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Tips before you buy
Buying a house is most likely the biggest financial decision you will ever make in your life.
It is worth every bit of effort to make sure the choices you are making are right, both in terms of the property you are buying, the condition it is in, the price you pay, and the financing you need to complete. You wouldn't buy a car without a test drive, a look under the bonnet, a service history or perhaps even an inspection by a professional, so why do less with a house?
SURVEYS
We would not advise that you try to save money on surveys. Like insurance, you may never need it, it may be a 'waste' of money, but it can turn out to be the best thing you ever bought. People automatically think of getting a house survey, but they are not the only surveys that could be worth buying.
A Drainforce drain survey (Tel:200096) for a few hundred pounds could save you from work costing thousands, and at the very least will give you peace of mind - a valuable mind state in the often stressful house buying process!
If the property you are buying has uPVC double glazing, Channel Windows (Tel:729193) will survey them so you will know whether any work needs doing before you buy.
But first you need to find a house to buy...
CHECKLIST
- Make a checklist of all your priorities including:
- Price
- Number of bedrooms
- Local transport links needed
- Schools
- Parking
- Garden size
- What's going on in the local community
- Amenities
- Amount of decoration/restoration you're prepared to put up with
- Location, location, location - in fact, have a good walk around the neighbourhood you're thinking of settling in. Those well-spent ten minutes can be very enlightening.
MORTGAGE IN PRINCIPLE
Before you start looking for a house get a 'mortgage in principle' so that you know what you can afford. Armed with this information and the checklist you will find a suitable house much more quickly.
In terms of finances make sure you don't spend all of your cash on a deposit without considering other costs such as surveys, legal fees, mortgage arrangement fees etc
KEEP NOTES
Keep notes of everything. Houses you saw, good points bad points, who you spoke to etc. This will become ever more important when it comes to encouraging surveyors, lawyers and so to keep the tasks they are doing for you at the top of the priority list.
Now find your home!
HIRE AN ADVOCATE
The term 'Conveyancing' refers to all the legal and administrative work associated with transferring the ownership of land or buildings from one owner to another. The conveyancing process starts after an offer has been made and accepted for a property, and legal details have been exchanged by the two parties.
Most buyers appoint a legal representative to do the conveyancing on their property. DIY conveyances are possible in the UK but not in Guernsey. Try to appoint an advocate through personal recommendation. It is good to have some reassurance that they will act quickly and competently on your behalf. There is no need to shop around for a good price as advocates are bound by a fixed scale of fees, currently 0.75% of the value of the property though advocates charges can be higher in the conveyance of a flat given the additional complexity. The biggest cost associated with conveyancing is document duty currently charged at
2% for transactions of up to £150,000
an additional 0.5% for transactions of up to £250,000
an additional 0.5% for higher value transactions
There will also be small costs incurred for the court and registration fees.
MAKE AN OFFER
Once you have found a house that you wish to purchase you need to make an offer. Ordinarily this would be done via the estate agent but on Guernsey Property Hub the buyer and seller deal direct. The plus side of using an estate agent is that it creates a level of anonymity and an extra layer in the negotiations that will be comforting to people who are intimidated by negotiating price. On the down side the estate agent doesn't make decisions for you so you still have to make an offer and the seller still has to decide whether to accept or reject it. Estate agents are often no more than an obstruction in the process. However, if you desire the greater anonymity they may provide it is suggested that you either deal via email rather than in person (so you have time to consider what has been said before replying) or alternatively appoint your solicitor to act as a go between, or perhaps even a friend or family member. Before you make an offer you need to consider a few things...
Check that the house is worth roughly the price that you are willing to pay, and that is being asked. Do this by getting details of as many similar properties in the same area that are either on sale (what are their asking prices?) or have been sold recently (what price did they sell for?). How do they compare with yours? This will be particularly easy to check if you are buying a property on an estate where there are lots of similar houses. When making comparisons between houses, bear in mind that its value can be increased by factors such as extensions, loft conversions, fitted kitchens, being in a good location, or being a brand new house. Consider whether or not the property is freehold, and make yourself aware by discussing with the seller what items are included in the sale.
Remember that properties do not have fixed price tags – you can make substantial savings with a little skilled haggling over the price. It is important to get the opening offer right, as this will play a big part in determining the amount you eventually pay. Normally, the opening is offer is about 5-10% lower than the asking price, and the two parties take this as a starting point for further offers and reductions in asking price until an agreement is reached. Be aware that the asking price is often set high in order to encourage a higher opening offer than would be given with a lower asking price, and you are expected to negotiate.
The negotiation will be affected by various factors, and you will do better if you take these into account: | | How many other people are interested in the same property. If you are the only one, you are in a strong negotiating position and the seller is likely to accept a lower price. If there are two or more parties making offers, the seller and their agent will be far tougher during negotiations and you may be sensible to offer the asking price.
| | | How quickly the seller needs to sell. If they need to sell quickly, they will be more likely to accept a lower sum than the asking price.
| | | How long the house has been on the market. If the seller is having difficulty selling the house, they are more likely to accept a lower price. Check whether the asking price has dropped since it went on the market.
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Your own position will also affect the negotiation. A couple of factors could be to your advantage: | | - Are you part of a chain? If not, the seller can be more certain that everything will be completed on time. First time buyers, people who have already sold or exchanged contracts on their own property and people who have nothing to sell all have this advantage.
| | | - Your agreement in principle will show the seller that you can borrow enough money to buy the property and demonstrates that you are serious about buying and that the process will be able to take place quickly once you have both agreed on the sale.
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Remember, if you don't think the property is worth as much as is being asked, you can introduce this into negotiations. For example, if some repair work is needed and you think this should bring the price down, you can try to persuade the seller that the property is overpriced.
DEPOSIT
Once your offer has been accepted, it must be made formally, in writing, and subject to certain terms and conditions. Ensure that the seller understands the terms of your offer.
| | Your offer must be “subject to contract and to survey”. This means that you are not legally bound to proceed until a survey has been satisfactorily completed and signed contracts have been exchanged. This is very important.
| | | Specify what fixtures and fittings you want to be included, and what work on the property you want to be undertaken before the sale has gone through.
| | | It is a good idea to demand that the property be taken off the market or marked as 'under offer'
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NEVER put down a deposit until you are satisfied with the terms and conditions of sale. Always consult your advocate before you put down a deposit.
VALUATION AND SURVEY
Your mortgage lender needs to know whether the property is actually worth the amount of money you have agreed to pay for it. They will require a basic valuation, but there are two other main types of survey: the homebuyer's report and the buildings survey (also known as the full structural survey). All lenders require a basic valuation, but it is strongly advised that you also have an independent, more detailed survey carried out. The level of survey you need depends a lot on the individual property you are buying.
BE ORGANISED
From this point onwards your advocate is responsible for doing a number of pieces of work, often more or less complicated depending on the property in question. Stay in regular contact with your legal representative and request updates. Demand to be made aware of what has been done, what still needs to be done, and any problems that have been encountered up to that point. Keep a diary of all conversations for future reference.
INSURANCE
Once the house is purchased you will need to insure it - in fact if you have a mortgage on the property the lender will no doubt insist on it. They may even require you to take out their insurances before they lend you the money. It is usually better financially to arrange your own insurances and to find a mortgage lender that will allow you to hold your insurances with another company.
Consider buying removals, legal protection, contents, buildings, critical illness and life insurance policies. Not all of these are necessary but all might be worth considering.
GETTING THE KEYS
You will be required to attend court for the final stage of the house transaction. At this point you get possession of the keys and can kick yourself for not having organised Monty's to help you move.
Check out our Moving Home Checklist section.
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