3 Unforgivable Property Errors

  • It is easy to make expensive errors when buying
  • Always avoid the following three basic mistakes

So you are out property hunting and are really excited about finding a great property at a bargain price.

But are you, like many buyers, worried about getting carried away and doing something you shouldn’t do, something that will cost you at a later date?

It is all about avoiding the pitfalls and dangers.

This blog identifies three of the biggest hazards to watch out for when buying a property, and tells you how you can lessen the risks:

1. Paying a non-refundable reservation fee
2. Buying without a suitable surveyor’s report
3. Not properly reading the conveyancer’s Report on Title

1. Paying a non-refundable reservation fee

Where you are buying an off-plan or new-build property, you will often be put under intense pressure by the site agent to commit to buying by signing a reservation agreement, and paying over a non-returnable reservation fee – which can be as high as a few thousand pounds. 

Convinced that you will lose out if you don’t accept in the short timescale given, you will often be severely conflicted.

You may be tempted to sign-up even though:

(a) You are unsure whether the property is a good deal
(b) You have concerns about the safety of your deposit
(c) You are unsure whether you want to proceed at all.

When faced with a request for a reservation fee or “holding deposit”, your first response should be to resist the request.

If that is not possible, ask for the payment to be fully refundable in certain circumstances, such as you not being able to get a mortgage or an unfavourable valuation. 

If the seller will only proceed on the basis of a “non-refundable” payment, think twice about going ahead. 

Only pay over a non-refundable amount if:

(a) The amount is reasonable (£500 or less in the average situation)

(b) It will go towards the purchase price if you proceed

(c) You are pretty sure you want to proceed, and will be able to do so.

Further, be sure that it will be fully safe, perhaps kept in a solicitor’s account, and refundable to you in full – ideally with interest – if the transaction does not proceed and you are not at fault.

Be especially cautious if you are asked to pay a non-refundable amount to secure a second-hand or overseas property.

In all cases, always  consult with a conveyancer or solicitor prior to making any payment, and avoid payment by cash.

If you make a payment on a non-refundable basis before taking advice, don’t despair. Seek expert assistance, you may have the legal right to claim back the non-refundable payment under the Consumer Rights Act 2015.

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2. Buying without a suitable surveyor’s report

A fundamental rule when a buyer is purchasing  a property is “caveat emptor” or “let the buyer beware.” The burden is on the buyer to identify any defects in the physical state, structure or condition of the property.

It is therefore important for a buyer to carry out a suitable survey in respect of the property. The website of the Royal Institution of Chartered Surveyors (RICS) lists 3 types of survey:

Level 1 – RICS Home Condition Report
Level 2 – RICS Home Buyer Report (with or without a valuation)
Level 3 – RICS Building Survey.

The RICS Building Survey is said to be suitable for larger or older properties, or where major works are planned.

It is important not just to obtain a surveyor’s report but to obtain one which is suitable for your purpose.

If you are buying a new property and don’t require a mortgage, you may be tempted to avoid the expense of a surveyor’s fee by not bothering to obtain a survey at all.  That is a high risk strategy and is not advisable.

If you are buying with a mortgage, and have any doubts about the valuation indicated by the surveyor instructed by the mortgage company, think about obtaining your own survey report – which you will be able to rely on with ease if at a later date you have to question the report obtained by the mortgage company.

Another area of risk is if you are buying a property at an auction. You may have plans to repair or refurbish the property and may think a surveyor’s report is a waste of money in the circumstances.

But the property may have structural or other problems which are not apparent and which could make it un-mortgageable if you need a mortgage to complete your purchase.

There are similar dangers if you are buying new-build student accommodation or overseas property, especially off-plan or new-build holiday accommodation.

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3. Not properly reading the conveyancer’s Report on Title

When you buy a property, you will usually receive a report of some kind from your conveyancer asking  you to carefully read and approve it prior to signing the legally binding contract. 

This document is typically called a “Report on Title” and deals with a range of important matters relevant to your decision to proceed, such as: whether the legal title is “a good marketable title” and key facts or issues in relation to the contract, lease, purchase deed, title deeds, searches and pre-contract enquiries. 

It is one of many documents your conveyancer may send you during your purchase and is possibly the most important.

It is vital that you read the report fully and carefully (including any document to which it refers) raising any questions or comments with your conveyancer. Avoid any temptation to skim-read or, worse still, sign the report without reading it at all.

Important or critical points a Report on Title may contain include:

  • Concerns about the length of a lease or its covenants, restrictions or regulations
  • Restrictive covenants limiting the use or enjoyment of the property
  • Information about neighbour issues or disputes
  • Rights of way or rights of light affecting the property.   

If the report contains facts, issues or nasty surprises which you miss or misinterpret due to your lack of due diligence, you will be bound legally and are unlikely to have any redress against the seller or your conveyancer for any loss you suffer.

If you have a specific plan or purpose for the property, always bring that to the attention of your conveyancer, and check that the Report on Title does not reveal anything for you to be concerned about.

Enjoyed this blog? Please share it with friends by clicking on the LinkedIn, Twitter, Facebook or Instagram icon on this page. 

Have you made any bad errors when buying a property? Are you willing to share? If so please leave your observations or comments below.

You may also find the following blogs useful:

Stress free property purchase (top tips to make buying less of a hassle)
Mistakes when buying a lease (protect your property against these woes)
4 property errors never to make (common errors that can be very expensive)

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Dalton Barrett
Rebel Property Coach

Please follow me on Twitter @Dalton1London
You can find me on FacebookInstagram and on YouTube
Please link up with me at LinkedIn

My website is: www.rebelpropertycoach.com

  


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