Chris Tremlett from UK Property Finance & Ex-estate agent gives his guide to buying residential property

Buying property is stressful. As an estate agent, I found the reason for my client’s frustration was due to a lack of understanding, how a property transaction worked. There is an unwritten etiquette that estate agents want you to abide by to make the process smoother for all involved. Unless you’re given the time to be educated, it is very difficult to assume each new purchase.

 This is a step-by-step guide to purchasing a property. Whether you’re an experienced portfolio landlord or a first-time buyer, the information covered in this article will give you some pointers to approach your next search. Everything from researching the market to placing an offer will be explained and I will share some of my first experiences.

What do you want?

A clear vision of the property you would like to buy can often be counterproductive. Going into your search with an open mind can discover opportunities that weren’t immediately obvious. There is a huge difference between buyer’s expectations and the property they finally purchase.

The market in its current form is moving incredibly fast with just under 102,000 transactions completing last month (March 2019). Subsequently requirements among first time buyers are having to change rapidly to gain a step on the property ladder. Landlords also are having to compromise between yields and capital growth. Compromise is an essential part of search but doesn’t  mean you have to settle for less.

“it’s easier to identify what you don’t like than what you do” …

The best advice I was given during a property find: “It’s easier to identify what you don’t like than what you do”. Identifying properties that make the shortlist is no small task, but the fun part is Researching. All the major property portals I.E Right move, have subscription and email update tools on their sites. By merely setting up an account adding in a few brief requirements, you can be instantly updated (via email) the moment a possible buy hits the open market. Remember to keep the search criteria broad in the beginning until the characteristics you don’t want, have been ruled out.  

All research must have a starting point and there is nothing more poignant than cost. Most buyers will have an idea of affordability before starting out. For those of you who aren’t sure but don’t want to commit to a mortgage appointment with an adviser, there are a various tools available such as price comparison sites. Once a budget is set this will allow you to discover value for money and compromising will maximizing the most out of the budget.

Example Scenario:

James and Beth, a couple from Hereford want a semi-detached house in a nice village. James wants a room where he can play his electric guitar in the evenings. Beth wants a dining room they can entertain in with enough space for a kitchen-family room. They both need parking for two cars and enough space for the kids to play in the back garden.

Problem: In total to suit all their needs, 3 reception rooms will be needed for the couple to have a dining room, kitchen/ family room and James’ man cave. The 3 bedroomed semi-detached houses in areas of choice all have either 2 reception rooms or 1 lounge and an open plan kitchen/diner. The properties with additional reception rooms or bedrooms are extended. This reduces the size of the garden for the children and takes price out of budget.

Compromise: James and Beth find a property with a small integral garage that can easily be converted into an additional room for James’ guitars. The house has one reception room for a lounge but has a large kitchen/diner to the rear which can be used as the family space. Beth can use the lounge as a ‘child-free’ space whilst James can practice guitars in his own separate space.

Finance

Setting a budget is usually just a ball park figure until a decision has been made about how the move is going to be financed. Nearly 30% of property transaction last year were made with cash which means if you’re like me and can just scrape together a deposit plus costs – The task of deciding how to find the rest is inevitable (unless a win on the euro millions arrives between now and then). Most purchasers will choose to call up their bank and book an appointment with an in-branch advisor. However there is a wider choice available depending on the persons financial position.

Typical purchase:

A typical purchase will consist of speaking to a mortgage advisor and/or bank to discuss mortgage products. Once the right option has been decided upon, an application will begin. Mortgage applications can be a quite intense experience, so you had better be prepared: questions such as ‘how many people do you have to buy Christmas/birthday presents for?’. These questions are routinely asked to ensure the bank is exercising due diligence so you can afford the product being sold to you. The process from application to a mortgage offer is 6 to 8 weeks (issue free). A lender will need an additional 5 days once the legal work has completed to transfer the funds.

Other options:

Mortgages are the most regular form of funding, but few people are aware of the other products available. Lenders have a product for nearly every type of property purchase. Whether it’s a property you’re building yourself or a site of 20 houses, development finance is a consideration. Properties at auction need to be snapped up quickly so a bridging loan is commonly used (for advice on buying at auction, please see previous blog)

All the possible funding options are available on UK property finance website.

Viewings

Viewing properties is certainly the entertaining part of buying a property. 90% of viewers will attend with the agent or the homeowner and not have a clear strategy. Using periphery vision to scout a good deal is only the half of it. All the senses need to be concentrated to prevent potential issues surfacing after purchase. In this section I will give you some useful tips on viewing etiquette, buttering up the agent and identifying potential works.

Viewing etiquette:

Whether an estate agent or the homeowner is hosting the viewing, building a rapport is an essential part of the process. If the agent likes you, the chances are they will work harder to get a deal done or offer others on the market better suited to requirements. If the homeowner likes you it will mean they are more likely to be easier on negotiating offer. For most vendors, selling to a buyer they like is an advantage because it will reduce tension and stress during the transaction.

5 rules for productive viewing

1.      Shoes off or shoes on?

Always ask if the viewing host would like you to remove your shoes when entering property. There is nothing worse than inviting a stranger into your home and them dropping mud on the cream carpet. Sometimes this can also be a cultural practise so if you don’t remove shoes you could be offending the homeowner.

2.      Leave the kids at home

Certainly for your first viewing on a new property, I would advise leaving the children at home. Despite if they’re well behaved, kids can cause a distraction and you might miss the crack on the wall or broken window pane.

3.      Timing is everything.

Being on time to the viewing is really important for obvious reasons but if traffic is a problem then make sure to call the organizer and pre-empt you’re arrival with an ETA. This common courtesy can really put the host at ease and allow you the extra minutes to view the property.

4.      Don’t say too much

Over promising is a regular problem on viewings. The viewer will often tell the host the property is brilliant and they’re very keen. 30 minutes later the viewer will see a property that is better suited to their requirements. It is best not to pass judgement until the agent/vendor is not in ears length. It can create false hope and create the impression of time wasting if you need to revisit it as an option at a later stage.

5.      Don’t feel rushed to buy

Once you have viewed the house you’re legally entitled to offer on the property, and it must be reported to the current homeowner. I would always advise taking 24 hours to consider placing an offer. The gravitas of how huge this purchase is can be lost in the excitement, so it is always best to sleep on such a big decision.

Offers

The art of negotiation doesn’t have to be an art form at all. The British stereotype is to run a mile when faced with the prospect of bartering. However there is a science to securing the property for the right price. The common mistake a lot of first-time buyers make is to lay all their cards on the table at once. Buyers should never offer first time, the full amount you would be willing to pay. The fine balance between causing offence and getting to start a healthy negotiation has been set at a helpful ratio. 3-5% below the asking price is said to be the best place to start depending on the amount of other interested parties.

The estate agent can make you aware of any other offers currently submitted without discussing how much they amount too. More than one current offer indicates that this property will be a popular choice so this will reduce your negotiating power.

At the stage of an offer being submitted the agent will ask for you to provide proof of funds and relevant documentation to comply with Anti money laundering legislation. The agent will certainly look at you favorably if you had prepared these documents ready to send with your formal offer. The files include:

• two forms of I.D (one photo ID and one proof of address)
• a bank statement showing the full amount of the mortgage deposit
• an agreement/decision in principle from a mortgage lender.

The moment this is received, they can effectively take the property off the market (sold subject to contract) subject to the offer being accepted. The agent will want you to show a willingness to proceed and these documents being organised will give them an insight into how easy you will be to deal with as a buyer.

Any offer submitted is NOT legally binding until the point of exchange of contracts so if you change your mind or circumstances change you can pull out of the sale without any ramifications.