last moment). It can be very frustrating to be gazumped, but don’t get drawn into a bidding war so emotion clouds your judgement. If you do get gazumped, walk away, it could be a red herring to get you to increase your offer. It may happen again!!!
Ideally you will have arranged a mortgage before you find a house. This will give you a guide of how much you can afford and prevent delays. However, if you haven’t already done so, arrange a mortgage as soon as possible once your bid has been accepted.
Some lenders will issue ‘mortgage in principle’ agreements stating that, subject to valuation and status, you are a guaranteed a loan up to a certain amount. A mortgage in principle will persuade the seller that you are serious and speed things up, as will the ability to give the seller/estate agent a solicitor’s details on acceptance of an offer.
Your solicitor will deal with all the legal aspects of buying and selling your property. Personal recommendation is the best way to find one or you can contact the Law Society (0870 606 2500) or the Council for Licensed Conveyancers (01245 349 599) for a list of names. Get quotes from several solicitors and ensure you know what you are paying for. There are many good solicitors that specialise in property.
The home you have just made an offer on may look safe as houses, but you don’t know what problems may be lurking behind the walls. You need a surveyor’s report to point out any problems. Your mortgage lender will arrange for a qualified valuer to do a brief survey, called a valuation, which you pay for. Provided the lender is satisfied the property offers enough security for a loan, you will be offered a mortgage. However, it is generally worth paying out the extra for a more in-depth survey. It may seem expensive at the time but compared to the costs a problem home can bring it is neglible.
There are three types of survey. It is in your interests to get the most thorough you can afford.
The compulsory mortgage valuation will cost £150 to £200 but it is a cursory affair. It simply tells the lender that if you default on the payments it will be able to sell the property and get its money back. It won’t spot major faults. In some cases nowadays, lenders do not even visit the property and do automated valuations based on area and house price data.
A homebuyer’s survey costs from about £250 – but more often around £400 – depending on the price of the property. It should reveal any serious defects. It can save you money because if it uncovers any major faults you can ask the seller to rectify them or reduce the price so you can afford to get them fixed.
A full building survey costs between £400 and £1,000-plus, depending on the type and value of the property in question. It goes into detail about the condition of the property and any remedial action the surveyor thinks will be necessary. The older and more expensive the property, the more important it is to have a full survey.
However, even the full building survey will not tell you everything you need to know. The surveyor won’t start taking up floorboards and won’t necessarily have access to the roof. Much of the report represents the surveyor’s views on the probable condition of the home and things which might go wrong.
You can pull out of an agreement at any time, so if a survey uncovers any major issues, you can walk away. It may have cost you a £1000 for the survey but it could have cost you a lot more in the long run.
This is the legal term for ‘transfer of ownership’ and often the most frustrating part of buying or selling a home. It’s done by both your solicitor and the seller’s solicitor. It involves ensuring the seller has the legal right to sell the property, checking that no-one has right of way through it and that there are no land disputes.
The conveyancing process is very involved and can often give rise to long, frustrating delays. The seller’s solicitor must get the deeds to the property. These may have to be obtained from the building society or bank which is lending the mortgage. The solicitor then prepares the contract. With leasehold properties – in particular flats with service charges – the solicitor will also have to obtain the ‘memorandum and articles of association’ of the management company and the accounts of the management company over the past three years. This often slows down the buying process.
The buyer’s solicitor makes a local authority search. This will provide details of who owns or is responsible for the roads or sewers and whether there are any road-widening proposals near the property. Separate enquiries may have to be made to the relevant water company. Some local authorities return the searches within two days, others can take up to eight weeks.
Most of these details should be provided in the Home Information Pack provided by the seller, however, your solicitor is likely to still want to check them out.
Remember solicitors tend to be very busy people and rarely do anything without being asked. Don’t expect your solicitor to be proactive – they might be, but don’t rely on it – keep checking up and asking if there is anything you can do to help the process move along. If you can, build up a good relationship with the seller, this means that you can deal directly with them and let them know what is still needed. If the seller is worried things are going to fall apart and can pick up the phone and call you to check everything is still okay, it could be the difference between losing a property and keeping it.
The whole process of buying a home is made even more complex because you are often a single link in a chain of buyers and sellers. While you are just trying to buy or sell one property from or to one other person, a whole network of deals is being done around you, and your deal cannot proceed unless all the other transactions succeed as well. This means that while many people say buying your first home is the most stressful thing, actually being a next time buyer can be worse as you are juggling your sale, your purchase and all the other worries.
If you are selling your current home and buying a new one, you need to make sure that you are exchanging contracts on your purchase and sale at the same time. Otherwise you may find you’ve committed to buying a home without having sold one, or have sold your home without having one to move to. Neither scenario is good for your blood pressure.
Exchange and Completion
The two most important stages in conveyancing are the exchange of contracts – between the buyer and seller’s solicitors – and completion. When exchange takes place the buyer usually puts down a 10% deposit. At this point, the seller and buyer are legally committed to the deal. If the buyer pulls out, for whatever reason, they lose their deposit. Conversely, the seller cannot accept a higher offer and if they pull out the buyer can claim compensation.
After exchange, a date will be fixed for completion – it usually takes place within four weeks. It can be done sooner, even on the same day but solicitors prefer a gap. You will need to have the balance of the funds for the purchase of your new home paid to your solicitor ready for completion. This means that you need to give them any deposit beyond 10% and have the mortgage company ready to pay the balance. At completion, the deal has been done and a transfer of ownership has taken place.