5 Critical Conveyancing Tips for Home Buyers!
The stress which can accompany buying a home sadly isn’t overstated: all too frequently a property being undervalued, a long chain and even the other side pulling out can derail your conveyancing process.
We therefore offer these 5 critical tips so you’re forearmed about some of the main areas which can cause woes and can prepare yourself accordingly.
- Offers aren’t legally binding
The conveyancing process starts with an offer from a buyer to a seller. A study by RightMove states that you’ll have to have 50 viewings before you’ll get an offer from a buyer. Most offers are funnelled through the selling agent and can often start lower than the original asking price.
With some toing and froing, the seller and the buyer agree on a price but you must be aware that this isn’t legally binding – there’s no legal force and sanction until you actually exchange contracts.
That’s why estate agents change listings to ‘Subject to Contract (STC)’ and ‘Under Offer’; they know all too well that ‘the deal isn’t done until it’s done’.
- Allow for 8 – 12 weeks before you can exchange contracts
When you’ve had an offer accepted as a buyer you’ll then have to select your best quote for instructing a conveyancing solicitor in order to start the formal legal process.
You can select either a conveyancing solicitor or a licensed conveyancer for this purpose but you should be aware that no matter how efficient your legal professional is, delays hindering your progress to exchanging contracts can occur because of any number of matters outside their control.
These include, among others:
- Getting your mortgage offer in – this can take anywhere from 3 to 6 weeks from getting your mortgage in principle as your mortgage lender needs to confirm your affordability, eligibility, and the value of the property via their mortgage valuation (which you pay for) before sending you their mortgage offer. In addition, you can also consider looking for wholesale mortgage bankers to get benefits such as affordable down payment, low-income group, reduced M.I. coverage, no cash-out refinancing, and more. Scout through all the mortgage options before opting for the one that works for you.
- A long chain – a chain is the number of buyers and sellers who are selling their properties to each other and typically has a first time buyer at one end and a second home seller or a probate sale at the other. As a rule of thumb, the longer your chain, the longer your overall process as more parties have to coordinate actions.
- Leasehold and shared ownership conveyancing – because leaseholds always involve a freeholder, there is always more information to collect and a more complex contract than would be the case with a freehold. Shared ownership, which is a special class of leasehold is even more complex, involving housing associations and having a rent element in the contract so it can draw out the process even further. Given the complexity of contract, working with residential property solicitors in Yorkshire (or the ones elsewhere), who can take care of the legalities is advisable.
- Don’t rely on an Estate Agent Valuation
Even though a good estate agent will use their local knowledge and understanding of the market to produce a listing value, they will also be sensitive to other factors, particularly the intentions of the seller. If, for example, the seller is looking for a quick sale, the listing price will be lower, comparatively, but if not, it will be higher.
The trouble is, anyone buying with a mortgage will in turn be tied into what the lender considers a property to be worth and that lender, as stated, always carries out their own survey which sometimes results in a lower value than the one buyer and seller agreed on. This scenario can completely derail a transaction.
If the buyer’s mortgage won’t cover the asking price, they’ll either have to come up with more money from somewhere – and they’re probably already overstretched, making this a non-option – or the seller will have to agree to a reduction in price. It’s unlikely that you’ll get a lender to increase their mortgage offer. In any case, it is better to have professional mortgage advisors (like those from createfinance.co.uk) by your side to keep you out of any ill-informed financial decisions.
To stop this happening you should research what properties in the street have sold for (not under offer or for sale as these aren’t the final prices). Use RightMove, Zoopla or the new Government website, UK House Price Index. You need to look for house prices that have sold over the last 6 months and try not to go back further than this as house prices go up each year by around 7% (London the average price is increase is X%).
- Don’t just go for the cheapest-looking conveyancing solicitor quote
Not only are some cheap-looking solicitor quotes merely estimates, burying lots of services you’ll most certainly have to pay for as ‘extras’ within the terms and conditions, but also the service you’ll actually get, which can greatly influence the speed and efficiency of the transaction, will depend on things like how experienced your solicitor is and how much work – or overwork – that firm has.
That said, paying more doesn’t always guarantee better service either. You should always check online reviews thoroughly and do things like make a test call to a solicitor firm’s offices: if you can’t get through easily then this might be your experience were you to instruct them.
You should always look for fixed fees – that way you’ll know the limit of what you’ll have to pay on completion – and a firm which offers a no sale no fee guarantee, given that a fair number of conveyancing matters break down. Ideally you’ll want to avoid having to pay extra legal fees if you’re unlucky in this way.
- You’re bound after Exchange of Contracts
You get to exchange of contracts when the buying side is happy to proceed, having carried out all the normal checks of a property, contract and title, and the selling side is happy that the buyer has the ability to pay over the required monies.
The action itself involves the solicitors on both sides exchanging contracts and, once this has occurred, both the buyer (in particular) and the seller are liable to legal penalties if they pull out of the transaction.
As a buyer, you stand to lose a full 10% of the value of the property, among other things, and as a seller, you can be sued by the buyer for their expenses incurred up to exchange.
Completion occurs when the buyer gets their keys and gains full possession of the property. The buyer and seller normally agree the date this will occur before they exchange contracts. It can be any period, however it’s normally set for 1 to 2 weeks after exchanging contracts. This elapsed time allows for things like booking removals and drawing down mortgage funds.
So in sum, if you’re buying a home, you’ll give yourself a greater chance of success – and of reducing your stress! – if you do as much research as you can on prevailing property prices, find out how long your chain is and select an experienced conveyancing solicitor.
