How to Quickly Sell My House for a Fair Price
It is emotionally challenging and time-consuming to sell a house more so for someone who has never done it before. Some people feel like potential buyers are invading their privacy when they come to view the house, opening and closing cabinets, and poking around. Prospective buyers will sometimes criticize your home and even offer you less the amount your home worth.
First-time home sellers make mistakes because of the complex and emotional transaction coupled with a lack of experience. But, a little information as will be provided in this article will help you avoid these drawbacks. Read on and find out how to sell house quickly and get a good price without a lot of stress.
We list the main options on how to sell your house quickly for a good price.
Sell to a Cash House Buyer
Cash home buyers are companies or individuals that buy properties in cash. They have ready money to purchase the house within the shortest time possible. This means that they do not have to sell another property or acquire a mortgage to obtain the necessary funds. A credible cash buyer will provide evidence that they have sufficient funds to pay immediately. And as they have ready funds, the sales procedure is fast. Professional cash house buyers are investors who buy properties at low market rates, renovate them and later sell or rent them for profit.
Selling to a cash buyer is the fastest way to obtain cash for your house. It is an option for a home seller facing financial difficulties as it has a 100% guarantee on sale. One advantage of selling for cash is that you will not pay any agent fees as you would when selling through a real estate agent.
The buyer pays for your legal fees and can deposit money in your account within 28 days. However, while selling to a cash house buyer, expect them to buy the house at 75-80% of market value. This option is not recommended for properties worth over £500k.
30-Day House Sale Specialists
This is a process that you can go for if cash house buyers cannot provide an acceptable price, when real estate agents cannot find you a buyer, or you want to sell the house fast for 95-100% its worth.
If you want to sell your house for a small discount in exchange for a speedy sale, there are credible 30-Day House Sale Specialists who you can consult. As their name suggests, you will have money in the bank within 30 days of making the sale. The specialists are mostly used by cash house buyers to sell their properties. These specialists are not expensive and efficient in beating the market and speedily securing you a buyer at a market value of 95%-100%.
Sell at an Auction
Although this might seem unconventional to some people, listing your house at a real estate auction may be an excellent way to sell your house quickly for a reasonable price. It is easy to sell at an auction as there are no negotiations. Experienced professionals take charge of documentation, marketing, promotion, and the auction event. The buyer is only required to set the lowest acceptable bid for their house, referred to as the Minimum Bid Auction.
Auctions depict a sense of urgency, thus enhancing chances of a quick sale as they have closing dates of 30-90 days from the date of the initial offer. Besides, the sale is not dependent on inspections and appraisals. Because of the competitive bidding process, there are high chances of getting a fair market value in the sale.
The main drawback of this option when selling your house is that auctions provide stricter bidding terms for bidders. This means that there is a smaller buyer pool in comparison to a conventional home sale.
Use a Skilled Real Estate Agent
Another way to sell house quickly for market value is selling through a skilled real estate agent who understands the local housing market. An experienced agent will recommend advertising the home on Multiple Listing Service (MLS). On the other hand, they can expand your marketing strategy by listing the property on different websites. The real estate agent will also help you set a realistic listing price in consideration of comparative market analysis. It is also the responsibility of a real estate agent to ensure that the house sells fast at your price, or higher through marketing and negotiations.
You will need a signed listing agreement stating that the real estate agent is your sole representative in your home sale. This contract is for a specified period. Seller agents typically charge 3% of the total sales price.
Change your Estate Agent
If the contract with your real estate agent expires without making a sale, you do not have to renew the contract. You can change your agent if you feel that the current one is not doing their best. It would be best to negotiate a shorter contract, not more than four weeks.
Bring in another Real Estate Agent
This is a consideration worth making if you are still under contract and your current agent has no opposition. Enlisting multiple agents the right way makes other estate agents work harder. It increases your chances of selling the house quickly at the right price. Do not agree to an arrangement where agents divide the fees irrespective of who brings the buyer. Enlisting multiple agents’ services should only be done by someone experienced in selling houses as agents can be unmanageable at times.
Reduce Your Initial Asking Price
You can only make this decision if you cannot change your agent or bring in a second one. If your agent is inappropriate for your property, you will have to reduce your price. However, if you are in a cold market, you are not guaranteed a sale even after reducing your price.
Sell your House at the Right Time
The best time to sell your house is during summer and spring as families move ahead of the new school year. Also, the pleasant weather allows for easier home inspections and viewings. However, increased inventory enables summer and spring buyers to be pickier and climatic conditions in different areas sometimes affect the ideal time to sell your home. Consult a real estate agent to advise you on the best time to sell the house in your locality, and use the information to set a target date to sell your house.
Before listing your house, please do the following to make it appealing to buyers.
Hire a Storage Unit and Clear Clutter from your House
After many years of occupying a home, you are bound to accumulate stuff. Some of this stuff is unnecessary,, and it makes the home seem smaller than it is. Before listing your house, remove all unnecessary items from your house such as ill-sized furniture, old clothes, and broken equipment, among many others.
When prospective buyers come to view the house, let them not find a disorganized or messy house. Clearing out your space highlights the square footage of the house. Also, remove family photos and other valuable items as people want to picture themselves living in the house. They cannot do so with your family photos hanging on the walls. Clean the pantries, organize closets, attic and basement. Take useful items to storage and donate what you no longer need.
Make Small Upgrades
Do not make significant upgrades as you may not recoup your investment. Instead, concentrate on small upgrades to woo buyers, especially in the bathroom and kitchen, to give you a return on investment.
Go through the house and note the areas that need fixing such as replacements or a little more polish. You can fix a loose floorboard, cover chipping paint, fix a leaking pipe, clean the gutters, and oil door hinges. You can replace a few lamps and add a new coat of paint to brighten a room and make it more welcoming. Other inexpensive ways of transforming your space include installing new faucets, shower curtains, light fixtures, kitchen cabinet hardware.
Increase the Curb Appeal
Whether selling online or in person, your home exterior will give a good or bad first impression about your home. If you have a yard, edge the lawn, refresh mulch, and trim hedges. Pressure-wash the driveway, walkways, and the house and paint the shutters. Remove bird droppings from your front porch, clean cobwebs, paint the door, and polish hardware on the front door.
If you would like to sell your house quickly, come to us as we buy any house. We will give you a reasonable price for your house after assessing the property. The reason we buy any house is an understanding that home sellers do not like a lengthy tiring negotiating and selling process. We like to make the process as short as possible.
Over the years, solicitors would meet physically and exchange contracts. But things have changed, and nowadays it’s done by agreeing over the phone. On the exchange day, legal companies contact each other and agree on the deposit of funds and the terms of sale, and the completion date. They will then inform the solicitors, who would convey the message to their clients. The client then needs to confirm the exchange; if it doesn’t confirm, they will be forced to start all over again. The exchange marks the point where the seller and the buyer are required by law to see the transaction to completion.
The completion is the last stage in the property sale. It is only possible if the seller and their team receive the money for the property, and then the property is handed over by the agreed time. The solicitor will then register the buyer’s ownership details with the land registry. Completion shows that responsibility and ownership of the property have been transferred to the buyer.
Completion explained in short
Completion is when a property transaction is legally finalised and the new owners get the keys. It takes place on a date specified at exchange of contracts.
Generally, it takes anything from two to four weeks between exchange and completion
Completion Date Agreement
There are no legal consequences until an exchange occurs. There are some two to four weeks before the exchange and completion where both parties prepare to move. If many parties are involved in the sale, it will take longer to be completed. Because of different schedules and opinions, you might not agree on the first choice; you should compromise. Most people will agree on a Friday because of work and use the weekend for moving and unpacking their belongings. You can start booking moving companies and saying your goodbyes when you have a date.
Although it’s possible to finish the transaction in a single day, the transaction will be stressful. Same-day transactions are common with a cash-only buyer; it is not achievable when a mortgage deal is needed. Unless there is an urgent need for a same day exchange and completion, it’s better to wait for a few days so that no one can rush into a commitment they cannot fulfil.
Deposit on Exchange
The amount of money the buyer is supposed to deposit in the exchange of contracts is different from the deposit that a mortgage lender requires. The exchange deposit varies from five to ten per cent of the purchase price. If a buyer can confirm the money is available a few days in advance, it may take little time to complete the purchase. The buyer should have an exchange of contracts checklist to know what is needed and when. For the seller, the buyer’s exchange deposit is a way of knowing that the buyer will see the transaction to the end; if they do not, the seller will keep the deposit as compensation. The exchange funds are not accessible until the completion of the contract.
The Duration between the Exchange of Contracts and Completion
The time will depend on what all the other parties have agreed on; it is usually between one or two weeks. But it may differ depending on different unforeseen circumstances; some transaction will even go for months. The most common case that can drag the completion process is when a buyer is staying at a rental house and must give two months’ notice before moving. The buyer cannot put in the notice before the exchange happens for security. It may also take longer if you purchase a new building; there might be some delays depending on the building’s state when the exchange took place. One more thing to beware of is the mortgage; a mortgage offer is usually valid for 3 to 6 months. If the offer expires before the exchange, completion of the contract will be determined by the mortgage lender or reapplication for a new offer which will also delay the process.
On completion day if things move smoothly, it might be over before you know it, but there might be delays as well. Transfer of funds is the main thing that causes delays. The money is sent to the buyer’s solicitor by the lender and then transferred to the seller’s legal company. So if the lender sends the money on time, things will go as planned, a little delay from the lender may delay the completion.
Exchange of Contracts Checklist
There are a few things on the contracts worth knowing to complete the purchase as soon as possible. Keep an eye on the bank details, ask the solicitors for the correct details, and if there are any changes on the bank details, you will be on top of it. That will help in avoiding any delays. Start preparing for moving early; don’t make any commitments before the exchange, but you can start looking for moving companies and even start packing so that immediately the contact goes through you can move easily.
Ensure the buyer gives you all the utility people’s contacts like, cable suppliers, electricity, water, phone and gas to avoid any last-minute rush. Getting the contacts before completion will also help you know who you will keep and who you will change. Check all the metre readings to know if everything is in order, so there are no disputes on completion day. After the entire exchange checklist is done, you can wait for your new house’s keys.
Completion Day Checklist
Have a list of all the things you should do and start working on it as soon as the exchange happens to make sure completion day runs smoothly. Give the moving company enough time to park, and you can get a one-night storage facility near the place you are moving to, this will save you the hustle of getting everything from the old property the morning of completion. Keep all the important documents and personal paperwork that may be needed in a folder that you can carry with you.
Make arrangements on how and where you will pick the keys. After getting the completion statement from your solicitor, make sure you read and understand every detail to avoid any surprises on the last day. Lastly, since many people are involved in the completion process, it is safe to have a plan B if you can’t access the house that day. Get a place you can sleep until the next day.
For the seller, make sure everything you agreed on is the same on completion day. If you were to leave some furniture in the house, do not remove them without informing the buyer. Take care of all the legal requirements before the completion date.
Work On the Property between Exchange and Completion
If the property being sold is vacant and needs some work before it gets to the standard the buyer wants it to be; building work can be done between exchanging contracts and the completion date. Another instance is where the lender holds back mortgage funds until some work is done on the property. In such a case, allowing the seller to work on the stated areas might be the only way to sell the property. You can do building work through a legal document called key undertaking, which states what kind of work will be done on the property.
Why Is There A Gap Between Exchange And Completion?
Even though it’s not a must to have a gap between exchange and completion; because of the same day completion, the gap allows both parties to get all their documents and affairs in order and enough time to move. The time will also give the buyer time to get all the needed funds ready. The problem of not having the gap is that the buyer might pull out the next day; you will be left high and dry with all your belongings in a van somewhere.
The gap is a good breathing space where both parties can recollect all their thoughts, and if there are any second thoughts and one pulls out, there is no much damage done. Completing the sale on the same day means you will skip the exchange of contracts, which is a legally binding document. The exchange gives the seller and buyer peace of mind, knowing that neither of them will be pulling out of the deal without consequences. Why is there a gap between exchange and completion? It is time for both parties to finalise the purchase without any future problems; they have time to get everything in order before completion.
How to Avoid Delays
To speed up the process between exchange and completion, both parties should respond as quickly as possible when they are called. If there is any document or information needed, they should have them in hand to deliver whenever requested. They also need to be open and transparent throughout the transaction. If the mortgage offer has expired or the house is not in the standard condition to be sold, they need to be open and communicate that; unnecessary lies can drag the completion for no reason.
The seller and buyer should maintain communications throughout the process; talking will help identify any problems early. It’s important to agree on the completion date faster so that everyone gets enough time to sort out moving arrangements. Keep in touch with the agent so that he or she can be available when needed. Finally, when choosing the completion date, you should avoid holidays or days that most people move; you will need ample time to finalise the completion process and move.
There is no specific timeframe between exchange and completion. It can go from months to a few weeks or even just a day. Until the contracts are exchanged, there will be no date for completion set. The faster the seller and buyer exchange contracts, the sooner they will be able to complete the transaction. Allow enough time for both parties to arrange everything needed, rushing to completion may cause even longer delays; you may miss some details along the way.
Deal with all the things that may delay the transaction early, waiting for the last minute may result in extending the completion date. Choose the best day of the week as the completion date. Fridays are the most popular for moving; this means financial institutions and moving companies are busiest on Fridays. If you want to stick to the completion date, you might want to consider other days in the week where there won’t be any delays. Some challenges come between exchange and completion that you should note, for example, redirection of funds has become a threat, especially with online fraudsters.
Conveyancing is quite a lengthy process, and it is almost impossible to determine the exact timescales involved. However, usually, a conveyance might take anywhere between 6 and 12 weeks, particularly when a property is tied to a chain. On the other hand, the process can be shorter when there is no onward chain. Chain-free properties are rare, but are out there. But, exactly how long would it take you to buy a house with no chain? Here is everything you need to know.
What is a Chain in Conveyancing?
A property or conveyance chain is a sequence of connected property transactions, each of which depends on the foregoing and subsequent purchase. Conveyance chains are the primary source of delay in the process of buying a property. This is because sellers tend to list their houses in the property market with an expectation to purchase new properties using the proceeds of other house transactions. Ideally, what this means is that there is more demand than supply for properties, and it might take longer for a buyer to acquire a house than it is for a seller to dispose of their property.
Property owners can create a chain-free scenario by purchasing new houses before listing their current homes in the property market. In this case, buyers need to consider property sellers that are already settled in other houses. However, keep in mind that buying a property in a chain-free scenario does not always guarantee a shorter buying process. This is because of other potential issues that might be linked to the property you intend to purchase, such as unpaid taxes, payment dues, or even disputes.
Average Timescale for a Chain-free Conveyance
On average, the process of completing a property conveyance without a chain can take up to about 4 weeks. This is good news for a person planning to move into their new house in the shortest time possible. With time completion of paperwork and release of search results, there is no good reason why purchasing a new chain-free property should take more than 4 weeks. In the UK, only 1 out of 10 property transactions are chain-free. Such properties exist in such scenarios as homeowners moving abroad, houses disposed on behalf of a person that has passed away, or homes owned by property investors.
Also, newly built houses are considered to be chain-free. Therefore, when purchasing a new property from house builders, no other transactions are linked to that process.
What Slows Down the Conveyancing Process?
Buying a property can be a complicated process sometimes. As such, there are potential factors that are likely to slow down the process of acquiring a property. These factors include the following;
A conveyance chain is one of the many factors that can slow down the process of buying a property. The complexities of arranging transactions and other legal details by every party involved in the chain are notorious for delaying the conveyance of a home.
Surveys are critical when it comes to the exchange of ownership rights of a property from the seller to the buyer. Unfortunately, a slow surveying process implies a lengthy conveyance.
Search delays are quite popular during the peak times of the year. The longer it takes to receive your search results, the more time it will take you to acquire a new property.
The Mortgage Factor
The time taken to acquire a formal mortgage offer must always be factored in determining the overall timescale of a conveyance. When the acquisition of actual mortgage funds is delayed, the timeframe of buying a property is also slowed down.
Delays in Paperwork
When the seller’s solicitor delays in preparing and sending the paperwork to your solicitor, there is no doubt that you will have to wait longer to acquire the property.
How to Minimise Delays with No Chain
The general rule to avoiding conveyance chains is by identifying a seller who has no subsequent or foregoing property transactions to the one you are about to initiate. On the other hand, you can avoid delays linked to property chains by ensuring you do not have any other house transaction subsequent to the one you are starting with a new seller. However, as illustrated above, chains are not the only factors that contribute to conveyance delays. So, how do you minimise conveyance delays when there is no chain involved? Here are some helpful tips.
Appoint a competitive solicitor
In addition to providing legal guidance to their clients, solicitors are mandated to act on behalf of sellers or buyers in the conveyance of properties. With an experienced and competitive solicitor, you can rest assured that the paperwork, contract signing, payments, and other legal procedures in the conveyance framework are well taken care of. You can push your solicitor to have everything finished in time and in the right way. This way, all the unnecessary delays are eliminated.
- Be available always
Your availability throughout the process is critical as far as conveyance timescales are concerned. This includes being available for surveys and responding to all queries raised by your solicitor. Delays on your part (for example, delaying to respond to your solicitor’s emails) could slow down the conveyance of the property in question.
- Work on a Completion Date
The sooner you establish a completion date for the process and initiate negotiations at an early stage, the faster you will acquire the property at hand.
- Do your homework thoroughly
In this case, you want to ascertain that the conveyancer you choose to act on your behalf is highly qualified, experienced, and competent for the process. Also, please do your research on a property before you commit to it. This will save you time and money too.
- Online Conveyancing
There are plenty of reasons why an online conveyance is considered faster and more reliable. For example, you can share information with your seller at any service and hour, including timelines outside the working or office hours. This means that surveys and searches can be facilitated at faster times and queries addressed in the shortest time possible. There is no better way to buy a house faster than online conveyancing.
Tips for Buying a House with No Chain
To acquire a property in good time, consider the following tips;
- Never allow the agent to do all the communication
Estate agents play a critical role in liaising with solicitors, sellers, buyers, and other property professionals in the conveyance of a property. However, since you are the one purchasing the house, ensure that all the communication is not left for the agent. The only point in which the agent should be given some latitude of freedom is in ensuring that all the moving parts remain intact and that you are kept in the loop with the other parties.
- Maintain contact with your solicitor to ensure that all your responses and uploads have been received successfully.
- Maintain constant feedback. This is the only you will eliminate confusion, delays, and the pressure arising from lack of information on your part as the buyer.
- Select your conveyancer wisely. Not every cheap quote means good to your property conveyance.
Selling any property can be an uphill task. You need to know how to manoeuvre through the hoops of bureaucracy. More often than not, many property sellers end up making a loss instead of a profit on the house’s sale. It may be occasioned by the various charges you need to pay before making a property sale. For this reason, you need a solicitor.
Of course, these professionals do not come for free, solicitor fees for selling a house come into play. It is vital to understand that the solicitors only handle legal affairs; therefore, they are not responsible for finding you a buyer.
Let us dive right into the services they provide.
Let us kick off with the basic definition of terms. A conveyancing fee is an amount one has to part with to ensure all legalities involved in selling a house are handled correctly. In simpler terms, it is the amount of money you pay a solicitor to handle all the paperwork involved in selling your property.Get an Instant Quote >>
These fees are further divided into two:
- The legal fees
- Disbursement fee
This is the amount charged by the solicitor for their services and time. It is their fee for doing all the work and streamlining all sale operations.
Refers to the fee charged by third parties; these third parties complement the efforts of the solicitor. An example of a third party is a land registry, who is responsible for holding copies of a title deed. The buyer or seller can pay these expenses depending on the agreement or personal preferences.
Here is a list of the significant disbursements you might incur:
Transfer of ownership
There is a certain fee charged by the Land Registry to change a house’s ownership or any property. They have to change the names in the database from the previous owner to the new buyer. This cost may vary depending on where you live, but the standard fee is between £200 and £300. They will cover all the costs of this operation
Local authority searches
You will need to look up if there are any development projects planned to occur in the area you want you to buy a house. This search is mostly done on the local authority database. They charge a fee of £250-£450. This search will check for things like the drainage system or anything else related to the environment.
Anti-money laundering checks
It is an essential step before anyone can sell any property to you. The solicitor has to investigate if the money you are paying with is legit and that you are not just looking to launder the money. They will also verify your identity. This expense is about £6-£20 and will mostly be done by an online firm.
Refers to a check done by the conveyancer to find if the lawyer you are about to hire is a real one. You certainly do not want to send money to a fraudster. A typical property fraud check is about £10.
The Land Registry mostly holds title deeds. If you want to sell your property, you will need a copy of the land’s Title Deed. There is no buyer out there who will pay for land without a legit Title Deed.
Additionally, you must be aware that the freehold cost is often cheaper than the price for a leasehold. It just means that it is cheaper to buy land as compared to leasing.
Stamp duty land tax
Refers to a tax charged for buying land that exceeds a certain amount set by the authorities. In this case, any property above the value of £125,000 is subject to stamp duty land tax. This cost is based on a sliding scale so that the price may fluctuate.
Bank transfer fee
Telegraphic transfers are most preferred when it comes to transferring of funds because it guarantees the money will reach the seller’s account on an agreed day. The fee charged by the bank for this transfer is about £20-£30. The solicitor you hire may also charge a fee for overseeing the transfer of funds.
Help to Buy scheme (HTB)
The Help to Buy scheme has indeed helped many people become land or homeowners. But there is a small liability; you will have to pay extra due to the added legal work attached to this scheme. Many solicitors will charge a fee of £200-£300 depending on the workload that may be present.
Help to Buy ISA
It is the bonus that one can redeem if you want to buy a house or property through Help to Buy ISA. It means you will pay less for the property at hand. The solicitor will charge a total of £50 and the VAT.
If the deposit you are making does not come from one source and comes from multiple entities, you will have to pay extra. It is because you will have to prove that the other entities are legitimate. It results in more legal procedures, and thus, incur more expenses.
Any law firm will charge around £100 for this service. You will also incur an additional £200 for an insurance cover, but the insurance is optional in many cases.
Let’s now take a look at the factors that influence conveyancing fees.
The legal fees may vary depending on the law firm you hired, among other factors. The standard total for this service stands at £850-£1500. Here are some factors that make these services a bit costly:
- Surveys and inspections- these are procedures governed by the law. You cannot surpass these steps because doing so may be an act of defiling the law. They are put in place to protect the buyer’s investment, and they contribute a large percentage to solicitor fees.
- The size of a house; the bigger the house, the more the value. When the total value of a house is high, it attracts more risks because a large amount of money is involved.
- If selling a leasehold property- you will have to pay more because such cases involve more legal work.
- Other factors include; the state of the market and ownership structure. If the structure
Charges for leasehold properties
As stated earlier, the fees for freehold are cheaper than costs for a leasehold. It’s because a lease will involve many legal procedures that may prove to be expensive. One such procedure includes paying for a Deed of Covenant. The Deed of Covenant is a legally binding agreement between a landlord and a buyer. This agreement may entail details of conducting some repair work on the structure.
Most of the significant fees have already been mentioned above. However, there may be events where one needs to pay for other expenses, such as an insurance cover. For instance, if a seller does not have a building regulation certificate and intends to set up a structure. Then an insurance policy may be necessary.
What to do if a sale does not push through
In the unfortunate event, you do not make a sale or property purchase, then liaise with your solicitor. Some firms will offer a waiver for all legal fees incurred while some will only give you a discount. It is essential to choose a solicitor who waives all legal fees because you are looking to save some money.
Also, seek a clear explanation from the firm on why the sale did not push through, and possible remedies to the situation. It may be of help if you will head out to the market again and seek another buyer.
The need to hire a conveyancer
Conveyancers are professionals who will help you make that sale on your property. It is not a requirement by law to hire one; it is crucial to get yourself a conveyancer to make the deal much smoother.
Here are some reasons why you need to get one:
- Legal procedures can be hard to grasp- a conveyancing solicitor act as guides through the universe of property sales. An experienced solicitor will always explain to you what each step means and what to do next.
- Save on money- as much as hiring a conveyancer is a bit pricey. Think about the risks of attempting to make a sale all by yourself. You have no way of knowing what expenses to avoid and which not to, you will be walking blindly. A solicitor will guide you in the right way.
- They have special knowledge and skills- this is the most obvious reason for hiring a solicitor; to act as a guide and adviser as you make the transactions. They will explain to you the details in a contract and many more areas.
- Help you save on time- selling any piece of real estate will involve talking to many officers, agents, banks, vendors and many other parties involved. A conveyancer has a full understanding of all parties involved and as a result, will take less time getting in touch with each one of them.
- Stress-free transactions and closing process – solicitors will save you the hassle of running around and booking appointments with various offices. You will sit back and wait on the solicitor to get in touch with you.
When to pay conveyancer
Most conveyancers ask for a deposit so they can commence any work. This fee can be up to 10% of the total amount they will charge for the whole process. It is advisable to comply and pay this deposit fee so they can begin any work. You will then pay the balance after the sale goes through. However, in some events, the solicitor’s firm will ask you to pay for various disbursement fees before the sale is complete.
The role of a solicitor in the transfer of equity
If you get a divorce and need to split the marital property acquired over time, you will need a conveyancing solicitor. There are various processes carried out in such cases that include an identification search, bankruptcy search, Land Registry search, and transfer fees. Lastly, if you are looking to remortgage such property, you will incur additional soliciting fees.
How to save money on solicitor fees for selling a house
An excellent way to reduce this cost is by comparing the quotations of different firms online. However, look at their service charter to confirm you are getting value for your money. Do not go to the cheapest and get low-quality services.
Another way is hiring a solicitor who keeps the charges fixed from the beginning to the end. Some firms charge extra when a process turns complicated, and you end up getting a large bill from them.
How do you identify a professional solicitor?
Getting an excellent and reliable conveyancer can be challenging due to the various legal procedures involved and their costs. A quarter of all legal complaints filed to the Legal Ombudsman, UK are related to conveyance. It depicts a clear image of the situation on the ground. It is imperative to get the right solicitor and avoid being part of the sad statistics.
- A competent solicitor should be registered and associated with a professional body. It will help you know that the solicitor is indeed legit and is not out to defraud you of your hard-earned money. It would be best if you also did due diligence before hiring any firm to handle the legal part of the sale for you. A brilliant way to find if a firm or an individual is trustworthy is by going through reviews. Reviews give you a clear picture of the people or person you are dealing with.
- Additionally, you should check out online solicitors whose services are affordable and who take average time to complete their task. Most online firms tend to be cheaper and will produce good results in a shorter time. But the best way to get a solicitor is by comparing quotes from different firms.
In conclusion, get yourself a solicitor who puts the client before profit. A good solicitor should be client centred and will try their level best to deliver results in real-time.Get an Instant Quote >>
Transfer of equity is the inclusion or exclusion of an individual from a title deed of a property. It is a partial or complete change in the ownership of a property. A transfer of equity is done in the presence of a solicitor. The new title deed will reflect new ownership once both parties bring the process to a close.
Picture this short scenario. You are a real estate mogul. You decide to transfer one of your high-end properties to the management of your son. This transfer will be considered legally valid once the ownership rights in the title deed reflect your son.
As opposed to a property sale, transfer of equity does not necessarily change the entire ownership, unless this is the intention. The former owners of the property might remain when a new one comes in thus changes the list of owners.
When Can A Transfer Of Equity Occur?
Most people have their reasons or intentions on why they want a transfer of equity. The common ones, however, are:
- A New Relationship Or Marriage
If you are in a new relationship or are getting married, and you own a property, you might feel it best to change ownership of that property such that it reflects both you and your partner. Such a transfer will involve adding your spouse to the title deed, which will transfer ownership of a portion of the property to them.
- Separation or Divorce
Visualize that you are looking to separate or divorce your partner. Throughout your time together, you bought assets and jointly owned them. Now, that your relationship is over, you might wonder what to do with those assets. You can decide to keep being joint owners or opt to transfer ownership of each property to one partner. Maybe the matrimonial house can go to your ex-wife together with the kids, while the downtown piece of land to be entirely in your possession.
- Tax Efficiency
You can transfer ownership of your property to your spouse or children to reduce your tax liability. The tax payable according to most state laws reduces once you transfer ownership rights as a gift to a family member. It would, however, be advisable to seek legal consul before transferring ownership for tax purposes.
- Opting Out Of A Joint Ownership
Maybe some time back, you decided to pool funds with a friend or family member to purchase a property. You might have thought of leasing it out and sharing the profits. Now, one of the owners wants out or wants to transfer ownership to one of his friends or relatives. Doing this would call for a transfer of equity. Another instance is one owner seeking to buy out all the others, making him the sole owner of the property.
Process Involved In Transfer Of Equity
The process in the transfer of equity is, on most occasions, simple when the involved parties are in agreement, and when the owners listed on the title deed fully own the property. Factors like taxes, mortgage, or disputes between owners, can at times, come in play, thus complicating the process. Other times you and the other owners might be required to work with different solicitors as opposed to working with one. Each transfer of equity process involves varying factors and situations, and therefore, should be treated as unique. The process, however, follows the same steps. They include:
- Review The Title Deed
The solicitor involved in the transfer will request a copy of the title deed. He or she will examine the parties listed and check for any factors that might restrict the process, for instance, mortgage, taxation, and age of the new owner. The solicitor might as well request for the identity information of the individuals listed on the title deed to confirm their identities.
- Draw the Transfer Documents
Once the solicitor finishes reviewing the title deed, he will prepare the documents for the transfer, with the main one being the transfer deed. The transfer deed serves as legal evidence that a transfer of equity took place. The land registry provides different transfer deeds, depending on the portion of ownership being transferred. A TR1 form, for instance, covers for a full transfer of ownership.
- Inform Third Parties
A third party is any individual who does not necessarily own property but might be affected once it changes hands. In this case, it can be a bank, mortgage lender, or a building agency. Third parties should consent in writing, to the transfer of equity.
All parties involved will then sign the transfer documents to consent to the transfer of ownership. An independent witness should oversee the signing process. In the case of a mortgage, your solicitor should as well send the transfer documents to the mortgage lender.
- Inform The Land Registry
After all the parties consent and sign the transfer deed, your solicitor will inform the land registry so that they can create a new ownership record for the proposed transfer. A fee ranging between €50 and €1000 might be charged, depending on the property’s value.
What If The New Owner Is Less Than Eighteen Years Old?
A person under the age of eighteen cannot legally own property. If the new owner is less than eighteen years old, you might have to prepare a trust deed, then assign a trustee to hold the property until the young lad or lass turns eighteen. The trust deed will act as a covenant that the trustee is holding the property until the new owner comes of age.
Do All Parties Require A Different Solicitor?
One solicitor can serve both parties if no conflict arises. Another suggestion would be to work with two solicitors from the same firm. The law society, however, advises each party to work with a different solicitor if they sense that a conflict might arise, now or in the future. The usual assumption is that a conflict might arise. If one emerges, the same solicitor cannot represent both you and the opposing party. Another factor that calls for the involvement of two different solicitors is if there is money involved. Will the new owner take up mortgage after the transfer of equity? Is the transfer of equity a buyout? Is there any indication that the transfer is in exchange for monetary value?
What If There Is A Mortgage On The Property?
A mortgage is usually the most common inhibitor in the transfer of equity. The lender’s interest is that the debt continues being paid as per the stipulated instalments and timeline. The owners listed on the title deed are liable to ensuring payment of the debt. If your property is a mortgage, you will have to inform the mortgage lender about the transfer of equity.
If a new owner is being added to the title deed, the mortgage lender will assess his or her creditworthiness by running a background check. The lender might prepare some terms and conditions for the new owner, should he decide to take ownership of the property. The new owner can then proceed to take up ownership if he agrees to the conditions, and if the mortgage lender finds him credible beyond doubt. After the transfer of equity, the new owner will be responsible for payment of the debt.
In the case where an original owner wants out, he or she will be withdrawn from the mortgage agreement, meaning that he will not be held liable for the debt in case of default. No lender can allow you to walk away from a credit agreement without overseeing its payment. The mortgage lender will only approve the transfer of equity after ensuring the original owner pays the debt or at least pays his share. If not, then the new owner should consent that he shall be liable to pay the debt after the transfer, failure to which he stands to lose the property.
To avoid these complications, the involved parties can pay the debt in full before proceeding to transfer ownership of a property. They afterwards, will not have to seek approval from the mortgage lender. Another option can be taking up new debt to clear the existing mortgage, then remortgaging the property and henceforth, working with a new mortgage lender.
Payment Of Stamp Duty
A variety of factors need to be considered when assessing whether to pay or not to pay stamp duty land tax for a transfer of equity. If so, how much should you pay? The amount of stamp duty you pay depends on the situation. As per HRMC guidelines, you are required to pay stamp duty when a property is transferred to you, in exchange for monetary value. The term “monetary value” stands not only for money but also for a case where a mortgage transfers from the original owner to a new one.
A few situations that call for an assessment are:
You may have to pay stamp duty land tax if you transfer ownership rights of a property to your spouse. It will, however, depend on whether the property has been exchanged for monetary value. HRMC charges a 2% fee for a monetary value that surpasses the statutory threshold of €125000. For example, say the monetary value is €300000. Deduct the statutory threshold (€125000) from the €300000 to get €175000. The payable stamp duty land tax will then be 2% of €175000, which is €3500. In contrast, if the monetary value is €100000, you will not pay the stamp duty land tax.
- Divorce or Separation
At times, a court order or a prenuptial agreement might require you to divide your assets after divorce or separation. In both cases, you will not be required to pay stamp duty land tax. However, if you decide to buy your partner out in exchange for monetary value, you will pay the stamp duty land tax. This payment will as well follow the HRMC guidelines of 2% and €125000 threshold.
- If the transfer of equity is because of a will agreement, you will pay stamp duty.
- If you transfer ownership of a property as a gift to a family member, you will not be liable to paying stamp duty because the transfer is not in exchange for some monetary value.
It would be advisable to seek counsel from a solicitor if you are not sure on whether to pay stamp duty land tax. Some solicitors can conduct the payment for you, as per your agreement with them. They can as well claim relief for you if your situation does not require you to pay stamp duty.
Transfer of Equity Timeframe
A Transfer of equity usually takes four to six weeks to complete. It might, however, take longer if the parties do not agree or if the property is a mortgage. In the case of a legal dispute, the transfer of equity will have to be held off until the dispute is resolved. In the case of a mortgage, the mortgage lender or any other third party should consent to the transfer. It might take time for the lender to perform due diligence. Another factor that might delay the process is if you opt to remortgage the property with a new lender. The involved parties might as well slow down the process by not providing the necessary documents, paying the required fees or signing the transfer deed on time.
Costs Incurred During Transfer Of Equity
The two main costs that you will incur are fees payable to the solicitor, and registration fee to the land registry. The sum you pay your solicitor will depend on your agreement with him or her, and the sum you pay the land registry will depend on the value of the property. If your transfer of equity involves a mortgage, you might be required to pay a search fee or any other closing costs that might arise. Another cost that you may have to pay is stamp duty land tax, though it will depend on the situation.
You may have come across the term ‘Memorandum of sale’ while selling or buying a property but maybe unacquainted with it or its importance. For any prospective buyer who looks to submit a mortgage loan application or a seller who wants to sell a house quickly, you must obtain this important document. This post explores the memo of sale in detail while explaining all you need to know about it.
What is a Memorandum of Sale?
A memorandum of sale is a simple document containing written confirmation of every important detail of a property transaction. It is drafted by an auctioneer, home buying company or the estate agent after a sale agreement. The document is then sent via email or post to solicitors representing the seller and buyer.Get an Instant Quote >>
In most cases, memorandums of sale contain the following important details:
- The agreed cost of the property
- A full address of the property in question
- Important details of the seller and buyer such as their phone numbers, current address and email
- Complete contacts and details of solicitors representing the seller and buyer
- Land registration number of the property
- Whether it is a leasehold or freehold property and how many years are still on the lease if it’s a leasehold.
- If it’s a quick cash property sale
- The amount of deposit to be paid and whether it has been confirmed or verified.
- In case of an auction sale, information must be given as to the exchange date
- Where applicable, the mortgage lender and if there is principle decision in place.
- All the relevant details of the mortgage advisors participating in the sale
- Confirmation of ownership which should be done prior to property listing
- Whether the purchase of the property is under a company name
- Expected completion and exchange dates
- Any special condition in the sale like cash advance, an option agreement or delayed completion.
- Any legal issues that require investigations, for example, rights of way
- If the vendor is purchasing another property and if so, all the details of the purchase
- Fittings and fixtures involved in the sale
- Any additional detail relevant to the sale
Generally, the more the data, the better. This essential document should be drawn as soon as possible for the sale to kick off.
Who provides a memorandum of sale
A memo of sale is put together and given by the seller’s estate agent. The estate agent is to be paid a commission from the property’s sale; hence it is realistic that they provide the document.
When is a memorandum of sale issued?
As the seller, your estate agent is responsible for drafting and issuing the memorandum. The agent will draft it immediately you receive or make an offer and you accept it. The memo should be received soon after negotiating verbally and agreeing on the sale. However, neither the buyer nor the seller is obligated by law to adhere to the memo’s conditions; therefore, it can change upon further negotiations.
Why is a Memorandum of Sale Necessary?
The memo of sale is a crucial document as it confirms when a property sale or purchase is agreed upon by the seller or buyer. It is vital since, at this point, it becomes an official document and the agent will take your property off the market, which is crucial to the buyer as it implies less chance to be overcharged.
Memorandums of sale are very important documents that contain all the relevant data necessary for a property transaction in one place. With this document, you save a lot of time wasted in moving around when it comes to selling a house.
Immediately the sale is confirmed, the estate agent should circulate the document as soon as possible. By this, the sale can start immediately and efficiently. However, this is not legally binding, nor is it a complete confirmation. Therefore, the buyer can always withdraw the sale anytime, even with the document. To avoid such an incident, keep every information open and be honest from the start. Transparency is important in every legal transaction. Keep in mind that you don’t have to sign the Memo of sale.
What Happens After You Send the Memorandum of Sale?
A memorandum of sale is the very first and among the most important stages of a property sale process. It implies that your estate agent, in case you are using one, is now authorized to change the listing to sold-subject to contract (STC) or under offer. As soon as all solicitors get hold of the document, the actual process and work can start. However, this should not mean that everything involved is settled.
- Buyer Checks: make sure your agent checks the buyer’s financial state before proceeding with the process. This means evidence of a mortgage proposal in the last two months, sometimes referred to as an Agreement in principle (AIP) or a Decision in principle (DIP). You can also request for proof of deposit, so you are sure the buyer can afford to buy the property before changing it to sold on the property listing.
- Conveyancing: both solicitors start conversing with each other to begin the process. If they have not already taken any relevant ID checks, they will do this and request funds on the account to begin their work.
What property forms are required?
The following property forms should be filled out:
- TA6 form: which is a form containing all the property information
- TA7 form: a fixtures and contents form
- TA10 form: if you are selling a flat, you will need a TA10 form, typically a leasehold information form.
What your solicitor will also require
Apart from the TA6 form, TA7 and the leasehold form, your solicitor will need two forms of authorized identification, guarantees, warranties, building control documents, planning permission, among others. Besides, he or she will require the title plan or any other important information that will aid in the process.
With everything ready, you can start the arrangements with the mortgage company. This ensures that mortgage funds may be drawn at any point in the contract exchange.
What searches are performed
The buyer’s solicitor will perform certain searches like environmental, drainage or water, local authority, chancel repair, brine or common registration, clay as well as coal or tin mining searches.
The buyer can also conduct some surveys on the property. Although there are several such surveys, the main ones which should be done by an expert form the Royal Institute of Charted Surveyor include:
RICS General Condition Report
Although it’s a minimum requirement in many mortgage companies, this report is essential. It involves a survey to check the whole property in general without paying attention to the tiny details.
A qualified surveyor from RICS spends an hour or so on the property. However, the time spent on the property depends on the size of the property. The surveyor will raise any concerns with the property. However, this is not the best survey if the house is in critical condition.
RICS Homebuyers Survey
This is a very detailed survey that reveals every important information and issues with the property in question. For example, this survey report reveals structural issues, damp or any other issues with the house. A qualified surveyor will report these issues without disturbing the seller, like moving the furniture to analyze the area.
A homebuyers survey includes a valuation that uses the HM Land Registry information and includes any arising issues. This may mean that a buyer may have to renegotiate the purchase price downwards in serious conditions that will need repair. However, it is the seller’s choice to reduce the price. If the seller agrees to correct the price, there is no need to correct the memo of sale and passing this information to the solicitors involved is enough.
RICS Structural or Building Survey
Building survey is the most severe survey that buyers will opt to have peace of mind. Although it may be expensive to conduct a building survey, a buyer will prefer it if the house is old, it has many structural conditions and has not been refurbished for many years.
The surveyor will conduct a thorough survey similar to a forensic approach to produce an extensive report on everything. The buyer will research the cost of refurbishing the property to a good state and communicate it.
An example is with a property in leasehold where checks will be conducted with the management company. The solicitors will converse with each other and raise any concerns. Immediately they have all the data; they will summarise everything and refer to this as a report on Title.
Exchange of contracts and completion of sale
If the survey returns fine and there are no other inquiries, both solicitors will set a date to exchange the contracts and complete the sale. A Transfer (TR1) form will be sent to you to sign it and send it back.
The exchange of contracts and completion of the sale may happen a couple of days, weeks or even months later. However, it can still occur on the same day, especially since a lot of buyers and sellers prefer to exchange contracts and complete sale immediately after the process is completed.
The estate agent not sending a memorandum of sale
If you are having a problem with the agent failing to send a memorandum of sale days after the sale is agreed on, then this is not a very good sign that things will proceed to the end. It may not necessarily mean there is an issue since there are few things resulting in the delay. They may be:
- The seller is having trouble obtaining a solicitor to send the details across
- The estate agent is either slow or dis-organised
- The seller is considering other viewings or is waiting for more viewings before committing to the sale.
If even after a week of a sale agreement, the seller or estate agent is not sending the memo, this may be a sign of a slow and frustrating purchase process. It’s even more painful when the memo is sent a few days later, so you realize they are slow and the process will take more time than you expected.
What to do when you are not receiving the memorandum of sale
The seller should send the memo a few days after a verbal agreement on the sale. If you are not receiving the document almost a week after a verbal sale agreement, then it’s time you take a step. Contact the seller or estate agent if there is one to enquire about it. Ask when and what time to expect it and wait patiently.
Although the delay is not a good sign, it may be as a result of some unavoidable circumstances, so it’s best you give them some extra time. If they are not sending it on the communicated date, you can still inquire. However, note that a verbal sale agreement does not legally bind you to the purchase. You can therefore walk away to another sale, especially since the concern is not from your side. However, may communications to inform the seller or agent of your decision before you proceed.
Property sale chain complications
A chain break is among the causes of a memo of sale to fall through. It happens when somewhere along the property chain, on party drops out, causing other involved parties to be at risk of falling apart. This causes lots of frustrations and upset as the dream of acquiring a house may slip away in the buyer’s hands.
A property sale chain occurs when a property buyer and seller are tied together because the purchase depends on another different transaction. The potential buyer is not always selling his or her house to buy yours.
However, the risks of the other transaction will not necessarily fall to you. Besides, there are different ways to overcome a situation where a dependent sale falls through. The key factor here is communication, as it will help solve the issue. Solicitors who have enough experience will handle such a situation best and avoid problems in time. Ways to eliminate the issue include:
- Analyze the problem and understand what the problem is. If the problem is related to money, alternative funding, for example, borrowing from family or friends, can be sourced.
- If the property was on-demand, the agent may choose to replace the buyer. At this point, a good number of the paperwork is already done, so an experienced solicitor will know how to go about the conveyancing quickly.
- You can also choose to drop the price for the buyer.
This whole process may be frustrating; hence you should remain patient and handle things in a calm way. watch out on ‘gazundering’ where the buyer may decide to drop the price at the last minute. If it happens, you should back off from the transaction.
Other common issues with a memorandum of sale and how to solve them
Apart from the chain break, there are other issues relating to a memo of sale. One common issue is how long it takes to complete a transaction relating to the memo of sale. A completion date is postulated as four weeks after exchanging the final contracts. However, the uncertain nature of the property transaction may imply several delays between the final stage and the memorandum. To avoid such delays, hire a competent agent and experienced solicitor to help in the buying or selling process.
Since the memorandum is not a legal binding paper, a party can choose to withdraw and there is nothing you can do about it. There are no penalties for withdrawals, hence no reassurance that the sale process will proceed to the final stage. Although you cannot eliminate the possibility of a fall, being transparent and organized during the process will help.
If you are buying, be transparent on your financial position and obtain a mortgage agreement in principle prior to the process so you look at properties that you can be financed for. Besides, go for houses that are within your budget to save you the finance troubles. When selling, be considerate of the price and explain every important detail, especially the property’s state.
A memorandum may seem overwhelming as it involves a lot of details and forms to fill out. However, the benefits of acquiring the document make it worthwhile, and taking your time to familiarise yourself with this document will save you a great deal. It’s important that you seek legal guidance if you feel the urge to and understand everything that is involved in a memorandum.
The document is not only important to the process but will also help you sell or buy your property quickly. With a competent estate agent and an experienced solicitor, you will sell your house quicker than you expected. If you are buying, then your dream of acquiring a house will come sooner than expected.Get an Instant Quote >>
It can be a daunting process to sell your house and most especially with all the hustle and bustle required to obtain the necessary documentation. Though it is an overwhelming experience to change what was once your haven and move into a new house. Conversely, the hard work takes its toll on the homeowner right after they have made the decision and they start the selling process. The selling process is complex and among the decisions that you need to put in place are finding an estate agent that will organize the viewings and spruce up your property. Then here comes the paperwork which is a key step to get your home selling process. Some documents are fairly straightforward and others are complicated. Here is everything that you need to know about the documents needed for you to sell your house in the UK.Get an Instant Quote >>
1. Management Information Pack
This is also known as the leasehold information pack. If you have been paying for services or your house is leasehold then you are required to have a Management Information Pack. This pack contains the necessary information a seller is formally required to avail to the buyer. The vital information contained in this pack could sway potential buyers to make a purchase of your house. To arrange for this document, it can be done through the freeholder, managing agent or you can hire a solicitor to get this document for you. It is worth noting that the pack takes several days to arrive and it is better doing this right off the bat after you have decided to sell your home.
2. Proof of Identity
Basics first, right! For you to make to sell your house you need to prove your identity by providing any form of identification. To prove your identity, you will most likely be asked for a minimum of 3 forms of ID, such as passport, driving license, bank statement or a recent utility bill. Also, photo identification is required, it is key to check with your conveyancer or solicitor beforehand. Your proof of identity can be held for five years after which the documents are destroyed.
3.Energy Performance Certificate (EPC)
When you sell, rent or build a home it is a requirement to provide the EPC. This legal document contains details of how energy efficient a house is and its CO2 impact. Properties are given energy efficiency ratings. An A rating being maximally efficient while a G rating being minimally efficient. This important document enables buyers to determine the cost of energy once they move in or if they will need to improve the efficiency of the house energy system. An EPC remains valid for 10 years and it can be acquired from a qualified assessor. By simply providing the register with your address you can retrieve your lost EPC certificate.
4.Property Title Deeds
Original property title deeds need to be provided so that you can sell your house. Not only do these important documents provide the chain of ownership but also contain important documents such as leases and licenses which the potential buyer needs to see. Whether or not your property is registered it is a must for you to provide the property’s title deeds. If you are lacking the deeds do not fret as you can check your title deeds with the Land Registry whereby they are digitally put into the system and registered. In the case your property is unregistered you will have to prove ownership by providing unregistered title deeds.
5. FENSA Certificate
FENSA is an abbreviation standing for Fenestration Self-Assessment Scheme and this certificate contains any details about any doors or windows that were replaced after 2002. It establishes whether the doors or windows comply with the stipulated building regulations. When you sell your house you need to supply this certificate. If you haven’t been living in that property you should check with the home records to find out if any replacement work has taken place or not.
6. Fittings and Contents Form
This is also known as The TA10 Form. It serves to enable both parties to know what exactly is being sold from furniture, outbuildings to even ornaments. It covers items such as the garage, trees, plants, shed to any other indoor item that you may throw into spruce up the deal. The property price should be well detailed so that both the seller and buyer should know what is included to prevent delays or reduce the risk of the potential buyer pulling out.
7. Shared Freehold or Leasehold Documents
If you are selling a leasehold property then you need to provide the lease for the said property to the prospective buyer. Whereas a Share Certificate is required if you are trying to sell a shared freehold home. Obtaining this information can take several days or weeks and it is entirely dependent on the landlord or managing agent. To avoid any hold-ups you should seek to get this information right after you have decided to sell your house.
8. Property Information Form
This is also known as the TA6 Form and it is hefty to complete though it is a vital document that plays part in the selling of your property. It is among the largest documents that you will need to complete when selling your property and it is essential to invest enough time when producing this document. This document provides detailed information about the property and it enables a buyer whether or not to purchase your house. The answers to this form are legally binding and they need to be completed truthfully and accurately. The TA6 form covers matters such as:
- Planning- this includes any new building works or alterations that are either ongoing or have been completed.
- Boundaries- where does the boundary of the property lie.
- Agreements- whether formal or informal you need to disclose such agreements.
- Council tax band
- Sewer system- if there is a septic tank or a mains sewer system connecting to the property.
- Utility suppliers- you should give details of utility suppliers
- Target completion dates- if there are any undergoing projects you should give their target completion dates.
- Complaints- any complaints or disputes with the neighbors.
- Warranties- any guarantees and warranties relating to the property.
- Insurance- information regarding how much it will cost to insure the house and any other added irregularities.
- Occupiers- if after the purchase of the property will the current tenants continue to stay in the sold house or not.
- Parking- whether or not will you share your parking space with your neighbors and any matters related to parking.
- Services- the condition of various services in your home such as heating, wiring and that of the boiler.
- Environmental matters- this covers matters such as flooding risk, radon levels and your EPC.
- Other charges- it includes costs such as lease costs or costs that may arise from a gated residence.
9. Electrical Certificates
Electrical certificates give information on all the electrical works that have been carried out at the house and it is something you need to provide the potential buyers with. Examples include electrical replacements or rewiring. If you don’t have this document then consider hiring the services of an electrician who should be able to produce this certificate so that you can hand it over to the next homeowner.
10. Boiler Replacement and the CORGI
CORGI is a gas safety certificate that gives information about the condition of your gas or boiler. If you have either replaced the boiler or the prior owner has done so and you have the records then you should provide the records to the prospective buyer. If you don’t have updated records of your boiler then the buyer will assess the shape of the boiler is or if they need to invest in it to make sure it is fully functional This is not favorable to the seller as they will have to incur these costs or better yet reduce the price of the house.
11. Documents On Alterations and Extensions
Adding extensions or making alterations is a common doing to add value to your property. Though not all refurbishments require approval it is important to be informed to prevent delayed sales. This document provides proof that all the legal procedures were followed before and during the renovation of your property.
For you to sell your house you need to comprise this long list of documents and it is not an easy task. However, depending on your work or lifestyle you don’t have to stress over comprising this long list of documents.
Some solicitors and companies can do all the heavy lifting for you at a reasonable fee. With this in mind, it up to you to find an estate agency or company that will sort out all these vital documents while putting your best interest at heart.Get an Instant Quote >>
For many people, buying a second home or property can be a very appealing idea, and around 10% of the UK population have second homes. The process of looking for a second property may be a bit easier since you have been through the process of buying your first house., but things can be a little bit different.
The reason for buying the property and the purpose of the home brings about different rules and regulations. We discuss the different issues that a buyer needs to know in the purchase of a second home. These important aspects include; reasons for buying a second home, how to finance the purchase, the extra costs incurred and the importance of contracting a conveyancer.Get an Instant Quote >>
Reasons of Buying a Second Home
Most people buying second homes are motivated by having a getaway crash pad. Some want a house outside the city where they could enjoy the serenity and fresh air of the countryside when having a relaxed weekend or a house in the city where they can stay during the working days and go back home to the family during the weekends. In some cases, it is an investment with the hope of the property value going up, while renting it out to cover the cost of mortgage. Whatever reasons you are buying the property, you will be subject to different regulations and rules.
Buyers need to look for a real estate agent who will work to meet their needs to find the right property.
How to Find a Good Real Estate Agent
Having bought your first home you may be familiar with the ways around estate agents. For a second home, you will need to be more careful as you are buying in a locality that may not be very well known to you. You have to find someone who knows the property around that area very well. Here is what you need to check out on an estate agent:
An Understanding of the local housing market
The agent should be conversant with the houses on sale at the same time be in the know of the price ranges of those houses.
A good transaction History
BE sure to ask for the agents records of previous completed works. The history will help you gauge the capability of the agent in finding the home you want.
Engage the real estate in talk to evaluate his or her communication skills before contracting them. You have to find a reliable communicator as you will probably be busy with your job. Good communication is a sign of commitment.
Good Negotiation Skills. You can gauge the agent’s negotiation skills through his completed transactions. A success rate is a proof that the agent has good negotiation skills and can get you the best deal.
Are there Extra Costs Incurred?
Yes, there are extra costs. When buying a second home, the first house becomes a primary residence. A buyer must be aware of some extra financial burden that was not felt when buying the first home.
In the United Kingdom, second homes are subject to the stamp duty. While buying his or her first home, a buyer is exempted from paying the stamp duty. It is a relief for first-time buyers, and is included in the purchase of any other home that the individual buys. The stamp duty depends on the price of the property they want to call a second home.
|Property Value||Standard Stamp Duty Charged||Additional Stamp Duty Charged|
|Up to £500,000||0%||3%|
|£500,001 to £925,000||5%||8%|
|£925,001 to £1.5m||10%||13%|
Rates are different depending on where you are in the United Kingdom, and if you are buying a mobile home such as a houseboat, and caravan you are exempted from any stamp duty.
Capital Gains Tax
In a scenario where the owner of a second home decides to sell it, the owner is liable to pay the capital gain tax that does not apply to primary residences. The tax applies to the excess cash earned from the increase in the value of the property and not the whole amount you sell the house.
For basic rate taxpayers, the tax is lower than that for higher taxpayers. Basic taxpayers are required to pay 18% while higher taxpayers are required, to part with 28%.
If you plan to use the second home as your primary home, it is important to inform the relevant authority to be exempted from the tax.
Just like your first home, the second property will be subject to council taxes. Second homes are classified, as furnished home and the taxes are applicable whether no one lives on the property. There are discounts given if the home meets certain criteria, and is leased for a certain amount of time.
Costs such as bills still apply in second homes. These bills include insurance and heating tax. You could also spend on renovations and decorations that are not that cheap.
Financing Options for a Second Home
The different ways available to finance the purchase of a second home include mortgages, self-sponsoring and using equity.
Most people who are still paying mortgage on their primary residence are widely worried if they can get a mortgage for the second house. Well, they can apply if they meet some requirements. These requirements are:
- A Substantial Deposit – Most lenders will need a form of commitment from a buyer, in form of a deposit. Most lenders will need a deposit of 25% of the property’s value.
- A Good Credit Score – Just like any other loan, mortgages need to be certain that your history of credit has been smooth and that you are reliable. Lenders will need this before considering giving you another mortgage.
- A Good Income – Since you are still repaying your first mortgage the lenders need to check if you earn enough to service your first home mortgage and the second home mortgage at the same time.
- Proof of Rental Income – If the plan is to rent out the second house, you will have to show your prospective lenders proof of a potential rental income.
Different mortgage facilities give different valuations costs, counsel fee, arrangement charges and early-payment fees, a buyer should be keen at comparing the offers.
Instead of taking another mortgage, a buyer can take into use the equity he or she built up in the repayment of the mortgage on the first home. It is a phenomenon known as re-mortgaging.
Since buyers need 25% of the value of the property they want to buy, they could increase the mortgages they are currently servicing by that similar amount. The important thing is the buyer to check the amount of equity they have on their home.
The equity you have on your property is calculated by finding the difference between the current value of their home and the amount of mortgage they are yet to pay.
For the older borrowers they have they have the option to ask for a retirement interest-only mortgage that allows them to pay interest until they die or enters long term care. The house will later be sold to repay the mortgage.
If the equity is enough to release the 25% needed as deposit, they have the option to increase their mortgages by that amount.
Letting Out the Second Home
In case the reason for buying a second home is to have a holiday home, it can be turned into a revenue generator. As the homeowner, you have the right to let out the house when you are not using it. In some instances, you cannot let out a home on ordinary homebuyers’ mortgage. For that situation, you may have you remortgage your first house or get a specific holiday let mortgage.
You could also opt to rent out your primary home and live in the second home through buy-to-let.
This a situation where a buyer lets out his or her current home to raise a deposit for another house or to live in their second home.
If a buyer decides to go this route, they must communicate with their lender as some prohibit letting out a house whose mortgage is yet to be fully paid. The rent earned must also be more than the monthly payment of the mortgage you have to make.
Whether it is holiday letting or let-to-buy, the owner can do it personally or seek the help of real estate managers and services like air BnB. You are allowed to deduct the expenses of maintaining the house before taxation if you rent the property for more than 105 days. Also, it is important to remember that before seeing profits, the revenue will have to settle renovation costs and stamp duty.
Helping a Family Member
A homeowner who is trying to help a relative climb the property pyramid, the property will be considered as a second home and will be required to pay the stamp duty.
Buying to Resale
Some people may buy a second house to try the art of property development. The goal and aim are to profit off on a strong housing market.
The plan is to buy a cheap house, work on it through renovation and extension and then later sale it at a higher price. The problem with this is it only needs people who are risk-takers as housing markets could crush leaving the individual with a house that they are unable to sale while counting loses on the money spent on the house.
Buying to Start a Business
If you are purchasing a property for business and partially for residence, it will be classified as mixed property or semi-commercial. It means that business rates will apply for you but you will have a reduced stamp tax.
Buying at an auction
You could choose to buy your second home at an auction thus eliminating the need of a real estate agent and freeing up funds for the stamp tax and other taxes.
Once you have decided on the locality you want you could contact a nearby auction house that will send you a catalogue. Check out the catalogue, and visit the properties personally to check them out.
For this purchase, if your bid is successful you are needed to pay 10% immediately and the rest soon after. It is suitable if you have the full amount to purchase the house.
Buying a Home is a Legal and Financial Process
The process of buying a house comes along with a lot of financial calculations and decisions. The process can be very tiring and very risky if not handled with a lot of care. For that reason, a buyer should seek the help of a conveyancer. You need to know who a conveyancer is and what services you should expect out of him or her.
What is a conveyancer?
A conveyancer is a specialist who deals with the legal clause in the buying and selling of a property. It is important that though licensed a conveyancer is not necessarily a lawyer or solicitor, though they could be.
The process takes the following steps;Get an Instant Quote >>
Instructing a conveyancer
The first step is you deciding on a house you want, and you get an offer. After this, you contact a conveyancer who will ask you to fill up documents and draft a contract and terms of business. The contract will set out the costs that you will have to pay and the deposit you have to make. Be careful when using one who was recommended by a real estate agent.
Receiving sellers Draft contract
The seller’s conveyancer will do the drafting after which your conveyancer will go through it. The contract should include; property forms, official documents supporting ownership and other documents relating to the house.
Be sure to check whether the property you are buying is a leasehold or freehold. Freehold means you will own the land on which the property stands while freehold means the land you are on, is leased. Be sure to check by yourself the lease period as it can be challenging to extend.
Searches and Investigation
At this stage, your conveyancer will dig deep looking for other details about the property that could not be seen by just visiting the property. This is done to protect yourself and your mortgage lender.
Searches could include;
- checking if there are any future government infrastructure that will affect the property i.e. a road
- Checking out the land and house title deeds are authentic
- environmental searches to see if the house is near any kind of environmental unfriendly site and chances of the property being affected by acts of nature like floods
- Checking that there are no leftover liabilities on the property. You could be advised to take a chancel repair insurance.
These searches incur extra costs so be sure to include them in the conveyancer fee.
It the responsibility of your conveyancer to go over the details of your mortgage and evaluating it. You will also be required to take building insurance on the property by your lender
After all inquiries have been answered, and you are satisfied you can go ahead and sign a contract. The contact must include the fixtures and fittings inventory, the date of completion and arrangements for paying the deposit.
Exchange of Contracts
On the agreed-upon date, the deposit is paid, and contracts are exchanged, marking the end of a legal process. At this point, the contract is legally binding. Both your conveyancer and the sellers will read out loud the contacts to ensure that they are similar and record the whole process.
Between the time the contracts were exchanged to the time of completion, the seller must have vacated the premises and their conveyancer or solicitor have received the payment. This period allows you the buyer to apply for transfer of title deed to your name at the land registry
For completion to happen, all the payments should have been made, and the seller leaves the keys to the property at the real estate agents office. At this juncture, the process of conveyance comes to an end.
After completion, ensure that your conveyancer paid the stamp duty, you receive your legal documents from the Land Registry that you will send to your lender. Ensure to keep all documents including the estate agents and conveyancer documents and copies of them safely.Get an Instant Quote >>
Purchasing a home can be a very daunting task, especially if it’s your first time trying to own one. With the current Covid-19 pandemic, this task is even more challenging. Having a rough sketch of how this process works will make this task less stressful. This post is a comprehensive guide on the several steps of buying a home and the possible timescales.
What period will it take you to buy a house?
The basic timeline for purchasing a house will always vary, this is depending on the purchaser and the seller’s circumstances, including the conveyancing issues and delays that may arise.
1. 6 weeks-8 months
- Finding a property: Do some research on the area, look out for estate agents and search on several websites.
- Submit an offer: Approach the seller and tell them what your budget is and if there are any conditions you want met.
2. 4-12 weeks
- If you offer is accepted: Get in touch with a surveyor to check on the property’s condition. Get a conveyancing quote and instruct the chosen
- Conveyancer or solicitor who will also check on any legal issues.
- Exchange: You will make a deposit and once you do so, you will not back out of it without a high cost.
3. Instantly-4 weeks
- Completion: You will need to pay the balance in exchange for the keys and deeds to the property. Legally, the property is now yours.
- Note that: Nobody has the legal authority to see the deal to completion until they exchange contracts.
Affordability of the property you want
It will be a waste of time getting excited about your dream property if you don’t even know if you can afford it. It will be best to avoid unnecessary disappointment by sitting down and assessing if:
- You have the necessary funds to buy the property
- You can borrow any additional cash that you will need,
- Mortgage Affordability Calculator
An AIP refers to a mini-application that involves the lender checking on your information and credit file to decide the amount of money they might be willing to loan you. These are not binding offers since the lender can change their minds. For instance:
- The lender might be unimpressed with the property that you are willing to buy.
- You may fail to present the requested necessary evidence. This evidence is such as payslips or p60.
An AIP is also be known as a ‘mortgage in principle’; thus, you need to be keen.
Finding your dream home
By now, you should be ready to go on a house hunt. This should help you find your dream home.
Make good offers
Consult with experts in the field of house buying, selling and renting to give you clues on the offers you can give when buying property. Do not spend amounts more than what your pockets can afford since you will also have to pay additional costs. Make sure you ask the seller to include a list of all the fixtures and fittings in the purchase. This will enable you to avoid being given the keys to an empty house.
This is just a small milestone in the process of owning your new property. But remember that at this point, remember that nobody has any contractual obligations.
Be keen on gazumping and gazanging
It is important to keep in mind that you and the seller have no legal obligations to see the purchase to completion until the exchange of contracts’ level is arrived at (Engalnd and Wales Only). Before you reach the level of exchanging contracts, you will always face the risk of gazumping and gazanging.
- Gazamping: This is when another buyer makes an offer that comes with more money and your seller decides to put a hold on the deal. Therefore, you could add a condition to your offer that asks them to take the property off the market. This will reduce the possibility of them welcoming another buyer.
- Gazanging: This is when the seller makes a choice to cancel; thus, staying put. This usually happens when the prices are skyrocketing and they can make a lot more money if they are patient for a few more months.
There is very little that a buyer can do to avoid these situations since they are interlinked to what the seller chooses to do and this could end up costing you lose of a lot of cash. This is especially if it happens prior you exchanging the contracts and possibly your solicitor has already done a great deal of work.
Therefore, the best thing to do to avoid this situation is to be as fast as possible in the process of accepting your offer and exchanging contracts. You can do this by getting your solicitor and the mortgage lender to fasten things.
Find Your desirable mortgage
An agreement in principle is usually valid for a period of between thirty to ninety days; this is depending on the lender. Therefore, if the search took long, then this period might have expired. The mortgage products on offer might vary daily. Therefore, it will prove worth it to do a snap check of the market to ascertain if there are other better deals out there.
Don’t be quick to go direct to the bank
There are so many lenders out there and only a few will have an ideal deal for you. Maybe your bank will be able to give you a good deal. Having a good credit score will grant you a lender that will want to offer you a deal. You can go an extra mile and get a personalized mortgage illustration that will have detailed mortgage features.
Choose a good conveyancing entity
Conveyancing is a process that involves transferring property from one owner to the other by following a legal procedure. Conveyancers who have a license are also specialist property lawyers. They handle all the legal paperwork, carry out the local council searches and also the land registry, develop a draft contract and take care the whole process of exchanging of cash.
Most people scouting for houses do this before making an offer even though it is not crucial. However, with the help of a good conveyancing solicitor, this process can be fast. You need to have a good solicitor who is confident with what they do, good at communicating and most importantly, reliable.
How to find a good solicitor
When you are trying to purchase a property, you must find the best solicitor to represent you. Appointing a conveyancing firm with a lot of experience will enable you to find a solicitor that will be beneficial to you. You can check out the best conveyancing firms by going through reviews, meeting with the solicitor will not be necessary. However, you can be able to arrange for face to face meetings.
These conveyancing solicitors carry out several duties such as:
- Understanding the requirements of the client and the timeframes.
- Preparing for the completion procedure.
- Represent the buyer in making inquiries to take care of issues that are pending.
- Checking for the house’s title and compiling a list of searches for the property.
- Understanding the terms of the mortgage and taking care of any special conditions
- Answering the client by providing important information and documents.
- Setting up dates for exchanging contracts and documents.
- Register ownership with the land registry.
- Handing over tax returns and transferring funds for the required stamp duty that is needed.
- Preparing a budget for the client to know the amount of money that the conveyancer will need to exchange and complete the deal.
Checking the property by the lender and if you are worth it
At the time when the agreement in principle is complete, the next procedure will be converting it to an entire application. The lender will make sure it is comfortable to:
- Lend to you: The lender will check whether the information you gave is accurate and they will ascertain by requesting for evidence like payslips and others.
- Lend on the property you intend to buy: The lender’s collateral for taking out a loan is the property. In case you don’t manage do update your mortgage payments, the lender will repossess the property. The next step will be to sell it for them to earn back their money. Your lender will want to ascertain that the property is qualified for this purpose. For this reason, is why the process of application makes use of an independent valuer. He will be responsible for assessing the property and give the lender a final report. What the buyer offers for the property may not be the actual value. The loan to value ratio of the mortgage deal will have to be scrutinized on the official valuation but not based on your offering. Lenders will have their own rules on the type of property they are willing to lend.
Does a lender have the power to not lend on your property?
A lender might have different reasons as to why they do not want to lend on your property. Some of these reasons may be:
- The lender may become wary of the properties that are higher than commercial premises or residential houses constructed using unusual materials.
- The application form needs to verify these issues so that the lender can see if it is a no go so that they do not waste the time of an application valuer. In case you find something that’s not adding up about the property, note it at the application stage so save time.The solicitor carries out searches on your behalf
While the lender is assessing your application for the mortgage, your solicitor will begin carrying out the required searches. Searches and prices will always be different depending on the location. Some of these searches are optional but it will be great to carry them out. Furthermore, the mortgage lender will persist on some. For example:
- Local authority searches: Check to see if you require to be aware of any issues related to building control, neighbouring road schemes and enforcement actions.
- Drainage searches: Check whether the property has any connections to the sewers.
- Environmental searches: Check to ensure that the land which the property sits on is not contaminated.
These searches usually cost certain amounts of cash and the solicitor will always charge you these fees at the early stage of the conveyancing process. So, you do not need to get it out of pocket again. There is no way of reducing these costs.
Solicitors mostly work depending on their schedule. Check on them frequently through phone calls to get the papers and documents processed faster since you have paid them to carry out these duties. Try and write to the senior partner if they do not meet your expectations.
Book a property survey if you need one
Once you are certain you have the chance to borrow the money you need, you will need to make sure that the entire property is in pristine condition. You should do this after the mortgage offer is complete but you might do it before the exchange.
1. Mortgage valuation isn’t a property survey
The mortgage lender performs basic valuations to guarantee that they are comfortable to lend on it. On a bad note, this does not guarantee any protection. If the property goes down just when you purchase it, it will just be tough luck on your side.
2. Having second thoughts on mortgage valuation?
At times, the property’s valuation is usually carried out by just a simple ‘drive by’. The valuer can simply drive past the property and inspect it to find out what they can see through the car window. Most of the time, they just do this to make sure that the property exists. If the property appears to have a problem, it will be best to revisit the estate agent and renegotiate the price. This might seem like a late move to engage in during the process but surveying means additional costs so it won’t be reasonable to pay up until you know you are getting the mortgage.
3. Types of surveys
There are three major types:
- Homebuyer’s report: This survey is best for conventional properties that are less than fifty years old. At times, you can settle your mortgage dues with your lender to carry out this survey simultaneously as the basic valuation of the home.
- The full structural survey: This survey is more relevant for older properties. Furthermore, they are more detailed and cover everything and most of the time they are usually worth the expense. This survey can give you a reason to re-negotiate the price of the property. While carrying out this survey, try to make sure they access the attic space among other things.
- Snagging survey: Buyers who intend to buy new buildings might also have to spend a little more cash. This survey points out any defects and bits that are unfinished so that you can push the developer ensure they get corrected before completion.
It will work out great for you if you befriend the surveyor. They are likely to tell you more than they will write in the report. If the surveyor finds any property issues, you will need to ask the builder for the costs of repair. You can request the vendor to fix it or reduce the total from the price.
Attainment of a mortgage offer
At this stage, you are close to owning your property. The only thing you need to do is get a formal offer that states your lender is willing to front you cash to purchase the property. Sit down and go through the mortgage offer and check out the following:
1. Find your mortgage illustration
Go through your new mortgage illustration, including the offer document sent from your lender with the illustration that you put away. In case there are any differences, you will have to go back to your lender.
2. The accuracy of the mortgage offer
All things listed on the mortgage offer document need to be accurate, especially in the case of your personal information and any vital figures. Therefore, if the information is not accurate, get in touch with your solicitor to get it corrected.
3. Mortgage conditions review
The mortgage offer you receive will outline the conditions to apply by before the lender hands over the cash. The solicitor will be responsible for making sure these conditions are adhered to.
Take care of your buildings insurance
You may not own a building, but you will be legally bound to buy it once you exchange contracts with the seller. Go through the valuation report of your mortgage to review the value of rebuilding that the surveyor estimated. The purchasing price may not be a factor but you will need to have enough cover rebuild if anything happened.
Hold talks for a date of completion
The solicitor will give you updates on the searches’ results. If it turns out all good, the next step will be to agree on the date of completion with the seller. The date of completion is the day you get the keys to the property. This will have to be a suitable date for all of you.
Surrender the cash deposit to your solicitor
At this stage, you are almost getting at the stage of exchanging contracts. This means you need to hand over your deposit money to your solicitor. Your solicitor will also involve you in a contract signing at this stage, this is also the time you commit to buying the property.
Exchange of contracts
At the time when the seller’s solicitor and your solicitor exchange copies of the contract, you go through a process termed as exchange of contracts. Therefore, these exchanged contracts are legally binding between the associated parties. You can’t back out from a sell once this happens. The same applies to the seller too. At this stage, a series of paperwork happens quickly.
Ask for a statement of completion from your solicitor
The solicitor will furnish you with a completion statement. This statement will clearly breakdown the amount of money you need to hand over to the seller’s solicitor. Furthermore, it will entail any outstanding deposits, solicitors’ stamp duty land tax among others. You will have to pay these fees before the completion date.
More searches carried out by the solicitor
Before completion, your solicitor will have to verify that the seller is still the owner of the property and at the same time you haven’t gone bankrupt since the mortgage offer.
Signing the transfer deed
The solicitor will get the transfer deed ready for you to sign and there needs to be a witness to this. This will be an assurance that you are ready to own the property. After signing, the seller’s solicitor will be sent this copy by your solicitor.
Your solicitor gets money from your lender
The mortgage money that you agreed with the lender will be requested by your solicitor from the lender so that payment time will have adequate time to clear in account of the solicitor. This is the point you can receive the mortgage funds you agreed upon with the lender.
The solicitor will send the payment in full to the solicitor of the seller and get their title deeds and proof of the seller’s mortgage being cleared.
At this point, you get the keys to the property handed over to you.
Stamp duty payment
This payment is made through your solicitor. You will have 14 days before the solicitor sends your transfer deed to the stamp office so that you pay stamp duty tax. However, they usually ask for money before the completion.
Register your ownership officially
You should leave it to your solicitor to register your details with the registry. The amount you pay can be large or small. It will all depend on the price of the property you are purchasing.
Get the tittle deed
It will be the responsibility of your solicitor to fetch the new title deed from the land registry. The next step will be to forward these documents to your mortgage lender. At times, they keep them in a file. This is in case you don’t put in a request for them.
You are now the proud owner of your new property so it is time to put your mark on it and make it your dream home.