Kate Faulkner's Top Tips for Buying a home
with Declan Curry's Your Money Show
Whether you watched me on Declan Curry’s Your Money programme on Saturday 9th November or not, hopefully the suggestions below will be useful if you are looking to buy a home.
Do your research first! What does this actually mean?
Many people write ‘do your homework’ but that’s because they often don’t know what it is you are supposed to do. Here’s my tips based on what I do BEFORE I look for a property:-
Know your market
Since the credit crunch there have been huge numbers of micro markets. So even if, on average, prices are rising in your area, some property types such as city centre apartments outside of London or three bed semis in the suburbs could still be falling.
If your market is ‘hot’ then as soon as properties go up for sale – look for the boards – they will have a ‘sold’ slapped on them. In this case, get to know what streets/properties you like, put a note through or if they come up for sale, make sure you have your finances and legals ready to go so your offer is accepted over someone else’s.
If on the other hand this takes weeks, months or even years, then don’t rush, you have plenty of time to buy and will hopefully be able to negotiate a good price.
Checkout what properties are selling for
Even if a property is advertised at £220,000 it doesn’t mean it’s worth it! Two things to do to work out what properties are selling for. Firstly ‘tick’ the box when searching for a property to buy on-line which says ‘included sold subject to contract’ or ‘include sold properties’. The ones which are selling are usually priced right, so this will give you an idea of a well-priced property versus one where the vendor is being unrealistic.
Then put in the postcode of the type of properties you like into a ‘sold property prices’ page. Many sites offer this, I quite like www.mouseprice.com though. You can see what prices people actually accepted for properties – and if you find a property you like, you can see how much the vendor paid for it, which is useful when thinking about what offer to make.
Brief an agent with your needs – not a massive wish list!
A major mistake most people make – especially First Time Buyers – is they have worked so hard to get the money to buy a property in the first place, they have a wish list as long as your arm!
Unfortunately you are likely to have to compromise. At the moment half the number of homes are up for sale than normal, so finding your perfect pad is unlikely.
If you want three beds, but could live in a two bed home, then give the agent ‘minimum two beds’. If you want a garden, but could live without say ‘would like a garden, but not essential’. Many times the good agents who stick to your wish list get let down as it’s likely you will change your mind throughout the buying process and, based on what’s for sale, you will adjust your requirements accordingly.
Next tip: understand the financials:-
So, lots of costs involved and the first job is to check you have saved enough. When you buy, if a property is under £125,000 there is no ‘stamp duty’ so it will cost you around 1-2% of the price you pay.
If you are paying £125,001 to £250,00, you pay 1% stamp duty so that’s 2-3% of the property value and if you buy a property from £250,001 to £500,000 then it will cost you 4% in stamp duty and the rest of the costs will add up to 5-6% of the property’s value.
You will also need a deposit of 5% or more, so make sure you have this cash available at time of exchange – the legal company will need it in their bank account to buy the property.
From a financial perspective, get this sorted first so you know what you can afford. As mortgages are hard to secure, brokers who still don’t charge unless you take up their mortgages do exist and can be worth their weight in gold! Mortgage offers come and go quite quickly, so it’s important to make sure you have a professional to look after you day to day.
Finally, rates in 2013 are artificially low – around 3-4% - this is NOT the norm! On average, interest rates are around 5% long term, so check you can still afford the money you borrow if rates increase to 5-7%.
And top tip number three is: thoroughly check a property you want to buy!
Properties in the UK are getting older – just like our population. People are good at updating the kitchens and bathrooms in their property buy typically poor at maintenance.
As such a property which ‘looks fine’ inside and out might be disguising the need for new wiring, damp proofing, a new roof, blocked drains and all sorts of other scary and costly things to put right.
Get your own surveyor - don't use the lenders!
Make sure you use your own appointed surveyor to check for any nasties – remember the lender just sends someone round to check your property exists and you pay through the nose for it! That’s called a mortgage valuation. This is NOT a survey. You can have a condition survey, a Homebuyer’s report or a structural survey, depending on the type of property you have. If you need help finding a surveyor, contact us!
Make sure you have an expert legal company
It’s very tempting when everything is costing so much to find a cheap legal company – but don’t. If you buy a flat, whether it works well or not depends on the ‘leasehold agreement’. This requires specialist legals, so make sure you employ one. Some specialise in new builds, others will be ‘help to buy’ experts and some period property know alls such as understanding legals for a Grade 2 Listed. Although the job they need to do to make sure the property is legally yours is the same, the questions they need to ask will be very different – so make sure you don’t stint on poor quality legals.
Check the property won't blow up!
Finally, if you ever need to rent the property you buy and for your own safety, get a gas and electrical safety certificate. If it’s a new build they should provide this for you. If the property has been re-wired in the last 10-20 years, it should be OK, but check it. If it hasn’t been re-wired for years, you are likely to have to do it and it’s a massive job. You don’t just put in new wiring, the decoration will be wrecked, so you will have to re-decorate.
I hope the above is useful, and if so, join up for FREE and read or print (at no cost) our ‘buying a property’ section where you can have access to checklists which explain how to find out about your local property market, to the legals, making an offer, viewing a property and Help to Buy an existing or new build property.