Here is a step-by-step guide to buy a residential or commercial property in the UK, faster and at best price.
Determine your budget and what you can truly afford
To ensure that you do not take on a larger mortgage commitment than what you can afford, you need to look for a residential/commercial property or land to work towards a mortgage within two to three times your annual income.
Also please bear in mind to have enough savings for home improvements, maintenance and decoration.
Should you sell first?
Most Buyers have a property or land to sell first before buying a new home or land as the way of financing it. The plus point of selling before buying this is that you will be in a good position to pounce quickly when you do find your dream home giving you an added advantage.
The negatives are that if you may sell and then it takes a while for you to find your next home, leaving a possibility of a homeless scenario. Also if you need to sell first to buy your next home, the seller may grow impatient waiting for you to sell your home if they want a quick sale.
Things to consider before buying a property
Type of home
Depending upon your home ownership goal, decide which type of residential property, like a detached or semidetached home, a bungalow, flat, a housing cooperative or a townhouse would be best suited for you and your needs.
Specific features in the home
You are perhaps making largest purchase of your life, so your home should meet both your needs and desires as closely as possible, as it is a big decision and financial commitment. List all the basic things like the property size, neighbourhood, amenities and also smaller details like bathroom and kitchen layout etc. This will then help you in making that crucial decision.
The home you can actually afford
Just because a bank is ready to lend you more doesn’t mean you should borrow that full amount. Many first time homebuyers make this mistake and end-up as house-poor, which means they are left with little or no money for vacations, utilities or even food after they have made monthly mortgage payment.
Mortgage you qualify for
You think that you can afford a £300,000 home while the lender may think you are good only for a £200,000, based upon his calculation of your income and other liabilities. Many sellers will not entertain an offer if it is not pre-approved for a loan. To get pre-approval, apply for a mortgage. Remember that your loan can fall through even after pre-approval at the last minute if you do something that affects your credit score, like finance a car purchase.
Decide about must haves and nice to haves
Make a list of absolutely must have features that you want in your new home, and which are simply nice extras. Must haves may include number of bedrooms and bathrooms the house has, and its proximity to your workplace. You might also have strong preference to a move-in ready residential property or a commercial property that offers more outdoor space.
Nice to haves may include how the house is decorated, a pool and a well-manicured landscaping or anything that can be easily fixed.
Working out the finances
- Notify your mortgage lender of your plan buy a residential /commercial property or land.
- At the early stages, figures at best will be approximate only. Get a rough idea of your house’s worth and how much amount will be left with you after paying off the mortgage.
- Figure out about outstanding mortgage amount and early redemption penalties if any.
Arrange for a mortgage
Put your finances in place before making an offer.
Take measures to improve your credit rating, this will help in your mortgage application getting through.
Hire a conveyancer or solicitor
Hire a solicitor or conveyancer to complete the legal work for you.
Conveyancer/solicitor will liaison with authorities to ensure that there are no major problems with the residential or commercial property and land.
You need not necessarily go with the solicitor/conveyancer suggested by your mortgage company or estate agent.
Decide how to buy your property
- You can buy your home, residential or commercial property and land either of your own, through online estate management websites like Agent Home Owner or through a local estate agent.
Buying through estate agent
- An estate agent does not value your property. Valuation could only be done by a qualified surveyor and costs hundreds of pounds. Estate agents simply place an asking value for your property.
- Never accept an agent’s estimation at face value as they try to maximize their profits. If you feel they have underpriced your property, it means they want to make a quick sale to receive their commission faster. Estate agents, at the end of the day, are salesmen.
- Remember that valuation only sets the asking price, a residential or commercial property is worth the price someone will buy if for.
- Compare estate agents based on their past record of coming closest to the asking price, and how quickly they had bought properties for their clients.
- The regulations of the Office of Fair Trading clearly state you need not pay anything to the estate agent if you did not sign a contract for Sole Selling rights with him.
What to watch for in an estate agent
- Agents usually provide the percentage figure of commission they will charge. Don’t forget to add VAT to it as they normally not include it upfront.
- Always negotiate on the percentage commission of the agent which they are most likely to agree as they want business from you.
- Check the contract for hidden fees, like penalties and marketing fees. Any additional charges must be agreed upon in writing so that it does not come as nasty surprise at the last moment.
Working the commission of agents
- Some agents work on fixed commission basis. This could be advantageous compared to working out an exact budget for the agent’s fees. Flip side of this arrangement is that the estate agent is not motivated to get lesser price for the property as he will get the same fixed price. To keep him motivated, offer incentive or agree to higher fixed fees if he gets lesser price for the residential or commercial property or land you wish to buy.
Buying online – Online estate agents gaining grounds
- A growing number of buyers are shunning traditional agents and marketing their properties through online agents, and saving thousands of pounds in the process. For example, while a high street estate agent could charge you £6,000 for the sale of a property worth £300,000, the same sale could be done by an online estate agent for £1,000 or even lesser as they do not incur overhead expenses in maintaining an office and pay for its infrastructure and staff.
- Buying online makes sense as you feel as if you are in charge of the whole process.
- Buying online is also the best option if you think that you are in a better position to buy your residential home or commercial property or land and don’t mind conducting the viewing yourself.
- In online buying, you save thousands of pounds as the online estate agents do all the hard work for you at a fraction of the cost of high street estate agent’s fee.
- Online estate agents are gaining more acceptances among the sellers. Sole agents usually charge 1% plus VAT. Buyers use online estate agents to buy properties faster at low flat fees.
- At present, private property buying and selling sites account for five percent of the completed sales, as per the Royal Institute of Chartered Surveyors, and this figure is continually improving. Online estate agents come handy for buying attractive properties in popular areas.
How Agent Home Owner is different from other online estate agents and conventional agents
Agent Home Owner offers a comprehensive range of services for the property buyers and sellers that make it stand apart from the rest competing in online and offline marketplace. Some key deliverables that differentiate AgentHomeOwner.com from other online and conventional estate agents are summarized below in brief:
- Advertise your residential or commercial property and land absolutely free for 14 days.
- To continue your listing, you can choose any of the low cost premium advertising plans starting from £9.95.
- Advertise your residential or commercial property or land for Sale and To Let.
- Display “For Sale” or “To Let” Boards on your properties or commercial land that you could put yourself. Or you can take the help of Agent Home Owner professionals to do it for you.
- The average saving on properties sold through Agent Home Owner is over £4,500.
- Your property will be viewed by thousands of serious buyers and house hunters all over the UK and elsewhere, weeks after weeks.
- A comprehensive marketplace for the homeowners and landowners to buy direct.
- Download free Brochures and leaflets showcasing your residential or commercial property in an attractive manner to the prospective buyers.
- Test the market by advertising on AgentHomeOwner.com and judge the response. The price you advertise isn’t necessarily the price you get. If there is lot of interest, buyers will naturally bid the price upwards. Modify the price in real time of your live advert to cash on the response of the buyers.
- Display multiple photos with property description. Link a local map to help the prospective buyers easily locate your residence or commercial property.
More benefits of buying through Agent Home Owner
- Integrated messaging system for buyers and sellers.
- Receive instant notification of seller’s queries and messages.
- Bespoke viewing request system allowing sellers to arrange viewing dates that suit the seller. Receive Notifications of any viewing request accepted etc.
- You get your own Online Control Panel which puts you in full control of your advert, incoming messages and viewing requests 24 x 7, so you never miss out on a potential seller.
Getting the best of both worlds
There is one more option that is a real value proposition. You can get your home valued for free by an estate agent and then use AgentHomeOwner.com to advertise your residential property or commercial land at par of the market value. We will also give you an indication of an initial selling price.
You can buy by both methods – through high street estate agent or through online estate agent. However, if you not sure which one to opt, and decide to sell through AgentHomeOwner.com first, then it’s a big bonus as you can save 1,000’s of pounds by not paying the estate agent fees (as you can take it off their books then). All it would cost you is only the small fee you initially paid for advertising on AgentHomeOwner.com property portal.
Understanding Conveyancing
- It’s the process of legally transferring the ownership of a home from a seller to a buyer. It is generally done by a Conveyancer or a Solicitor that you need to hire.
- You need to negotiate and accept an Offer through an estate agent.
- You will have to fill out a variety of questionnaires to provide relevant information to the buyer. Some of these are:
- Provide general information (TA 6) about boundaries, disputes and complaints etc.
- Provide information to the buyer on common hold (TA 9) or leasehold (TA 7) in case you do not own the freehold.
- (TA 10) provides information on fittings and fixtures while (TA 13) includes finalization details related to handing over the Keys to the buyer.
- The above questionnaire information would be used by your solicitor/conveyance. Draft a contract that will be submitted to the buyer for approval.
Make an offer worth accepting using Agent Home Owner
You can use AgentHomeOwner’s very own bespoke control panel and messaging system to make an offer to the seller or any other contact provided by the seller on the site.
Make an offer worth accepting using a conventional estate agent
Make an offer to the estate agent when you are in the strongest position as a Buyer. You might be asked to pay a small holding deposit of £500 or £1000 to ensure your seriousness for the offer of buying a residential or commercial property or land.
Review the contract
- Before signing on the dotted line, review and thoroughly understand every single clause. Pay special attention to contingencies in the contract that will help you protect yourself when something goes wrong. Such contingencies include your bank rescinding your financing or if the residential property has serious physical defects.
- Get the home inspected, which should typically cost you around £200. If there are issues such as a non-functioning boiler, ask for price reduction from the seller to make up for the repairs. And if you find any deal breakers, such as an unstable foundation, you can refuse to sign the contract and back out.
- Once your residential or commercial property inspector confirms that there are no big defects that could affect the property’s value, you can submit a Mortgage Application. Review all closing costs like title insurance and attorney’s fee before signing the contract.
Things to watch for before signing a contract
- Review all commission rates; they should be in line with what was agreed upon.
- Ensure no services have been handwritten onto your contract and you have not been signed up to an in-house service you hadn’t agreed to.
- Ensure that there are no additional or hidden charges.
- Negotiate the length of the Tie-in-Period and the written Notice Period. Open Ended Sole Negotiator Contract would mean you may have to pay commission to the estate agent even if the offer is made by the extended introducer of the estate agent months or even years after the agent stopped marketing your property.
- Challenge anything you are doubtful of and never pay more than you need to.
- Understand the continuing liability you might be signing up beyond the term of your contract.
Exchange of contracts
- Solicitors/conveyancers of both parties (Buyer and Seller) make sure that the contracts are identical and send them to one another.
- Once the contracts are exchanged, both parties are legally bound to sell and buy residential or commercial property or land under consideration of the Contract.
- This means, you are legally bound to buy the property and cannot accept another offer. If you don’t, the seller can sue you.
- Similarly, if the seller doesn’t complete the sale, you can sue them.
- Immediately after the exchange of contracts, the seller should receive the buyer’s deposit, which is usually 10% of the price of the land or residential /commercial property you are selling.
- The conveyance/solicitor will register the transfer of ownership with the Land Registry.
More on signing of contracts
- Exchanging the contracts means the seller is legally bound to sell the house or land and you are legally bound to purchase it.
- You are entitled to a walk-through of the residential of commercial property to confirm that nothing has changed after the inspection.
- Ask the settlement agent for copies of all the papers you will sign before closing so that you could review all the finer details carefully at your convenience.
- If you pull out at this stage, your 10% deposit may be forfeited.
- Ensure that you exchange contracts only after getting satisfactory report from the surveyor.
- Contracts can only be exchanged after the receipt of formal mortgage offer.
- You need to have Buildings Insurance for your residential or commercial property as well from the date of exchange of contracts.
Final negotiations and arrangement
- Make arrangements for the supply of utility services and that the seller has got the readings made for electricity, gas, telephone, water etc.
- Negotiate any final things that have not yet been agreed, like buying the seller’s geyser or refrigerator.
Make your deposits ready that are normally paid to the conveyancer before completion.
Completing the purchase
- Completion is when you pay for the residential or commercial property / land, and take possession of it.
- On the day of completion, money and deeds of the property are transferred between the conveyancers of the buyer and seller.
- The seller will have to leave the property by the time of completion, which is usually 30 days from the date of exchanging the contracts.
- You should be now able to collect the keys, which is normally done by the estate agent.
- You have now officially become a homeowner. Congratulations!
Settle up with the conveyance and solicitor
- Your conveyancer/solicitor will send you an account covering their costs and disbursements that you need to settle.
- Stamp duty is normally paid by the conveyance/solicitor.
- Make sure that the change of ownership is registered with the Land Registry.
- You might get small refund in case the surveyor overestimated the costs.
