Buy

Properties to Buy

House buying can be stressful. Our guide takes you through the process of buying and selling from offer to keys being handed over.

Price and offers The advertised price of a home is not necessarily what you will have to pay. It's normal to offer an amount some way below the asking price. If the house is selling for £130,000 and you can afford to pay £120,000, you might want to offer £110,000. If the bid is rejected you can always go back and offer a higher price.

Remember that you don't want your bid to take you over a stamp duty threshold; the seller will be well aware of this and generally expect bids up to that level.

You make your bid through the seller's estate agent. The agent relays your bid to the seller and carries their reply back to you.

At times when property prices are rising very fast you may even find yourself gazumped. 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 sucked into a bidding war and don't let emotion cloud your reason. If you can't strike a deal at a price you want - walk away.

Mortgages

Ideally you will have arranged a mortgage before you find a house you want to buy. This will 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 straight away. 

Solicitors

If you haven't found a solicitor before you make the offer, you must hire one straight after. You need a solicitor to deal with the legal aspects of buying and selling property. Personal recommendation is the best way to find one or you can contact the Law Society or the Council for Licensed Conveyancer’s for a list of names. Remember - a good solicitor is a sound investment. Get quotes from several and be sure you know what the quote covers. -

The survey

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 one 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.

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Conveyancing

This is the legal term for transfer of ownership of the home and often the most painful part of buying a home. It is undertaken by your solicitor and the seller's solicitor and 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 business of conveyancing is very involved and can often give rise to long, frustrating delays, which will have you plotting dark deeds of revenge against the legal profession. 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 inquiries 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.

Conveyancing in Scotland is different. The seller can set a closing date for offers on a property. Interested parties make sealed bids which are opened on that date. If the seller accepts your bid you are legally bound to buy the property.

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. After this 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. You get the keys to your new home.

The chain

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. -