Using an estate agent - buying a property
Source: The Office of Fair Trading, www.oft.gov.uk
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Estate agents provide advice and property details to buyers. But the agent's
main concern is to get the best deal for the seller, who is the client.
As a buyer, you are the client only if you are paying an agent to find
a property for you.
Personal interest
Remember that estate agents may be in a position to benefit personally
from the sale of a property. You must be told promptly, and in writing,
if your estate agent, or a relative or business partner of the estate agent,
owns the property you want to buy.
Property particulars and viewing
The estate agent can provide a written description of the property (known
as property particulars). This will give you an idea of what a property
is like. It is against the law for an estate agent to make false or misleading
statements about a property. If the particulars say the property has double-glazing
and loft insulation, it should have these features.
You may see these terms in property particulars:
-
freehold - the seller has full ownership and the right to sell the property.
Most houses are freehold;
-
leasehold - the seller has a lease on the property for a set time period.
The seller can sell the remaining time on the lease but the property is
actually owned by a freeholder. Most flats are leasehold.
If there are terms you do not understand, ask for an explanation.
If you think you might be interested in buying a property, the next
stage is to go and see it. The estate agent cannot charge you for arranging
a viewing or showing you round the property.
However, if you view a new property, or one that is still under construction,
you may be asked to pay a non-refundable deposit or sign papers if you
are interested in buying. Get advice from a solicitor first.
Making an offer
If you want to buy a property, you must first make an offer through the
estate agent. This can be above, below or the same as the asking price.
Before making an offer, seek the advice of a solicitor.
When you make an offer, the estate agent must pass it to the seller
promptly and in writing. The only exception is if the seller has told the
estate agent some offers are not acceptable, such as those below a certain
amount.
Estate agents must treat all buyers fairly. They must not hold back
offers from buyers who do not want to use their other services. For example,
you should not be treated differently because you do not arrange a mortgage
through the estate agent.
The estate agent doesn't have to tell you about other offers which have
been made.
It is not always the highest offer that wins. The seller may decide
to sell to the person who can proceed with the sale quickest.
If your offer is accepted, the estate agent will send you a letter confirming
the details. But at this stage there is no legally binding contract. The
buyer can still receive and accept other offers, and both you and the seller
can renegotiate the price and any conditions of the sale right up to the
point when contracts are exchanged or accepted.
Gazumping
Although the seller may have accepted your offer, the estate agent must
pass on any further offers received unless specifically told not to by
the seller.
This can lead to 'gazumping', where a higher offer is put in and accepted
at the last minute before contracts are exchanged.
To avoid this, you can make your offer on the condition that, for a
set period, other offers will not be accepted. Get advice from your solicitor
if you want to do this.
Repossessed properties
You'll sometimes find that a property has been put up for sale by a mortgage
lender, such as a bank or building society, which has repossessed it.
Repossessed property belongs to the lender (known as the mortgagee).
When choosing a buyer for the property, the mortgagee has a legal obligation
to get the best possible price, but may also take into account how quickly
you can raise funds and exchange contracts.
If the mortgagee accepts your offer for a repossessed property, a procedure
known as 'the notice of offer' sometimes follows. This may delay things.
Details of the property and your offer are advertised in the local press.
The mortgagee asks for offers from other prospective buyers to be made
by a set date, usually by sealed bids. If one of these offers is accepted
instead of yours, the whole process may start again until the highest possible
price has been reached.
Deposits
When you make an offer, the estate agent may ask you to pay a pre-contract
deposit of a few hundred pounds to show your commitment to buy. This is
usually held by the estate agent.
Before you part with any money, find out from your solicitor if a deposit
is necessary. If it is, check whether it is refundable if contracts are
not exchanged. When you pay, get a detailed receipt from the estate agent.
When contracts are exchanged, you may have to pay a bigger deposit,
usually 5 or 10 per cent of the purchase price. This will be held by the
seller's solicitor.
Mortgages
There are a number of ways to find a mortgage. Shop around, for example,
at banks and building societies. Or go to an independent financial adviser
who will be able to tell you what's available.
Estate agents can also give advice and may offer to arrange a mortgage
for you. You do not have to take up this offer.
A mortgage is a large, long-term debt. You could lose your home if you
can't keep up the repayments. Think carefully before taking on a mortgage.
Surveys and valuations
Before giving you a mortgage, the lender will get the property valued.
The valuation helps the lender, but you may want more information from
a home buyer's survey. This is a more detailed inspection of the state
of the property. You could ask the valuer to draw up a home buyer's report
while preparing the valuation for your lender. Or you may prefer to use
a valuer who is not in contact with your lender.
You might want to get, or the lender may require, a full structural
survey. This tells you whether the property is sound or whether major repairs
are needed. A full structural survey should be carried out by a qualified
and independent surveyor.
To find a surveyor, ask friends and relatives if they can recommend
one. If not, look for details in the local phone book or ask in your local
library. If you want to use a surveyor who is a member of a professional
association look for the letters ARICS or FRICS or get details of members
through the
Royal Institution
of Chartered Surveyors.
If you are buying a flat, you will probably be partly responsible for
the upkeep of common parts of the building, such as stairways, roof and
garden. Ask your surveyor to check the whole building as well as the flat.
Does the building need, or has it recently had, major repairs such as redecoration,
or a new roof or a lift? If so, will you have to pay a share of the costs?
The cost of a home buyer's survey and valuation or a full structural
survey will normally be based on the value of the property.
Legal advice
You can do the legal side of buying a property yourself. There are books
on do-it-yourself conveyancing in your local library. But unless you are
really confident you know what you are doing, it is best to leave this
to the professionals.
Solicitors and licensed conveyancers know the problems that can arise,
can ask the right questions and are insured against making mistakes. They
will also sort out your contract.
Fees vary and it pays to shop around. Try the local phone book or ask
around. The estate agent may be able to recommend a solicitor or licensed
conveyancer.
Do not use the same legal adviser as the seller.
Other pages in this section
Source: The Office of Fair Trading, www.oft.gov.uk
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