This article is for you if you have never bought a property before and want to know about the main steps or procedures involved.
It is also for you if you have bought a property before but found the process unclear, confusing or mysterious – and you don’t want that unsatisfactory experience again.
1. Viewing properties
The process normally starts with you looking at properties. If you go through a traditional estate agent, someone from their office will normally accompany you on viewings.
With some of the modern agents, viewings are unaccompanied. This gives you the opportunity to speak directly to the seller and you may use it to your advantage to push down the price if you are a good negotiator.
If possible, view the property with someone who can give you a worthwhile second opinion.
2. Reservation fee or similar
Be wary if you are asked to provide a reservation fee, holding deposit or something similar in order to secure the property. That is especially likely to happen if you are buying a new build flat for investment purposes.
If you do decide to pay a reservation fee, insist that it is paid into a solicitors client account or be protected by a formal guarantee.
3. Making an offer
The offer you put in will depend on a whole range of factors, including the strength of the property market, your desire for the property and the motivation of the seller to sell.
Subject to market conditions, a traditional approach is to expect sellers to accept an offer at least 5% lower than the asking price.
If that is your approach, you will probably start with an offer at around 10% below the asking price, and negotiate from there.
If you are buying a property for investment purposes, you should work out the maximum price you can pay in order to get your desired rental yield.
4. Acceptance of your offer
Once your offer is accepted by the seller, you will be expected to instruct your solicitors and make your mortgage arrangements – assuming you are buying with a mortgage.
5. Valuation of the property
When you buy a property, the legal rule is ‘let the buyer beware’. It is therefore important for you to arrange a suitable survey and valuation of the property, even if you are a cash buyer.
There are several types of survey/valuation reports. Work out the one which is best for you, taking into account the type of property and its condition.
6. Instructing solicitors
You should instruct solicitors who specialise in ‘conveyancing’, which is the legal process of transferring property from seller to buyer.
Ask the solicitors for a detailed breakdown of all your likely costs and charges so that you can budget for the purchase.
Your solicitors are likely to ask you for a payment on account so they are not out of pocket when they have to pay out money on your behalf, such as for search fees.
7. Obtaining a mortgage
It is best practice to check out if you will qualify for a mortgage before you even start looking at properties.
See if you can obtain ‘a mortgage in principle’ – giving your seller confidence that you will be able to obtain a formal mortgage offer and proceed with the purchase.
As soon as you have agreed a price, make or proceed with your mortgage application and pay the fee to have a mortgage valuation/survey carried out.
8. The deposit
The contract you enter into will normally require you to pay a 10% deposit or down payment. You should have the deposit ready to pay to your solicitors when requested.
9. Before exchange of contracts
‘Exchange of contracts’ is where the seller and buyer, through their solicitors, enter into a binding legal contract. Neither party can back out after that point.
Before asking you to sign contracts in readiness for exchange of contracts, your solicitor will carry out pre-exchange land searches and various enquiries on your behalf.
At this stage, your solicitors will also consider your mortgage offer and make sure that you can comply with its terms and conditions.
Take the opportunity to raise any questions or concerns you have about the property and do not sign the contract until you are entirely satisfied with everything.
10. Exchange of contracts
Because of its binding nature, your solicitors should not exchange contracts unless they are totally satisfied with all aspects of your purchase.
You should expect them to send you a ‘Report on Title’ dealing comprehensively with various aspects of your purchase including the adequacy of the legal title you will get.
Prior to exchange of contracts, you will need to sign the contract and, if you are getting a mortgage, the mortgage deed securing the interests of your lender.
11. After exchange of contracts
After contracts are exchanged, your solicitors will carry out further land searches and will ensure that your mortgage funds are ready for the legal completion of your purchase.
You will be given a ‘completion statement’ showing any amount due from you to enable completion to take place.
You will be asked to sign the deed which legally transfers the property to you. That is usually a Lease or a Transfer.
12. Legal completion
Legal completion takes place when your solicitors send the balance of the purchase price to the seller’s solicitors and they then authorise the estate agents or the seller to release the keys to you or your agent.
13. After completion
The job of your solicitors does not end when the keys are released.
They still have to pay any stamp duty due and register you at HM Land Registry as the new owner of the property. They must also register any mortgage you have entered into.
Once registration has taken place, they should send you official written proof from the Land Registry that (1) you are the new owner and (2) any mortgage has been registered.
14. Dissatisfied customer
If at any point during your purchase you are dissatisfied with the service of your solicitors, have a look at the ‘client care letter’ received from them. That should set out your rights to complain as well as other redress which may be available to you.
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Rebel Property Coach
My website is: www.rebelpropertycoach.com