Buying a house is one of the biggest financial decisions that you will make in your life. It is a lengthy and complicated business, which while exciting is often fraught with stress and worry. But luckily there is a lot of good advice around helping you to make your home-buying experience as easy and problem-free as possible.
After finding a home you like, which can take anything from a few days to many months, the process from having your offer accepted to completion of the sale takes about 12 weeks. This is about twice as long as in many other countries - home-buying in Britain is a notoriously drawn-out business.
It is important to have a good understanding of the process as it will help you to avoid some of the most common hazards of home-buying. Home.co.uk has prepared an introduction to the home-buying process to help you to understand how it all works, how to plan it and what to watch out for. After reading this you should have a better idea of what to expect and how to set out to buy a home feeling prepared and ready to go!
Before looking at properties, you should consult a lender or mortgage adviser as to what your maximum possible loan would be. This will be based on the size of your deposit and how much you earn.
All buyers need to put down a deposit on the property - a mortgage lender will rarely pay the whole price of the property. You should try to put down at least 5 per cent of the value of the home as a deposit, and more if possible. The smaller the deposit you put down, the more your lender will charge you for the extra risk. Most mortgage lenders charge a 'mortgage indemnity guarantee fee' (MIG), or a fee for loaning a higher percentage of the value, on bigger loans. If you do not have enough money for the deposit, for example if your house is not sold yet, it is possible to get a 'bridging loan' from your bank, which will be repayable on the sale of your house.
Lenders will usually lend up to three times the size of your annual income, though some will lend up to four times your income. If you are buying as a couple, this increases to either three times the first income plus one year of the second income, or two-and-a-half times your joint income. Work out which way would allow you a higher loan and find a mortgage with which you can get a joint income allowance which suits you. Your lender may contact your employer to confirm your income, or if you are self-employed and taking out a self-cert deal you may have to supply proof of your income.
The key to successfully gaining a mortgage approval is not only having a large deposit but also being a low risk level in the eyes of lenders. Check your credit score through credit referencing agencies. Make sure any missed payments you may have forgotten about are addressed.
You will also have to pay for the legal work done by your lender's solicitor. Again, prices vary so ask your lender how much they charge. If you use the same solicitor as the lender to do your conveyancing this may save you money, but compare charges with other firms.
This is charged in case you default on your mortgage repayments and the mortgage lender cannot recover its money. Note that this protects the lender, not you.
Costs vary from lender to lender but typical MIG premiums are:
Make at least two visits. View the house in the daylight and at night. Come at rush hour, as you could get a nasty surprise - is the road used as a short-cut by motorists?
NB: Inspecting the property yourself does NOT avoid the need for a professional survey
Simply touring the area can give you a good idea of what it is like. There are also some good sites on the internet where you can research different areas and what is available there. Gentrification is a key indicator of an area which is improving and where house prices are more likely to go up. Key signs of gentrification include an abundance of cafes and trendy home design shops. Another sign of a good area to invest in is one with a lot of interest from property developers. Find out if any new flats and homes are being built. Local newspapers and council websites are a good source of information about planning activity, as well as information about local schools.
The lease stipulates who is responsible for maintaining and repairing different parts of the property and any conditions you must meet as a resident. Check these if you are considering buying a leasehold. You must also pay a ground rent to the owner of the land (the freeholder), usually a small amount paid each year. Your solicitor should check that the seller is up to date with ground rent payments before you sign the contract.
You should not buy a property with a lease of less than 60 years, and anyway mortgage lenders are very unlikely to lend for a lease as a short as this. Lenders normally want at least 20 years left on the lease after the end of the mortgage term. As a leaseholder you have the right to extend the lease for 90 years or even to buy the freehold if certain criteria are met, though the application process is expensive and takes a long time.
Property can be either 'registered' or 'unregistered'
If property is registered, the title to the property is registered at the Land Registry and is guaranteed by the state. The owner has a 'Land Certificate' instead of the usual title deeds. Buying registered property is more straightforward than buying unregistered property.
If property is unregistered, ownership is not guaranteed by the state. The title can only be proved by a copy of the title deeds, and your solicitor will check back the property's documentation over at least 15 years to certify it. With unregistered property, disputes over title are not uncommon.
When you buy unregistered property, it must now be registered for the first time with the Land Registry. This will take some time so the buying process will take longer than if you are buying registered property. Your solicitor/conveyancer's fees will probably also be higher.
When you have found a home you are happy with, you are nearly ready to make an offer.
Follow the links below for detailed information and tips to guide you through each stage of the negotiating process.
When making comparisons between houses, bear in mind that its value can be increased by factors such as extensions, loft conversions, fitted kitchens, being in a good location, or being a brand new house. Similarly, the value can decrease, for example, because of extensions that fill the whole garden or being in a bad location.
Remember that properties do not have fixed price tags - you can make substantial savings with a little skilled haggling over the price. It is important to get the opening offer right, as this will play a big part in determining the amount you eventually pay. Normally, the opening is offer is about 5-10% lower than the asking price, and the two parties take this as a starting point for further offers and reductions in asking price until an agreement is reached. Be aware that the asking price is often set high in order to encourage a higher opening offer than would be given with a lower asking price, and you are expected to negotiate.
The negotiation will be affected by various factors, and you will do better if you take these into account:
Your own position will also affect the negotiation. A couple of factors could be to your advantage:
Remember, if you don't think the property is worth as much as is being asked, you can introduce this into negotiations. For example, if some repair work is needed and you think this should bring the price down, you can try to persuade the seller that the property is overpriced.
Negotiation is a skill which pays. Here are a few ways you can become a better negotiator:
Once your offer has been accepted, it must be made formally, in writing, and subject to certain terms and conditions. Ensure that the agent and seller understand the terms of your offer.
Both you and your mortgage lender need to know whether the property is actually worth the amount of money you have agreed to fork out for it. As well as what is known as the basic valuation, there are two main types of survey: the homebuyer's report and the buildings survey (also known as the full structural survey). All lenders require a basic valuation, but is strongly advised that you also have an independent, more detailed survey carried out as the basic valuation will only show up any obvious problems that you will probably have noticed yourself. The level of survey you need depends a lot on the individual property you are buying.
Is a Survey Really Necessary?
All lenders require a basic valuation. They need to know that they are not lending you more than the property is worth, and that if you sell it off you will get at least as much money back as you paid for it. Although this is often referred to as a survey, it is really too superficial to merit this title.
The valuer arrives at a value by comparing the property with similar ones, taking factors such as age, condition and location into account. The valuation also points out any very obvious major faults which could affect the property's value, but is very brief and is not nearly as detailed as a real survey.
The basic valuation is commissioned by your mortgage lender, and is for their benefit, but unfortunately it is you who must pay for it. If the house is valued lower than the purchase price then your mortgage offer may be withdrawn, or offered on the condition that specified work is carried out on it first. If it does reveal that the house is worth less than the price you have agreed to pay for it, you may be able to renegotiate the price, but first double-check with the surveyor how the value given was reached, and that he or she is certain you are paying too much.
The basic valuation takes about half an hour, and costs between around £100 and £300, depending on the price of the house. Some mortgage lenders waive the fee for the basic valuation as part of a package to attract your custom.
The report was quite a radical departure from earlier formats and was developed following considerable market research and feedback from the general public. It was designed to be a user-friendly report with the minimum of technical jargon. The most significant change was the introduction of colour coded Condition Ratings usually referred to as the 'Traffic Lights System'. The surveyor must rate each element of the property using one of the following Condition Ratings.
The report is now quite lengthy, usually in the region of 25 pages, but it is divided into easily readable and logical sections as follows:-
The report will also include a number of appendices which provide useful information about what the purchaser needs to do next and, particularly in the case of leasehold properties, any enquiries that legal advisers need to make prior to exchange of contracts. The new format also allows the surveyor to add photographs to the report.
Section C is particularly useful to the buyer as it gives an overview of the Condition Ratings for each element of the building and includes a fairly concise section giving the surveyor's overall opinion of the property. This will include a comment as to whether or not the surveyor considers the agreed purchase price to be reasonable. Normally this will be the section that the client turns to first.
Section D includes a brief section on energy efficiency and reference to the Energy Performance Certificate that must be prepared before a property is marketed.
Section G gives an overview of the condition of the services based on visual inspection. However, the surveyor will not test the services. If the property is vacant the services may have been turned off or disconnected. The surveyor will not be able to turn services on unless the vendor is present and is able to turn them on. The surveyor will recommend further investigation if appropriate. Often it will be necessary to have the gas, electric and central heating systems tested in older properties.
Section J is a new element of the report and is used to identify risks to the building, grounds or occupants. This could cover such problems as potential flooding, the presence of asbestos based materials, an unprotected pond that could be a danger to small children or lack of safety glazing to doors.
The new Homebuyer Report has been well received by the public and the Condition Rating System, is considered to be very helpful to potential purchasers.
The RICS also offer a product called a 'Condition Report'. This is a simplified version of the Homebuyer Report and includes many of the elements discussed above, including the 'Traffic Lights System' for flagging up defects. The Condition Report does not, however, include a Valuation or advice on future repairs and maintenance. The Condition Report can be commissioned by vendors, prior to putting their property on the market, to prevent unforeseen issues cropping up when their potential purchaser has a mortgage valuation or survey carried out.
This is the most comprehensive - and the most costly - type of survey. It is suitable for any building, but is especially recommended for older buildings (75 years and upwards); those constructed out of unconventional materials such as timber or thatch; and properties which have had lots of alterations or extensions, or which you intend to alter or renovate.
The surveyor will check the property thoroughly, looking at everything that is visible or easily accessible to examine the soundness of the structure, its general condition and all major or minor faults. More specialist surveys can also be carried out on aspects such as foundations, damp proofing, or tree roots, either by a specialist within the firm of surveyors or by an independent specialist surveyor.
The report you receive will be extremely thorough and very long, as surveyors are legally obliged to inform you of all the findings of the survey. Don't necessarily be put off if it seems that endless defects are listed - every house has some defects and surveyors tend to show the worst-case scenario for anything they discover. You should be provided with a list of prices for repairs and maintenance work, which will also tend to over- rather than under-estimate prices.
A full structural survey normally takes much longer than the one or two hours required for the homebuyer's report. The survey report can also take a long time to produce, so this is a much lengthier process than for a homebuyer's report. You will probably have to wait up to two weeks after the inspection for the report, for which there is no standardised reporting format. A buildings survey costs anything up to £1,000, again, depending on the price of the house.
Shop around and get plenty of quotes, as it costs a lot to get a survey done and prices can vary. The amount you pay normally depends on the cost of the property you are buying. It is important to discuss in advance how much you will have to pay and what kind of survey will be undertaken, or you might find yourself being ripped off. It is possible that you may have to pay more than once for a survey, if the sale falls through or if you decide not to buy the property on the basis of the survey results and carry on looking.
You are advised to check up on the surveyor's credentials if you are unsure that they are a qualified professional. All surveyors should be a member of the Royal Institution of Chartered Surveyors (RICS).
Always talk to your mortgage lender before instructing a surveyor as it is usually possible to get the basic valuation done at the same time, reducing your costs.
In reality very few home-buyers undertake the conveyancing themselves, for three main reasons:
There are some cases in which DIY-conveyancing is particularly inadvisable, for example:
When a property is being sold an energy performance certificate will need to be provided.
Traditionally, solicitors undertook all conveyancing work but now there are also licensed conveyancers to do the work.
It is illegal for unlicensed conveyancers to charge a fee . Check with theCouncil for Licensed Conveyancers that a named conveyancer is licensed.
It makes little difference whether you choose a solicitor or licensed conveyancer - other considerations are more important.
Hire a solicitor or conveyancer as soon as possible in your home-buying process, so that they will be ready to step into action as soon as you have had an offer accepted - preferably as soon as you know you are likely to make an offer on a house. The faster things move, the better the chances that all will go smoothly.
Otherwise, you can consult the Law Society's regional directory for solicitors in your area, or look in the Yellow Pages or local newspapers for adverts.
If you have already used a solicitor for other business, you could contact them for recommendations of solicitors in the same firm specialising in conveyancing.
The same solicitor cannot act for both the buyer and seller, but two solicitors of the same firm may , as long as there is no clash of interests between buyer and seller.
The three main stages are outlined at the most basic level below. Follow the links for more detailed information on what each individual stage entails.
Once the sellers have accepted your offer, you exchange solicitors' details with them. Your solicitor will then contact the seller's solicitor and receive the draft contract.
The draft contract contains details of prices, the two parties, other information about the transaction such as deposits, and information from the seller's title deeds.
A property information form may be included if the solicitors are operating the TransAction Protocol. This is a Law Society scheme which is used by many solicitors in the conveyancing process. If your solicitor is operating this scheme, the seller's solicitor provides a package at the beginning of the process which includes:
Your solicitor will check the details of the draft contract and negotiate it with the seller's solicitor.
It is a good idea to check through the draft contract yourself in case anything has been missed out, such as any agreements you had made with the seller, so ask your solicitor for a copy if you have not been sent one.
It is the solicitor or conveyancer's job to make all the necessary enquiries to ensure that there is no reason why you might want to change your mind about buying the property. For example, it is vital to guarantee that the seller really owns and has the right to sell it.
The main standard searches are:
If you are buying a newly built house there are particular checks which must be carried out by your solicitor.
Your solicitor will then check through the draft contract and send anything that needs changing to the seller's solicitor.
There is often a fair bit of correspondence between the two solicitors so finalising the draft contract can take some time. Make sure your solicitor knows about any agreements you have made with the seller.
The day for the completion of the transaction (ie the day when the deal is finalised) must be agreed upon before the contracts are exchanged. It normally takes about two weeks from exchange of contracts to completion day, although it can be more or less. Some people arrange for exchange of contracts and completion to take place on the same day, but this is not always possible. Note that if you are part of a chain of sales, the completion date will probably need to be agreed with more than two parties.
The formal mortgage offer for this particular property which you obtain at this stage is distinct from an agreement in principle (which you should have obtained earlier). At this stage you also need to have received the results of your survey if you are having one done, and accepted these results. If you are not satisfied with the results of the survey, you need to address any problems at this stage, not after the exchange of contracts when you are legally bound to buying the house. Make sure that the parties have agreed all the terms of the contract and that any disagreements or any matters that are unclear have been resolved.
Once you and your solicitor are satisfied that everything is in order, the contracts can be exchanged. You sign a copy of the contract which is passed to the seller, and the seller signs a copy of the same contract which you receive. Once contracts have been exchanged (normally by the two solicitors) both parties are legally bound to follow through with the transaction. You can no longer change your mind - if you pull out it is likely that you will lose your deposit, and you could be sued for breach of contract. You also now have no need to worry about gazumping.
At this point you hand over a non-refundable deposit as security to the seller in case the contract is not carried out. This is normally 10% per cent of the purchase price, but it is usually negotiable. If you do not have the money for the deposit at hand immediately, you can arrange for a bridging loan from your bank.
Once contracts have been exchanged your solicitor prepares the draft transfer document (if the land is not registered it will require a special kind of transfer or 'conveyance'). This documents transfers the title of the property from the seller to the buyer. Once both parties have agreed on the draft, it is signed by the buyer and the seller.
Your solicitor will also deal with the finalisation and signing of documentation relating to your mortgage, and will arrange for the money to be available on completion of the sale.
Land Registry checks are carried out by your solicitor, to make sure that nothing is registered against the seller (or at the Land Charges Registry if the property is not registered). Problems such as undisclosed mortgages or disputes could be uncovered at this stage.
There will be various matters for you to deal with in the run-up to completion. There will be some documents to be signed and payments to be made: you must pay Land Registry fees and stamp duty. Before completion you need to make sure that all the terms of the contract have been fulfilled, such as any repairs.
You also need to be arranging all the practical matters related to moving house.
At last! On the day of completion you receive the keys and the seller is obliged to move out.
On the day of completion you also have to pay the balance of the price on the house (the agreed price minus the deposit which you have already paid), usually through your solicitor or conveyancer.
The seller's deeds are now handed over to you, and arrangements are made for any outstanding mortgages on the property to be paid off.
After completion the solicitor still has various details to tie up. Your solicitor will:
Buildings Insurance provides cover for the property itself, including basic essentials such as kitchen and bathroom fittings (sink, toilet, bath etc) and running water. It also provides cover for events such as fire, flood or even subsidence.
When buying a home, make sure that you have arranged for insurance cover on your new home to start on the day you exchange contracts. If you are not a first-time buyer, arrange for the insurance on your previous property to continue right up until the day you exchange, in case the deal falls through.
If your home is part of a larger building, such as a block of flats, your buildings insurance may be bought in a joint policy by everyone in the building so you will only need contents insurance, or if it is a leasehold then the freeholder may have insurance - check up on these.
With property values fluctuating so much, it is not always clear how much your property should be insured for. It is not the market value, but the amount it would cost to rebuild it that gives a more stable value for an insurance policy - including the costs of clearing rubble and architects' and surveyors' fees, as well as building materials and labour. Check your survey or valuation details for the rebuilding costs, which will be listed under the term 'reinstatement'. The Association for British Insurers (ABI) also has a leaflet on how to work out reinstatement costs, or you can check with your surveyor.
Legal Expenses Insurance is usually part of the cover offered with the buildings insurance. This can be useful as it provides access to private legal remedies for things like nuisance neighbours or disputes over a private roadway. Check the premium and the level of cover but it could be a worthwhile investment.
Contents Insurance insures all your possessions inside your home. You may be surprised how much your possessions are worth - even if you are not a big spender, they can be worth tens of thousands of pounds. 'Contents' refers to everything from furniture and carpets to jewellery, cameras and clothes. It's up to you exactly what your insurance policy covers and the price depends on how much it covers. The policy will state an overall limit on the amount you can claim, called the sum assured, and there is also a minimum sum assured which is normally in the region of £30,000 although some insurers will quote for less.
To work out how much cover you need, make a list of everything in each room and how much it is worth or would cost to replace. Remember to include furnishings, carpets and other fittings, and clothes and food, as well as more obvious items like TVs and jewellery. Insurance for items which you take outside your home such as bicycles, musical instruments, sports equipment and so on may also be included in your contents insurance. Often this is set up to a general limit, so if you need extra cover for more valuable items then you will need to ask for this limit to be increased. You can also ask for cover to be removed if you do not need it, so check what your policy includes - often standard policies include items like cash and cards left at home and frozen food up to a certain limit in case your freezer breaks down which you may feel are not worth paying for. You can reduce the cost of your insurance premium by agreeing to an excess on any claim, on both buildings and contents policies. This is where you pay the first part of any claim; for example, if your TV is stolen and you have agreed to a £50 excess you receive the price of the TV minus £50.
If you already have contents insurance on your previous home make sure the cover is transferred to your new one on the day you move in
There is a huge amount of choice of deals in household insurance, so searching for a good one can be a bit daunting. If you already have household insurance on a previous home, this can be transferred when you move. If you do this, make sure you are getting the best deal for your new property which may come under a different premium and be worth more, or less, than the last one. Get a lot of quotes from different insurance companies. It is also worth looking into direct insurance companies, brokers and online services.
Top Tip: When looking into insurance deals, keep a record of what you tell each insurance dealer and the questions you ask them. This will make it easier to compare premiums.
Some mortgage lenders provide their own insurance deals, but it is not necessarily wise to buy your home insurance from your lender. Their insurance premiums are often extremely high compared to those sold by insurance companies, and they might throw the cost of the premium in with the cost of the mortgage which makes it very difficult to work out how much you are paying. If your mortgage lender is offering you the convenience of an insurance policy bought from them, look very carefully at how much it will cost you and compare it to insurance policies elsewhere.
The Association of British Insurers website contains a lot of information about buildings and contents insurance. They will also send out leaflets by post.
This is a familiar phrase to home-buyers. You may think it will not apply to you, but what if you are unemployed for a period, or cannot work due to illness? The future is always unknown, and if the worst does happen you could suddenly face a crisis in paying your monthly mortgage repayments. It is a very wise precaution to insure against losing your home should such circumstances arise; every week, over 1,000 families have their homes repossessed.
In the past, the government provided enough help with mortgage repayments in the case of unemployment to save many people from losing their homes, but since 1995 the rules have changed. Now, borrowers who took out their mortgage after 1 October 1995 who are having repayment problems do not receive any help until 9 months after the beginning of the period of unemployment - enough time to fall dangerously behind with payments. It is extremely inadvisable to rely on the Social Security system. You should instead seriously consider taking out Mortgage Payment Protection Insurance (MPPI) to cover your mortage payments should you become unable to continue paying them.
Standards have been devised for MPPIs by the Association of British Insurers and the Council of Mortgage Lenders. These stipulate that a policy should:
Make sure your policy covers as many circumstances as possible, and your particular work situation. Many policies do not insure part-time or temporary work. Also check the exclusion clauses - for example, many insurers will not cover unemployment which is due to medical conditions which you had before taking out the policy, or due to pregnancy, stress or back pain. Unemployment which is voluntary, caused by misconduct or is seasonal are among other circumstances generally excluded.
As with household insurance, shop around for your MPPI. If your mortgage lender offers you a protection policy, make sure that you will not be paying far more than if you bought a policy elsewhere.
For those buying homes and taking out mortgages, life insurance is an important purchase to make. Most mortgage lenders insist that borrowers take out life insurance, but if yours does not, don't treat this as a good excuse to avoid the extra expense. Life insurance may seem like an unnecessary additional cost, but it is worth considering seriously. The point of it is to provide enough protection to cover outstanding mortgage repayments should you die before you have finished paying it off. This is particularly crucial if you have a family or other dependants, as it would make sure they could keep a roof over their heads in the event of your death.
Those with endowment mortgages do not need to worry about life insurance as the policy incorporates life insurance. However, nowadays most borrowers do not have endowment option mortgages, and so have to purchase life insurance separately. It is not a complicated product to understand - if you die, it simply pays out a lump sum. However, there are a few things you should look out for:
Different policies work in different ways, and different kinds of policies suit different types of mortgage. For example, some life insurance policies provide 'level term assurance', which means that you will be covered for the same amount throughout the duration of the policy. This suits an interest-only mortgage, which is to be paid off in a lump sum at the end of the mortgage term. On the other hand, 'decreasing term assurance' is good for a repayment mortgage - as your outstanding loan gets smaller as you pay it off, the amount of cover decreases too. Remember that if you are moving to a larger home, you will need to increase your life cover.
The policy will probably NOT cover:
Removal firms may offer insurance as part of their contract. If they do, check the limit on what compensation you will be able to claim as it is often quite low. Ask to see in writing exactly what will be covered and the time limit for making a claim.
With most removals insurance you have to pay a part of any claim, known as the excess, which is usually £50 or more.
Money over the threshold left to a spouse, through either marriage or a civil partnership is exempt. This is called the spousal exemption. In 2007 the threshold for married couples and those in a civil partnership changed. When the surviving member of a couple dies, their threshold for inheritance tax is double the threshold for a single person. This effectively makes the inheritance tax from their deceased partner transferable.
Some bequests and life-time gifts are tax-free, such as those between husband and wife. If one spouse leaves everything to the other, this avoids tax at the time of death of the first spouse but the problem is carried over to when the second one dies. When making your will, therefore, it is advisable to spread your assets, for example by leaving them to children as well as your spouse.
The problem is that until contracts have been exchanged the sale agreement is not legally binding. Once your offer has been accepted, either you or the seller can pull out at any time until the exchange of contracts. Unfortunately agents are legally obliged to inform sellers of all offers made on their property, even after one offer has been accepted. But during this period between the acceptance of your offer and exchange, you as the buyer spend a considerable amount of money on surveys, solicitor's fees, and confirmation of your mortgage offer. If the sale falls through you do not get this money back, and have to fork out all over again next time round - that is, unless you have been put off the idea of buying a new home. If you are part of a chain of sales, you could even be affected by someone else being gazumped.
The Scottish system of conveyancing has effectively eradicated most cases of gazumping. In Scotland a seller must provide written acceptance of a successful bid. This is legally binding and is further supported by Scottish solicitors' code of practice, which forbids working for a client who is seeking other offers after a written acceptance has been made.
Top Tip: If you are gazumped, emphasise to the agent and seller how keen you are on the property. If the buyer whose offer they have accepted pulls out, they may contact you to ask if you are still interested.
With all complaints, you should first of all write to the professional or company in question stating what exactly you are not happy with, how it has affected you, and what kind of response you are wanting - do you want a refund, compensation, or some other result? Remember to keep a copy of this letter. If they refuse to accept your complaint, you can pursue the matter further with the relevant professional body. Surveyors, solicitors and licensed conveyancers all have bodies regulating their profession.
If your surveyor has refused to compensate you after you have complained as advised at the beginning of this section, you have the right to take the matter further. All companies who are members of one of thesurveyors' professional trade associations have to follow standard complaints procedures. These associations' members all have access to a professional arbitration scheme set up in 1998 whose findings they, and you, are obliged to accept. If the company is not a member of either of these bodies, the case will have to be heard in court. For more details, contact The Chartered Institute of Arbitrators.
If your surveyor has not caused you any financial loss, but you are dissatisfied for some other reason, you may still be able to make a complaint. Contact the RICS Professional Conduct Department.
If, in turn, you are not happy with the way the SRA has dealt with your complaint, you can complain to the Legal Services Ombudsman.
If you have suffered financially as a result of your solicitor's negligence, you can claim for compensation. Reasons for this happening could include, for example, steps not being taking to ensure the seller's mortgage is paid off on completion of the sale, or missing an important restriction or other information during the inquiries. Solicitors are legally obliged to hold negligence insurance; contact a different solicitor if you need to make a claim on this insurance as the SRA will not deal with negligence claims.
Remember to contact your solicitor before notifying the regulatory bodies, as described in the introduction to this section.
If you have suffered financial loss as a result of your conveyancer's negligence, you can claim for compensation. As in the case of solicitors, conveyancers are legally obliged to hold negligence insurance; contact a different solicitor if you need to make a claim on this insurance as the CLC will not deal with negligence claims.
If you are selling a house, you have probably also bought it and therefore you have already gained some insight into the world of property dealings. Selling a house is a bit different from buying one, however. This guide is both an introduction for sellers who have not handled properties before, and a memory-aid for experienced property sellers.
You obviously want to sell your house when the market is strong and demand high. Therefore, it is advisable that you keep an eye on the property market and time your sale well. Generally, the market tends to be stronger in early and late summer than the rest of the year.
Another point to look out for are low interest rates. Few people are willing to take out a £150,000 mortgage when the Bank of England has just voiced intentions of raising rates by two percentage points. Also, you should co-ordinate your sale with others in the neighbourhood. If there are already three For Sale signs on your street, it might be better to wait a bit.
In order to time your property sale well, get an overview of the property market by checking what properties similar to yours are selling for. Ask Estate Agents what they are selling and search online property transaction databases for sales in your area.
You should have a rough estimate of how much the whole selling process will cost you. This helps you to adjust your financial priorities and prevents you from unpleasant surprises when the bills start coming in. Please keep in mind that these are only guidelines for estimates - how much you end up spending always depends on your individual circumstances.
If you have already bought a house and dealt with an Estate Agent you trust, the question of who is going to sell your house might not even arise. Conversely, if you have had some very bad experience with an Agent and told yourself 'never again!' you can skip this section, too.
All others, however, should consider the following three points before they make a decision regarding the method of selling their property.
No matter how you decide to do your sale - always carry out an independent property valuation first. This helps you to estimate how much your house is worth and where to set the asking price. Chartered Surveyors not Estate Agents carry out independent valuations. Estate Agents provide a marketing service for your property; they don't provide underwritten valuations. It is a common misconception that Estate Agents value your property for you; they simply give you a very intuitive estimate of what they think your house is worth. Moreover, their estimates might be influenced by their motivations; they might set the asking price too high to secure your instruction or too low to obtain a quick sale.
It is perfectly possible for you to perform your own estimate of your house's market value by comparing the prices that similar properties in similar locations have been sold for recently. For further information, have a look at the Property Valuation for Home Sellers guide.
Estate Agents have a mixed reputation and some have fallen into disrepute lately, as a result of unfavourable news coverage. However, over 90% of properties are still sold via an Estate Agent. It is true that, apart from the OFT, there is no independent body regulating all Estate Agents, and that Agents do not need any qualifications to practise their profession. The Property Ombudsman (TPOS) has introduced a complaints procedure which should cover most agents and it is also possible to complain to the Office of Fair Trading.
However, it is worthwhile knowing some basic rules when dealing with Estate Agents.
Take your Agent's suggestion into account, but do not rely solely on it!
The form the advertisements take vary from Agent to Agent, but most will list your property in their windows and brochures. Some also place ads in property magazines or local papers, while most have a website with property listings. A good Estate Agent will make sure that the advert reaches the target audience. As most buyers now start their search for a home online it is more important than ever to ensure that your chosen estate agent advertises widely on the web. Before choosing an estate agent you should compare your local Estate Agents' online property advertising, selling performance and average property price by looking them up in the Home.co.uk Estate Agent Directory.
We generally recommend you to have a fairly good idea of how much you want to (and can reasonably) get for your house, and to stick to it. If your house really does not sell, you can still make adjustments at a later date.
If you are a hard-nosed haggler who has already beaten down Tunisian cloth vendors and used-car dealers, you might prefer to take care of the negotiations yourself. There is nothing keeping you from it – just let your Estate Agent know!
It is not recommended simply to go for the Estate Agent with the lowest fee. Read the small print of the contract and make sure the amount and quality of advertising is sufficient! An Agent's commission is usually based on whether there is one or more Estate Agency instructed with the sale. If the Estate Agent is the sole agency, which means they have the exclusive right to sell your home for about six to eight weeks, the commission will probably be lower than if you have a joint sole agency (you instruct two Agents to work together on your behalf and share the commission) or a multiple agency agreement, in which case several different Estate Agents compete to sell your house and do not share the agreed commission.
Do not forget that you will be charged VAT of 20 per cent of the Estate Agent's commission. If your property is sold for £300,000 and your Agent charges 2.5 per cent commission (£7,500), you will end up paying £1,500.00 in VAT!
Before you become over-enthusiastic at the thought of what you will buy with the 3 per cent Estate Agent commission you are saving, consider the amount of work that a private sale involves. If you are also buying a new property, consider it again! This might well be one of the most stressful things that you have done in your life! If you are still up for it by now, read on. The following is a list of things you will have to do.
Selling at auction is best for people who want to sell their house as quickly as possible. But remember to pack your bags in time - you will have to hand over the keys 28 days after the auction date.
Make sure you choose the right auction house. This involves picking an auctioneer who offers property similar to yours within the same price range. Choosing an unsuitable auction house greatly diminishes your chances of getting a favourable deal on your house. Also, obtain a property valuation before you decide on the reserve price in order to protect yourself against a highly unfavourable sale.
You will have to pay your solicitor to be present at the auction in order to sort out any last-minute irregularities and answer questions. Depending on how enthusiastic your solicitor is about travelling, this can be quite a costly affair.
Some people feel their privacy is violated at auctions, since the properties have to be open to potential buyers and their surveyors.
Selling your house at auction can be more expensive than selling it via an Estate Agent. Also, you will have to cover certain expenses even if your property does not sell.
Remember, the better your house looks, the more people will consider buying it, the more quickly you will get it sold and the higher the price you will eventually get for it. Sounds good, doesn't it?
A cost-effective way of getting the most out of your renovation is to play to the property's strength. Refurbish open fireplaces or ceiling ornaments. Emphasise large windows, high ceilings and wooden floors.
Tidying the place and getting rid of the accumulated junk of the past years will make it much easier to clean too. Bathrooms and kitchens especially should be clean and hygienic. Remove any lime-scale and greasy remnants of past meals. Washing your carpets and curtains will do miracles to a house, and cleaning the windows is not a bad idea, either.
When answering their questions,be honest! You do not have to tell them straightaway that your house has been on the market for months now, but if they ask you specifically, you have to tell the truth. First, because it is quite likely you will be found out and lose the sale; secondly, because if sellers start acting unethically, the whole process of buying and selling houses could become a big mess.
We live in a dangerous world, and although it is possible that all the people who come to look at your house are reliable and trustworthy, there are some rules to follow to guarantee your personal safety:
Just as the buyers are keeping notes on you and your house, you should make notes about them. This includes contact details, the answers to the questions above, and your personal impression. Keeping a record helps you to make a decision once the offers start coming in.
Similarly you should find out what stage they are at in their property sale. The best type of buyers are the ones between homes, meaning they have sold their house already and are living in temporary accommodation. They are experienced and flexible in their timing.
Buyers who have already put their house on the market have at least made the first step already, but neither you nor they can be sure when they will actually sell their place. If they are dependent on the sales money to buy a new place, you should be flexible in your timing.
If the buyers have not put their house on the market yet but are dependent on the proceeds of the sale to purchase, you should not give them serious consideration.
Two things to keep in mind: a house sale is a process, not an act, and house prices are flexible and negotiable.
If the Estate Agent conducts the negotiations you are leaving it to a professional haggler. Most Agents will try to get as high a price as possible for you, but his efforts may be compromised by the fact that he wants to sell the property as quickly as possible - a high turnover is more profitable for him than a marginally higher sales price. Make sure you keep all lines of communication open and discuss every move with him - at the end of the day, it is your house we are talking about.
If you conduct the negotiations you should know that the initial offer is usually 5 to 10 per cent below your asking price. These are the rules of the game, and buyers expect you to know this and to have set the asking price artificially high.
A negotiation involves two parties: do not make too many concessions without getting something in return. If the buyer and the seller eventually meet in the middle, it should be because both have budged a bit. Remember: you are the seller. You can decide who to sell to or not. You are naturally in the stronger position.
It is not a good idea to simply go for the highest offer you receive - there are other important factors to keep in mind when deciding who to sell you house to (see below).
Another thing to keep in mind is not to let any personal issues get in the way of a successful, profitable sale. No matter how much you dislike the people who are about to buy your beloved home, if they are cash buyers and offer you a high price, it would be stupid to let this transaction fail.
Although this is not a binding document, it gives the whole process an official and professional touch and helps to eliminate any doubts.
The legal and administrative process is the reason property purchases take a long time.
Although as a house seller there are less administrative issues you have to bother about, it is still recommended that you hire a professional solicitor or conveyancer. The legal aspect is highly important, and you should not run the risk of inaccuracies that might cost you dear later on. Since conveyancing takes on average 2 to 3 months, it is safe to get a solicitor as soon as you decide to sell your house. It will not cost you any more to instruct him early, so you can avoid serious delays by getting him to set up legal documents like the contract when you start advertising.
The good thing about selling a property is that there are virtually no expenses that you have to cover for local authority searches, stamp duties and the like. All you will have to pay is a small Land Registry fee.
The solicitors will agree a date for the exchange of contracts. As soon as you have signed the contract, the sale becomes legally binding for both parties. You will receive 5 to 10 per cent of the agreed sales price as a deposit, and your solicitor will set a completion date. Your solicitor will not release this deposit unless the seller defaults, but it may be used as a deposit for another house if you are part of a chain.
On the completion day, you will receive the outstanding amount of money (usually transferred directly to your account) and hand over the keys. Now you are at last able to pay for your new home (if you need to do so) and move!
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