House buying is likely the biggest purchase of your life, so it pays to be careful. Here are nine things that estate agents don’t tell you about buying a home
1. How many sales fall through.
About three-in-ten property purchases fall through in the UK, losing the homebuyer nearly £3,000 on average according to Which? Mortgage Advisers. The main reasons are a change of heart by the vendor, a broken chain or being gazumped (where the vendor accepts a higher offer from another buyer). Keep tabs on progress on viewmychain.com, a free tool that provides instant updates on everyone involved in the chain.
2. That buying can have hidden charges
You may have just about got your head around the cost of the house itself, but have you accounted for the huge sum you may have to hand over to cover stamp duty?
A change in November 2017 to the Finance Act of 2003 means that first time buyers (FTBs) no longer pay stamp duty on the first £300,000 of properties costing up to £500,000 and 5% on the difference. For example a house costing £500,000 will incur a £10,000 Stamp Duty Land Tax bill. For properties costing more than £500,000 or for non-first time buyers, the rates are staggered.
Check how much you will need to pay on MoneySavingExpert.com’s calculator. Also, have you budgeted for everything else, including mortgage arrangement fees, removal company costs and solicitor’s fees? Also check what you need to give notice for, including utilities, broadband, car insurance and - if you are currently a tenant - rental payments, so you don’t find yourself with penalties to pay.
3. The extra costs of owning.
If you are buying a leasehold property or share of a freehold, don’t get caught out by hidden costs such as service charges, ground rent and the possible need for a lease extension - plus possible future repairs that you will pay a share of, such as a new roof, repainting the building or renovating the staircases. You can ask for a copy of the lease before you make an offer so you can check when it expires, whether you can make alterations to the building and whether your ground rent is due to double next year. Also push to see a copy of the service-charge budget, a recent service-charge bill and three years’ of accounts. That way you know how much owners have been paying and how the money is spent on the property – that way you will be able to budget properly and not be stung with surprise charges.
4. What to do if it is a sealed bid process.
A sealed bid process happens if more than one person gives an offer on a property. The estate agent will ask all bidders to submit a private bid by a set deadline, so the seller has all the offers on the table.
If the sale goes to sealed bids, the estate agent will give little away. Their interest lies in pushing up the price for the vendor. Make your bid a random number so other bids are unlikely to match it. It’s not always the highest bid that wins; vendors often choose the person who looks like they will complete quickest. In your accompanying letter to the vendor, sound keen, say why you love
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5. What the market is really like.
Agents will rarely tell a buyer to go in with a low offer, so do your research on the local market. Find out how long the property has been for sale, whether it has already been discounted, why it might not be selling and ask other local agents how close to asking price they are achieving. Never feel pressurised into buying anything. Look at the Land Registry or the likes of Zoopla or Rightmove to find out current asking prices and recent sales prices.
6. What might happen around your new home in the future.
You need to do your own research here to check that there are no plans to build a new bypass or 1,000 new homes outside your front door. Equally, there could be planned additions to your local area that will drive the value of your property up, such as a high speed railway line, or a new cultural development. Check local planning applications, talk to neighbours and look online to see if there are local campaigns to stop any development.
7. That you can negotiate estate agent fees.
When selling a property to buy the next one, you may want to negotiate down the agent’s fees. Remember, buyers are in short supply right now. You could also offer the agent a staggered rate of commission, to incentivise them to get the maximum possible for your property sale. Bear in mind, however, that if you are too aggressive with your negotiation, the agent may not feel motivated to really push your property to buyers.
8. That ignorance is bliss.
The estate agent must make sure that all marketing material is accurate and disclose any information they are aware of, such as an extension that doesn’t have planning permission or sales falling through because of subsidence or Japanese knotweed. But if they don’t know, they won’t accept responsibility for what you discover later. Look carefully when you are viewing, find out about anything that rings alarm bells and get a thorough survey.
9. How to get the most out of your survey.
According to the HoweOwners Alliance Only 20% of homebuyers get a professional survey done - and many of those who do feel the surveyor does little more than a cursory inspection of the property. But done thoroughly by a surveyor who comes recommended by people you know and trust, a survey can provide you with a vital bargaining chip if essential and costly repair works are identified. It is very important to have a survey done on any property you want to buy. Make sure you flag up areas of concern with the surveyor before they visit the property and ideally walk around it with them. The type of survey you choose will depend on the age and condition of the property. Never stint - you could end up paying many times more if you get an inadequate survey that fails to flag up a big problem.