Using an estate agent - buying a property
Estate Agents Work for the seller so their main concern is for the seller
Estate agents provide advice and property details to buyers on behalf of the seller
of the house or flat
Remember that estate agents may be in a position to benefit personally from the
sale of a property. You must be told promptly, and in writing, if your estate agent,
or a relative or business partner of the estate agent, owns the property you want to buy.
Property particulars
The estate agent provides written description of the property (property particulars).
It is against the law for an estate agent to make false or misleading statements about a property.
If the particulars say the property has gas central heating and double glazing , it must
have these features.
Leasehold or Freehold
Freeholdthe seller has full ownership and the right to sell the property.
Most houses are freehold
Leaseholdthe seller has a lease on the property for a set time period.
The seller can sell the remaining time on the lease but the property is actually owned
by a freeholder. Most flats are leasehold.
Viewing
The estate agent cannot charge you for arranging a viewing or showing you round the property.
If you view a new property, or one that is still under construction, you may be
asked to pay a non-refundable deposit or sign papers if you are interested in buying.
Seek legal guidance
Making an offer
Make Offer via estate agentsIf you want to buy a property, you must first make
an offer through the estate agent. This can be above, below or the same as the asking price.
Before making an offer, Seek legal guidance from a solicitor.
Offer to SellerWhen you make an offer, the estate agent must pass it to the
seller promptly and in writing. The only exception is if the seller has told the estate agent
some offers are not acceptable, such as those below a certain amount.
Estate Agents Estate agents must treat all buyers fairly. They must not hold
back offers from buyers who do not want to use their other services. For example, you should
not be treated differently because you do not arrange a mortgage through the estate agent.
Other OffersThe estate agent doesn't have to tell you about other offers which have
been made. It is not always the highest offer that wins. The seller may decide to sell to the
person who can proceed with the sale quickest.
Offer AcceptedIf your offer is accepted, the estate agent will send you a letter
confirming the details. But at this stage there is no legally binding contract. The buyer can
still receive and accept other offers, and both you and the seller can renegotiate the price
and any conditions of the sale right up to the point when contracts are exchanged or accepted.
GazumpingAlthough the seller may have accepted your offer, the estate agent must
pass on any further offers received unless specifically told not to by the seller. This is can lead to
GAZUMPING where a higher offer is put in and accepted at the last minute before contracts are exchanged
Repossessed properties
These are properties that are being sold by the bank or building society which has repossessed it.
Repossessed property belongs to the lender IE Bank or Building Society (known as the mortgagee)
The mortgagee has a legal obligation to get the best possible price, but may also take into account
how quickly you can raise funds and exchange contracts.
If the mortgagee accepts your offer for a repossessed property , they will place property details and
your offer in the local press and if a higher offer is recieved the whole process will start again
Deposits
When you make an offer, the estate agent may ask you to pay a pre-contract deposit of a
few hundred pounds to show your commitment to buy. This is usually held by the estate agent.
Before you part with any money, find out from your solicitor if a deposit is necessary. If it is, check
whether it is refundable if contracts are not exchanged. When you pay, get a detailed receipt from the
estate agent.
When contracts are exchanged, you may have to pay a bigger deposit, usually 5 or 10 per cent of the
purchase price. This will be held by the seller's solicitor.
Mortgages
Mortgages are available from banks and building societies. Or go to an independent financial adviser
who will check with multiple lenders to obtain the best offer An Example of this is
Estate agents may offer to arrange a mortgage for you. But allways shop around
Mortgages come in many types with fixed or variable rates and can be taken up to 30 years
( Please read the small print very carefully and obtain advice and a second opinion if possible)
The amount of mortgage offered will depend on a number of factors
Your Income ( single or Joint )
The valuation of the property
Your Credit Report and Rating
A mortgage is a large, long-term debt. You could lose your home if you can't keep up the
repayments, Think carefully before taking on a mortgage.
Surveys and valuations
Valuation Before giving you a mortgage, the lender will get the property valued. ( very basic survey )
HOME BUYERS SURVEY Due to the large lifetime investment you should think carefully about a
HOME BUYERS SURVEY ( Detailed inspection of the property and can be usefull in negotiating with the seller
if any problems found)
Structural SurveyYour Lender or yourself may require, a full structural survey. This tells you
whether the property is sound or whether major repairs are needed. A full structural survey should be
carried out by a qualified and independent surveyor. Be sure to use a surveyor who is a member of a
professional association and check with Royal Institution of Chartered Surveyors.
Flats When buying a flat, you will probably be partly responsible for the upkeep of common
parts of the building, such as stairways, roof and garden. Ask your surveyor to check the whole building
as well as the flat. Does the building need, or has it recently had, major repairs such as redecoration, or a
new roof or a lift? If so, will you have to pay a share of the costs?
Valuation CostsThe cost of a home buyer's survey and valuation or a full structural survey will
normally be based on the value of the property.
Legal advice
DO IT YOURSELF You can do the legal side of buying a property yourself. There are books on
do-it-yourself conveyancing in your local library. But unless you are really confident you know what you are
doing, it is best to leave this to the professionals.
Solicitors and licensed conveyancers know the problems that can arise, can ask the right
questions and are insured against making mistakes. They will also sort out your contract.
Legal CostsFees vary and it pays to shop around. Try the local phone book or ask around.
Buying from the Internet or Privately
All the guidelines above are relevent when buying privately or through the internet
BUYING A HOME IS A BIG FINANCIAL COMMITMENT SEEK LEGAL ADVICE
Below is an idea of some of the hidden costs when buying a house
How much in extra costs when buying your home
- Arrangement Fee
A fee charged by lenders to cover the cost of setting up the mortgage. Ask how much before you
apply for the mortgage
- Lender's Valuation (Basic Valuation) Approx cost for £100,000 house = £175.00
This checks that what you are paying and
percentage you are asking for in a mortgage does not exceed the valuation of the house
The cost depends on the price of the property but ranges from £175.00 for house costing £100,000
upwards depending valuation of the house
- House Survey
You should have your own independent detailed survey carried out to check for any problems
There are two types of survey,
A Homebuyer's ReportApprox cost for £100,000 house = £350.00
An estimation of the value of the property
Level of repair and maintenance ( i.e. condition overall )
Full Structural Survey which can cost anything up to £1,000
An estimation of the value of the property
Level of repair and maintenance ( i.e. condition overall )
A much more detailed look at the structure of the house
Having a survey is important because
It picks up any issues with structure of the house and things
like electric, gas, floors, damp etc.
Ir can often be used as a bargaining tool in price negotiation as
quite often the person selling the house may have been unaware of any problems
- Legal Conveyencing Fees rough Guide 1% of £100,000 = £1,000
Some solicitors will offer a flat fee for conveyencing while others may charge 1% of the value
of the house ask at the time you talk to the solicitor
( there are often additional costs you may be charged )
Local Authority and other Search fees ( £150 )performed on behalf of you which may additional to
the Conveyencing fees
- Government Stamp duty Rough Guide 1% of £100,000 = £1,000
There are different bands but houses between £60,000 and £250,000 is 1%
- Land Registry Fee Rough Guide for £100,000 house = £200
There are different bands but houses between £60,000 and £250,000 is 1%
- Mortgage Indemnity Guarantee
These fees can be significant if you are applying for a mortgage for over 75% of the
house price ranging between ( It is important to ask your lender or mortgage advisor )
Theses are used to protect the lender due to the higher risk involved with a
higher percentage mortgage
As you can see from above the costs of buying your £100,000 house will range
between £2,575 and £4,000 and it is best to have this money before you start
The UK Governments Financial Services Authority
Monthly Mortgage Payments The BBC Mortgage payment calculator
