Sunday 10th October 2021
The end of the summer is not the end of the world.
Here’s to October…
Hi all, and welcome to my October update. It has been a really busy summer and finally, with the end of the stamp duty incentives, the market appears to be slowing down a little. However, from what we can see, there remains no shortage of buyers wishing to find a house to buy; there is simply a shortage of quality housing stock being brought to the market, and at realistic prices.
Sam and I both pride ourselves in giving the best advice as to what price to bring your home to market at, based on considerable research and comparable properties, research which we are always more than happy to share with our clients when we visit them, in order to back up our advice. With a shortage of housing stock, and a lot of agents vying for each potential property, there can be a tendency for some agents to advise far higher marketing prices than is reasonable, simply to get a property on their books, and then reduce the price later. This only runs the risk of a property being on the market for far too long, and then appear to have an issue … most buyers tend to veer away from a property which they assume has an issue, even though the property might be the most glorious property, but simply overpriced to start with. The most dangerous side of this is that the house then might need to be reduced, sit on the market too long, and end up having to be sold for less than it should have, had it been correctly priced to start with.
An example of pricing only this week, which alarmed us on the owners’ behalf. The property we went to see was a semi-detached property and every bit of evidence suggested it was around the c£425-450k price bracket. However, another agent had told them their home was worth £490,000. (It is also concerning that the same agent apparently also said, in the same conversation, that they could ‘make a call’ and have a buyer quickly at £460,000, which begs the question of why they also said £490,000?). The client then had £490,000 in their mind, and started looking for a house to buy. When we visited them, and showed them the comparable properties to theirs, they understood our rationale, and appreciated our honesty. Moreover, we showed them a house that the other agent had just listed at £450,000 in the same vicinity, which was bigger, detached, and had more attributes. Their disappointment, not in the lower perceived value of their home, but at the irresponsible rhetoric of the other agent, was considerable.
That all aside, I thought it might be helpful today to highlight a little bit about what happens after a sale is agreed. We all know that, to get a house on the market, an owner will get a few valuations, have photographs taken, undertake some viewings and an offer (hopefully) agreed, but, what then?? The usual chain of events would then be:
The buyers and sellers would choose a solicitor. I would advise choosing a local independent solicitor firm, rather than a large conveyancing out of town hub. You would likely pay a bit more, but the reassurance of being able to speak with your solicitor when necessary, rather than endless messages for those less contactable, could be worth every penny.
(We had a case recently whereby the buyer in a chain below ours tried for over a month to reach his solicitor, without any return of call or email. Indeed, they had standard response ‘holding email’ saying that they were too busy to respond to messages for updates. The buyer almost lost his purchase).
Your solicitor will then take your ID and ask for funds on account to start work on your file.
If you are selling a property, they will send you a bundle of papers, including property information forms (for information about the property, including any planning permissions and works undertaken), and Fixtures and Fittings Forms (whereby you list what you are leaving at the property, what you are taking, and which items you might wish to sell to a buyer). These form part of the contract.
We highly advise clients who are selling a property, to instruct a solicitor from the outset, and get these forms filled in ahead of finding a buyer, as it can save vital time once a sale is agreed, especially if the chain is requiring a swift transaction.
Once the solicitor has these forms back, they will formulate which is known as a draft contract pack, which is sent across to the buyer’s solicitor.
If you are buying a property, your solicitor will ask for your ID and funds on account, in readiness for receiving the draft contract pack from the seller’s solicitor, following which they apply for searches. The searches contain vital information which could affect the property – various things from risk of flooding, any contaminated land, subsidence, location of water pipes, planning applications in the area, etc. It is essential to get these underway as soon as possible as they can take anything from a few weeks, to (as we found recently) 12 weeks to come through.
The buyer’s solicitor will then raise what is known as enquiries. They will ask pertinent questions about the property to the seller’s solicitor, some of which may well arise from the Search results. The seller’s solicitor will respond to these enquiries, following which the buyer’s solicitor might well raise ‘additional enquiries’ for the sellers solicitor to respond to.
In the background, the buyers should also be liaising with their mortgage lenders, and instructing surveys and valuation reports on their own behalf and that of the mortgage company. There may be issues which arise in the survey which will require responses from the sellers – which would either go via the solicitor or the estate agent involved.
Most estate agents will keep in touch with solicitors, surveyors and mortgage lenders, and liaise all parties, and then update the sellers and buyers with progress throughout the process.
Depending on the time needed for searches, and the responsiveness of the solicitors involved in the chain (do remember that most solicitors are dealing with dozens, if not hundreds, of other cases so might not be able to push your transaction through as quickly as you would like, which is why it is essential to ask them for their capacity level and ability to take on your case from the outset), the transaction of freehold purchase with a mortgage is currently averaging 8-12 weeks to Exchange contracts. This is extended depending on the workload of any solicitor within the chain. There is then usually a gap between Exchange and Completion for buyers and sellers to organise their move.
The transaction I mentioned above whereby the solicitor did not respond to this client for over a month, is now at four months, and still barely off the starting line. We had another transaction recently whereby one solicitor in a chain took over three weeks to send out the initial documentation to the buyer’s solicitor due to their level of workload. This in turn delayed the searches being applied for. This is one of the main reasons why we highly recommend choosing your solicitor carefully, not just on the price they charge, but asking around for advice and recommendations. You might wish to ask your estate agent which solicitor they recommend, based on responsiveness and communication. (However, it is also worth asking the estate agent whether they get paid commission on referrals to a solicitor, or indeed surveyor/mortgage broker).
This timeline could be extended considerably if there is a leasehold property involved as there will be ‘management enquiries’ raised from the leasehold management company, including asking for accounts and any works done or in the pipeline. Responses from management companies can be frustratingly slow, and take many weeks, so you need to be prepared for this, and the knock-on frustrations and concerns which might arise within that chain as a result.
If you are buying a property which is subject to Probate, (ie an owner has sadly passed away), then that property cannot be legally sold until a Grant of Probate is received. This can take many weeks from when the request is submitted to the relevant authorities. However, it doesn’t stop the sale from getting underway, and enquiries being raised etc. All can be prepared in readiness, and the property Exchanged once the Grant of Probate arrives. We are advised the currently this is taking 12-15 weeks, which is better than in recent times when it was taking around six months.
It is only when the solicitors on all side are ready, that they will then liaise on an Exchange and Completion date. Most transactions cannot exchange without a completion date being agreed. This protects both parties against exchanging contracts (from which date a buyer has to also insure the property they are buying), and having a never ending completion date. Some transactions will agree a long stop completion date, which can be brought forward by mutual agreement if each party is ready sooner.
Remember, if you are buying a property, to have your deposit in reachable funds in readiness for the Exchange of Contracts (rather than in a long drawn out savings account which might require three or six months notice to access). Also bear in mind that removal companies will require deposits at the outset of booking, so you will likely not wish to book your removal firm until you have exchanged contracts. This is one of the main reasons why most buyers and sellers have a two to four week gap between exchange and completion, to enable infrastructures to be put in place for the moving date.
I hope this has been helpful. I am always around to help and advise if you would like to ask any questions about the process. If I don’t know the answer, I usually know who to ask!
If you are thinking of selling your home in and around Winchester and Alresford, and would like to chat with Sam or me about how we would represent you in the market, please do give us a call. We would be pleased to come out and chat with you at your convenience!
Have a lovely October!