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Monday, 10 February, 2003, 09:26 GMT
BBC's house-buyer nears finish line
Adrian Plant, a 35-year-old Londoner, is looking to buy a house for the first time. As his hunt hots up, he talks to BBC News Online about his latest moves to secure his dream home.
After a month long search that has involved more than a dozen viewings, Adrian's hunt could be drawing to a close.
In only a few days, Adrian has felt all the highs and lows that the housing market has to offer.
Emotions have swung as he had one good offer rejected only to bounce back to put in another on a better property.
Now Adrian is waiting on tenterhooks to see if his latest offer for a new home will be accepted.
The cottage Adrian has made an offer on seems to fit the bill perfectly.
The property is in the right area has the right number of rooms, an entrance that does not open onto the street as well as a bit of green space at the back.
The house is right and so is the price.
But Adrian has learnt from bitter recent experience not to count his chickens before they hatch.
Last week Adrian had his heart set on a similar property only to have his hopes dashed.
"I had put in an offer and according to the estate agent I was the highest bidder."
Adrian had one key advantage which should have swung the deal in his favour - he is not in a chain and does not have to sell before he can buy.
"I am ready to move within a few days, I thought that was a real negotiating advantage," he said.
Rate cut woe
However, this was before the Bank of England Monetary Policy Committee's surprise move to cut interest rates.
The rate cut was widely tipped to breathe new life into the London property market which has shown signs of weakening.
"The same day as the rate cut the seller decided my offer was not good enough, I upped it a little but I was determined not to be bounced into paying over the odds."
In the end, after numerous calls, Adrian reluctantly gave up on the home, but perhaps this was for the best.
"The next day I saw a property which was much better all round. It was bright, modern and above all more tastefully decorated than the one I had been rejected for."
Adrian has put an offer in and is now waiting for the hoped-for thumbs up.
If Adrian has his offer accepted, he will soon enter the world of surveyors, solicitors and mortgage advisers.
Many first time buyers feel daunted and end up falling foul of high fees, poor advice or the dreaded gazumping.
Some first time buyers skimp on survey costs in order to scrape together enough for a deposit.
"More than eight out of 10 homebuyers rely solely on the mortgage valuation survey," Jeremy Leaf housing, spokesman for the Royal Institution of Chartered Surveyors (RICS), told BBC News Online
"However, often a mortgage valuation survey does not involve a close examination of key areas such as the roof space or drains."
Mr Leaf recommends that Adrian arrange a full building's survey - particularly as the property he is looking at dates from Victorian times.
"With properties this age it is best to be safe than sorry. A full survey could be carried out for just over £500."
Although not quite as virulent as the London market, Scotland's system is a total mess. Adrian should try buying in Scotland where you are in a blind auction against other worthy bidders, and the 'offers over' price very often is low just to attract lots of competition! Also an offer made to a seller is legally binding so you have to get an answer from the seller before you are able to make an offer on another place. At least Adrian can make lots of offers as better stuff comes on the market!
I have several friends who have been trying to sell their various flats and houses (all either in central London or the South East) for up to a year now! All are lovely properties, all are in good condition and all are in lovely areas. So why aren't they selling? Because it's now a buyer's market in these areas and most buyers don't want to pay over the odds for something that might drop significantly in value. Suggest Adrian takes note of this when putting in offers, otherwise he might get burned.
l have been searching for a property too. It has been very frustrating. In the last four months l must have viewed over 20 houses. Within this time l have been exposed to the unscrupulous practice of the agent. l believe they are the ones actually fuelling the price in the house. Do not forget that the higher the price of the property the higher their own commission. l have been in a position where l made an offer for a property that was accepted by the vendor and this was rejected by the agent as being low, they kept the property on the market until they got a bidder who quoted the price they wanted. How else will you explain that. The Agents are shylocks milking the already 'over milked' market.
Iżve found it far more useful to get a good local builder to do a 'survey' of a house that Iżm interested in as well as the mortgage valuation survey. they know what to look out for and cost a lot less.
Given that the housing bubble is already deflating in London, Adrian should pull-out of the market and wait for prices to tumble.
Good luck with the house buying, a number of warnings however. I think your experience when the seller increased the price after the interest rate cut illustrates the enormous dangers in this boom. Rates were cut to stimulate the economy, but obviously people are now getting greedy and basing their house valuations on nothing more than the money required to service the debt, UK house prices are based largely on easy credit. We have low interest rates because our economy has weakened, it makes no sense that the stock market has collapsed, yet house prices have boomed. Remember the price you pay will remain constant, the mortgage however will vary. Inevitably Interest rates will go up, and with low inflation the debt will not erode quickly.
Come on guys, this is a non-story. The real highs & lows are with people trying to sell... buying is easy... especially for the first time.
If he had any sense he wouldn't be looking at a second hand home.
Most of the major builders offer very good deals for first time buyers, 5% deposit, stamp paid, legals and carpeting if you're really lucky.
If you can suffer the drabness of a new home then most first time buyers will be in a better financial situation than if they buy a second hand one. So it's not exactly in the right location for work and so on but Adrian wouldn't have to reach into his own pocket for the initial costs or if he did he might be able to get something bigger than he anticipated?
Good Luck Adrian, most of us know your fears.
I have been working the issue of buying a new home since before Christmas. I have the cash to buy and a house to sell but do you think that this has helped the progress, you guessed it, not a bit. I have sitting here on my desk a contract report document for my new home and it is 215 pages and I am expected to read it. Given the fact that it has come from my legal people and is written in legal jargon it could take me weeks of phone calls and letters to try to understand what the hell it is all about. On the horizon for sellers is also the need to produce a sellers pack add that to all the paper work and the whole process of buying/selling could end up taken many months. Is this a ploy to slow down the whole process or is it to make more money for the legal eagles????????
I put my house on the market in Sept 8th 2001 and it took nearly a year to sell it because people kept pulling out or dropping out further down the chain. It is a ridiculous system, fraught with stupidity and greed. The new system offers no hope to buyers or sellers either as there is no commitment. I have now bought something in France. A much better system as once you agree on a price you are GUARANTEED that property as long as you can raise the money.
One way Adrian could prevent gazumping is for both parties to stump up £2000 each for a non refundable deposit if either pulls out (apart from not being able to raise the finance or finding anything wrong with the survey)
I read with amusement the discussion of the value of a survey, my experience is that these surveys are seldom carried out with anything like rigour or thoroughness. I paid over the odds for the "full" survey on my very flawed property and the surveyor produced a standard, though lengthy, document which had clearly just been trimmed a little to suit the property in question. A massive and potentially lethal structural flaw had been TOTALLY missed. Any surveyor with even a basic education should have spotted it right away. Luckily I had some experience in surveying and had spotted it myself. The answer: read some of the very good books available on the subject, complain if warranted of poor service by the surveyor loudly to the bank or building society, and be very thorough when YOU examine your property. Remember that the basic survey offered effectively for free by the bank or building society is only to rubber stamp their lending you a huge sum of money. It's not for your benefit. Trust your own instincts and be realistic when you look at a property. Repairs are extremely expensive!
I bought a my stone terrace last year, and it was built in 1890. I had the free buyer's survey the mortgage lenders offered, and it showed up possible rising damp and possible substenance. I then followed it up with a builder's survey- he said there was neither of those. But he brought up even more problems with wood infestations, and leaking roof. I persevered, even though the surveys were costing me nearly £1000, that I didnżt budget for, and brought in the specialists. Thankfully all my fears were laid to rest, as the roof only needed a patch, and there was no sign of living wood worm. I donżt regret paying that much, as I managed to knock off some of the value of the house. It also made me aware of potential problem areas, that I could keep a look out for in future. I donżt think you can trust a valuation survey, especially as we had a substantial 1/3 deposit, so they were only valuing the house for 2/3 of it's value.
Unfortunately the survey is really not worth the paper it is written on. Often a surveyor will 'discover' entirely erroneous or spurious issues with a house, which will have the owners completely puzzled, but worse, surveyors often miss major things: and there is absolutely nothing you can do get compensation from a surveyor, when they get it wrong. On those grounds a valuation or middle level survey is all you should bother with. What you really must do is get an experienced builder/plumber to take a good look at the house. They will tell you all the important things you need to know.
I think Adrian should think very, very carefully before proceeding to buy in the current climate, unless he is honestly happy to contemplate the potential for suffering significant loss of capital.
Property is a cyclical market, and despite the falls in London prices since last summer, we are just a few months into the downswing, which could be expected to last for a number of years (2,3,4) and see dramatic falls in prices from current bubble levels.
Unless family requirements dictated it, I would certainly not be purchasing UK property for the next few years, until it becomes clear that the risk of significant falls has abated.
Today, it is akin to buying technology shares in May 2000.
I had the homebuyers survey from the mortgage company, at a price of £500. The result was a generic load of rubbish, making statements like "The floor is carpeted. Carpets should be lifted and the floor underneath examined by an expert to ensure there is no infestation.". It was almost certainly produced by selecting paragraphs from a template and had very little specific to my property. Certainly nothing I couldn't see for myself.
Don't pay the extra for the homebuyers survey. Go for the basic valuation and get an independent structural survey if you're worried.
Myself and my Partner put an offer in on a house this time last year. All seemed to be going fine, we had successfully sold our existing property and we were waiting to agree a moving date with the vendor of the property we were buying. Time passed and after much pressure being exerted on both solicitors firms we couldn't get an estimate of a moving date. Eventually we got a call from the vendors estate agent informing us that they had been instructed to take it off the market, no reason was given. With a bit of digging we were informed that the vendors purchase had fallen through. However, I later found out that the price of the vendors new barn conversion had increased and the hence the house being sold to finance it needed to come off the market and re-advertised at £10k more! A week later I received a call from the vendor informing me that they had found another property and wanted to give us first refusal on the original house. However it was going to cost £10k more as! 6 months had now passed since the original offer and the market had increased! So, after being lied to and deceived we still got the property, unfortunately I had to fork out a lot more money for it!
Adrian should drive the transaction from now on. Keep tabs on all involved, and he should make sure he is aware of what anyone involved is waiting on. Paperwork can sit on desks for weeks (and this could be intentional !)
Make sure Adrian takes advice from at least two IFAs to make sure he is getting the best mortgage for him.
If Adrian has nerves of iron, and doesn't mind a game of brinkmanship, it can be very profitable to pull the deal at the last minute. Submitting an offer price X amount lower 'due to unsatisfactory survey results' can force the seller to accept if they are in a tight chain. I made £6K in two days doing this !
My company sold 4 very similar flats in London between June and December 2002. All were part of the same former pub conversion. In June I "sold" 2 in a day or so and could have allowed a gazump and got more. By December the final flat was sold. One viewing every 2 weeks was typical. I dropped the price and finally sold.
In short it is a buyers market in London. The above is FACT not journalistic opinion. Wait or offer 15% down on lots of properties because the London market will fall 30% plus from the autumn 2002 peak.
Good luck anyway. I understand you are buying a home and money is not everything but try not be pushed. Remember there are lots of lovely houses in London! I bet within 3 months another is for sale on the road you are looking at cheaper. Why not rent for a bit?
On surveys, remember even a "full structural" will be full of "in our opinion..." or "probably this or that" or "we suggest you contact another specialist...". There is no liability these days (or very little). Be aware even a structural is only a pointer.
After buying a house in July of 2001, my advice to Adrian would be to take charge from now on. Our solicitors and the sellers solicitors were very slow and it took daily phone calls, emails etc to ensure that all went through on time. Despite the huge pressure that I put on all parties, we still completed 3 days later than initially agreed (we wanted to move in on a Friday afternoon and ended up moving in on a Monday afternoon). Don't be afraid to be pushy and good luck!
I would advise Adrian against having a full survey. Its pointless as if you find a problem after moving in the report is worded in such a legal way you will not have any come back on them. By all means if need a mortgage you have to have a basic survey from the building society. I would advise anyone who is a cash buyer is to pay for a builder to go in, and search any land record themselves
I had a homebuyers survey when I bought my first house. This survey highlighted Woodworm in the loft and rising damp. The basic valuation, done by the same company, highlighted the same. When I remortgaged 12 months later I had another valuation done and miraculously both these problems had disappeared even though I had done no work.
Watch out for the lender's valuation costs. I have had two lenders valuations done on a property and each time the valuer did not seem to have a clue about the value of the property as there are no other properties of a similar type up for sale in the area to give him an indication. When I am asked 'How much are you/did you pay for it ?' and 'How much do you think it is worth' by a so called professional valuer, I feel that the local estate agents could have given a better valuation ( and for free ! ). As for the full structural survey that missed the fact that two supporting walls had been removed, the ceiling and roof were bowing, floors replacing, and the chimneys needed re-building etc etc. I would be very wary about parting with large sums of money for so called 'professional services'. It is essential to make generous allowances for a lot more expenses than just the deposit, estate agent fees, removal costs and solicitors bills.
I'll rent until such time as the economy settles down and House prices are more realistic, and not based on peoples greed
BBC's house-buyer nears finish line - sorry am I reading the same article? Should it not read BBC's house-buyer nears start line? From my own experience I know that Adrian is in the very early stages of a long and agonising process. If Adrian finds that this property is in the condition he expects and he does not get stitched up, then good luck to him
Typically anything can happen, as soon as you involve Solicitors and Estate Agents.
We put our house on the Market October 2002, had an offer within 2 days, which we accepted, offer was withdrawn 7 days later as the buyers had found somewhere else.
Had another offer made, accepted, so we proceeded to find our "ideal" home and made an offer, both us and our buyers had surveys done, we had our searches carried out, then the fun began with the Estate Agents - now not trying to point the finger but they did manage to totally botch the job. Consequently our buyers pulled out. We then found another buyer who made a better offer, we accepted, phoned the estate agents of the house we were buying only to be told that they had advised the seller to re-market the property as we weren't in a position to go ahead. The seller did this and accepted an offer exactly the same as ours, under advice from the Estate Agent, all without the Agent informing us. We only found out because the Agents marketing our property phoned to check the chain and were told the above sordid details.
Since then we have found yet another buyer, have found yet another house we can buy and hope to hell it all goes through this time......
The moral of this tale is ..... is it all worth it really!
Having moved from the UK to the USA I have had two very different experiences. The bottom line is I'm very impressed with the way property is sold in the USA. The realtors (estate agents) are very professional, your offer is a contract (subject to survey and finance). Gazumping does not exist. House prices raise at a respectful 2-3% per year and finally there is a disclosure clause, the seller has to tell about defects they know about. The last time I bought and sold a house in the UK it took months, in the US it takes weeks. It's definitely time the UK looked at legislation to regulate what is the most expensive purchase you will ever make.
Congratulations Adrian. I'm keeping my fingers crossed for you having your offer accepted. I and my husband are also first-time buyers and we've had absolutely no joy, despite viewing well over 40 houses in the last four months and having made full-price offers on 10. The supposed benefit of being first-time buyers is losing its shine with vendors because some are now beginning to think that we are all over-stretching ourselves and will pull out of the deal at the last minute because we can't really afford it. Our offers have been rejected several times in favour of those from people who already own property because the vendors think that they are more reliable and will go through with the sale. It's an absolute nightmare!
he housing market is overdue "a correction" a downwards one and probably quite a frightening one.
So is Adrian buying a home or investing in property? When he answers that question he'll know whether to go ahead or not.
In respone to Debs comments; it is very easy to blame Estate Agents for all the ills of the House Moving process but having been one myself in the past it is not that simple. Although there are few moody Agents out there, particularly the Independants, on the whole he or she is an innocent middle man between two parties who are, at best, economical with the truth! The Agent acts on behalf of the Vendor and must submit all offers by law. Whether the offer is accepted or not is entirely up to the vendor. I cannot believe that any Estate Agent would risk losing a sale by turning down an offer acceptable to the vendor. The normal commission rate for an Agent is between 1 and 2% so even if they somehow managed to squeeze another £2,000 from a buyer this would only equate to, at most, £40 on their fee!! Those looking for a scapegoat should look elsewhere, perhaps closer to home!!
Adrian, Good luck with the purchase of your home. However, if you are viewing the purchase as an investment, I would consider waiting. I bought my first house as a student back in the peak of the last boom in 88. (Yes banks were falling over themselves to lend money and I had no income other than my student grant). After the crash (and with hindsight) it was obvious that prices had to fall. We are in the same situation today. The IT contractor market is over and recession is banging at the door. It is only a matter of time until reality hits the housing market.
Many of the comments above about how the market is being driven by greed are SO true - However this can only happen as buyers are running around like headless chickens and putting in stupid offers.
I saw 2 houses this weekend and already there are about 8 offers between them, with the starting offer being the asking price. Sheffield is definitely a seller's market at the moment and if prices are about to slow/drop then surely we should be being more cautious? I would love to stay renting for a while BUT unfortunately the brilliant mortgage deal I can currently get as a graduate runs out in July as I'll be 7 years past graduation! Times runnig out!
I would advise anyone looking at a house to buy to take a look at even the most mundane things. We've just bought a house and now we know why she always had the back door open when we arrived as it became nigh on impossible to close it without sanding a large part of it off. The boiler has a rather dangerous lack of gas safety valves and virtually the whole house needed rewiring. We just got the most basic (and cheapest!) survey and in future I think I'm going to turn up with an army of plumbers, sparkies and joiners!!!
I guess Adrian is attempting to buy at quite a difficult time, prices may continue to spiral upwards or they might collapse - no-one really knows. When I bought my house nearly seven years ago, the situation was different, it was very strongly a sellers market. However, I found myself in a similar situation to Adrian; after 3 months of difficult searching I finally put an offer on a house and was disapointedly turned down - despite the fact that no higher offers had been made. But within a week or so a much better house came on the market and I bid the full price (I was a little desperate !) and got it. I have no regrets, although I may have bid a couple of thousand over the odds this is a small amount over a 25 year mortgage term - and I have the house I wanted, and it's now worth well over twice what I payed for it.
am currently trying to get the agent for the property i wish to purchase to put an offer to the seller. It is evident to me that he is trying to get me to offer more as he keeps saying that he feels it is "unlikely" that the seller will accept my offer whilst doing nothing about actually puting it to them. He is really beginning to wind me up and i have the intention of ordering the office copies (the registration documents of the property) to find out where the vendor lives (it is owned by a couple as a buy-to-let investment) and putting an offer to them directly. This is risky, i appreciate, as the agent may well endeavour to obtain his fee from both parties. However, i feel that i could argue quite strongly that his professional negligence is astounding. And yes, i am an evil lawyer and perhaps i do deserve this for my past crimes but i do not intend to let "Delboy" as he likes to be called to win.
As a retired Estate Agent, first time buyers have always be held in high esteem as they have no chain behind them and one would expect sellers to opt for their offers provided they are reasonable. The first thing any first time buyer should do is to get a mortgage agreed in principle before starting to view because that speeds up the money process. When buying fairly new property it is usually unnecessary to have anything more than a Building Society Valuation. Even on older property that also applies, as the Morgagers will call for specialist reports if there are any structural doubts. With the market as it is at present I wish we had the same laws as Scotland where once a deal has been agreed a contract is made and no one can back out of it.
Everyone who keeps harping on about the forthcoming slump in prices seems to be very ignorant about the fundermental changes in the economy since the late 80's. We now live in an environment of long term low interest rates. When the traditional mortgage-salary multiples were arrived at, 3-4 times, it was based upon rates twice that they are today, and yes I know that they may go up but I doubt I will see 10% again in my lifetime. A long term average of around 5% is much more likely. This means that traditional views of house prices are out moded. If you would care to look at what happen to the market in Ireland when they joined the EMU you will see that this fundermental change to a low interest rate economy had a similar effect on house prices and they have certainly not seen a crash. In fact I think that the average house price there is now over 7 times average salary. The prophets of doom were proved wrong there and they will be again. Good luck Adrian, go for it ! mate, remember as long as you can afford your mortgage, with a bit of ley way for interest rate increases then the value of the house only really matters in the very long term. If it is going to be your home then just go after the house you want.
Regarding dave of the USA.He comments on the "efficiency" of the system.He did not mention estate agents charge 6% commision alone and the other costs take at least another 2% off the selling price.
When I bought my house 3 years ago, I bought at the cheapest end of the market as I thought then that the property market had slowed and at most the value would probably go up with inflation. The house was an attractive 2 bedroom with garden for £90,000. Since then, it has increased much more than anticipated - but I'm still glad I bought at the cheapest end of the market as that would suffer the least effect of a downturn. My house is a reasonable size for London, in good condition, attractive and in a quiet area, very close to the city, and people still look at me with amazement when I tell them the current value, despite the fact that it is 50% more than I paid. If property goes down 30% over the next few years, then I'm not worried - it is well cushioned with equity. It is my home as well.
I currently own two homes, one in Bromley, London and the other in Oslo. When buying in London I found it extremely stressful, anybosy can pull out at anytime, gazumpting, solicitors, expensive fees. This was the opposite to Oslo. Here the seller completes a pack that has the survey already done (if he purposely hides a fault, he is liable for 5 years after selling the property). One cannot put an offer in on a property until the bank has agreed finance. The 'bidding round' lasts for an afternoon, at the end of that day you know if the property is yours or not. Once the seller accepts your offer it is legally binding, there is no getting outr of it. I say my house on a Sunday, bid for it on Monday, signed all the paperwork on Friday (I was busy on Wednesday) and moved in that weekend. It was very much stress free, no solicitors, surveyors, local authorities etc...
What should Adrian do now that the finish line is nearly in sight. Have you faced similar disappointment, do you think the quarter-point rate cut will reignite the market, or do you think sellers should grab the Adrian's of this world? Which choice of survey has served you well in the past? Please send us your comments.
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