Buy a property, pay no fees
from Business Matters Newsletter (March 2001)
Shark Infested Waters
You're hardly a first time buyer. So you know that you're reliant on
other people to get the deal done - estate agents, lawyers, surveyors,
mortgage companies, etc. You also know that they can charge handsomely for
their services and that you'll have to pay, even if the deal collapses.
Remember that under English law any party in the chain can pull out for
any reason before exchange of contracts. It doesn't matter two hoots that
you've already paid out a small fortune. "Tough luck mister"
- at least that's what you'll be told by the people demanding you pay
their fees.
Sorry but we've changed our minds
Imagine this typical scenario. You've made an offer on a smart little
house that you're planning to let out to students. The seller is intending
to retire to Spain. All looks fine and dandy so you shell out £400 for a
survey, pay your solicitor an up-front sum of £500 and agree a mortgage
arrangement fee of another £300. So that's £1,200 gone already. Then you
get a call to say that the seller is allergic to paella and won't be
moving to Alicante after all. Hasta la vista, baby - but you're left
£1,200 short - and there's nothing you can do. But next time. .
.
Strike a deal
You may have heard that "seller's packs" will change all this
by making the seller responsible for all pre-sale costs. Maybe - but don't
hold your breath. Plans to introduce them across the board have been
postponed again. But that's not to stop you striking your own deal with
the seller.
Tip. Offer the asking price on condition that the seller takes
the risk of your pre-contract costs. This simply means that he'll pay them
if the deal fails for reasons beyond your control. If he agrees get it
confirmed on the memorandum of sale:
"In consideration of payment of the full asking price, the
seller agrees to indemnify the buyer for the cost of the valuation, survey
and legal fees up to a total of £500 should the sale fail to proceed for
reasons beyond the control of the buyer:"
Naturally you can't expect the seller to have unlimited liability so
agree a limit on fees.
He won't buy that
The advice above won't work every time - but it could be effective if a
quick sale is needed. In other cases it's still possible to avoid running
up costs until there's a strong chance the sale deal will go ahead. In
theory a seller shouldn't accept an offer until his buyer has sold his own
house. Yet many people start spending money as soon as a
"conditional" offer has been made.
Tip. Don't instruct a lawyer or surveyor until the chain is
closed - meaning all properties are "sold." Check the state of
the chain with the estate agent - ask for details of the agents above and
below to make sure everything's in place.
Bank subsidies?
In the meantime, shop around for favourable mortgage deals that aren't
associated with excessive pre-contract fees. For example Lloyds/TSB
doesn't charge a valuation fee at all. Standard Life doesn't charge any
arrangement fee and will refund the valuation fee on completion. Legal
fees of up to £220 will also be refunded.
|
