Sourcing property part 2 from estate agents

 

Sourcing property part 2 from estate agents

The traditional way people look for a property from an estate agent is to pop to the town and register your name with all the agents in the nearest town to where you are looking for a property, they usually have a form or will put you on their data base and email or post property details out to you as and when they come in, you can ask the agent to supply sales particulars for all the properties they have on their books immediately for sale.

The main issue with Estate agents is the properties are sent out to everyone looking in the area so you are competing against many others so the chance of getting a good deal is very rare, also the estate agent is working for the vendor and will recommend the client with the best offer who is in the best position to purchase the quickest, they will often ask for proof of deposit in the branch and proof of a mortgage acceptance for around the amount of the properties you are looking for.

Some agents save the best properties for the people that they have a long term relationship with; they will give them first look at new stock or anything that needs a quick sale and might be below market value. If you know anyone who has a good contact in estate agents in the area you are looking it is worth getting them to put a good word in for you as some of my buyers have done and have had success.

Some agents offer virtual viewing with clever software that allows you to view the property on a laptop or pc, this is particularly useful in the current pandemic and is the safest way to view at the moment. They sometimes offer open houses (not available with current restrictions but something that will come back in the future) or 1 to one viewings with the seller or take to the property by the agent.

The best thing if you do want to only use an estate agent is to make sure you are ready to buy and have all your paperwork in order before starting the process, if you are a cash buyer then having proof of funds in a money laundering acceptable form, usually showing in a UK bank statement for the last 6 months so the agent will ask for 6 months statements. They will also need a good explanation as to where the money has come from savings, sale of a property etc.

If you are buying with a mortgage then the same conditions on the deposit as above will apply and proof will be needed by the agent, they will also ask for a certificate from a lender that is in date that shows intention to lend if all the required documents and applications are submitted.

Id may also be required by the agent to allow you to make an offer on a property this will be an original passport or driving licence and proof of address in the form of a utility bill or bank statement with full current home address dated in the last 60 days.

So go prepared and good luck.

Next sourcing property online.

 

Sourcing properties part 1

 

Are you a buy to let investor, then you already know that finding a good deal on a property is getting gradually harder, this is mainly due to the fact more people over the years have seen property as a good investment and it’s no longer the niche investment it was in the 80’s and 90’s .

Auctions

Property auctions, when as mentioned above property was more of a niche investment for the few who had the knowledge and were brave enough to take the chance on property investment when interest rates were more likely to go up greatly in the 80’ and 90’s, auctions were a good place to go to source property and you could pick up real world good deals.

Now property auctions are attended by so many investors from all walks of life and picking up a property that is a good a deal as you could off in the earlier days is much more difficult, also it takes experience when buying at auction as there are many pitfalls to the process. Properties bought at auction are subject to a mostly bought as seen protocol  so any issues with the property or title once purchased you are basically stuck with them without any recourse to the vendor  , it is possible to investigate the property prior to the auction and you can request an auction pack that includes limited property searches . It is then advisable to employ a conveyancer who is experienced in auction property to inspect the pack and property prior to the auction so that you are not buying a property that has underlying issues that are not visible immediately , example you could buy a property that has been extended but without the proper planning permission and building regulations , then receive a visit from the local authority after purchase asking for the extension to be removed , you will have no comeback to the seller and the property price will be severely affected once the structure has been removed let alone the cost to remove the structure .

So in summery when buying at auction request a brochure on all properties being sold and do in depth research on the property  that you are interested in before attending the auction .

The other big issue with auctions is the timescale once you have won the property , you have to immediately exchange contracts with a ten percent deposit and are given a further 28 days to complete . This means that you must not rely on getting finance after the purchase as you might run out of time and could end up losing your 10% deposit and being sued by the vendor. It is always advisable to get finance in place before the auction cash purchase is always the safest readily available funds in your bank account. There are a myriad of issues that can arise if you are buying with finance even if it has been agreed prior to auction , the survey after exchange could find issues like subsidence , damp or even risk to flooding and the financier might turn the you down after exchange. You might have an issue getting all the things done in the 28 days to satisfy the financier so pre planning this is essential. Also you need to have the 10% readily available for the deposit as it will be asked for on the day off winning the auction.

Next estate agent sourcing.

Getting on the property ladder .

 

 

Getting on the property ladder in the south of England can be very hard for first time buyers, especially if young and have only been employed or self employed for a few years. Also due to the current economic environment lenders are asking for larger than normal deposits, for non help to buy mortgages you are looking at 10 to 15% deposits currently.

With average property prices in the South of England flats are around £170,000 plus for 1 bedrooms and house’s are  around £300,000 the income needed if you had say a 10% deposit would be examples below.

Flat  priced at £170,000 minus 10% deposit =£153,000 mortgage needed the average multiplier is 4.5 times income single or joint an income off £34,000 would be needed , if it was a couple buying their first home the income needed is achievable jointly for this price ranged flat .

House priced at  £300,000 minus 10% deposit would leave a mortgage needed £270,000 divided by 4.5 =£60,000 if it was a joint mortgage the £30,000 income needed for each applicant is achievable , but if it’s a young single applicant this a large income needed to qualify for what is just an average house in today’s market .

House’s in the North of England are more in line with achievable incomes for a first time buyers house and are averaging around £145,000 in the North of England with flats around £66,000 so for the same examples income needed as below, although the average income is lower in the North of England compared to property prices the income gap to buy a property in the south is far larger and the deposit needed due to lower prices is far less.

 Flat £66,000 minus 10% deposit =£59400 mortgage needed the average multiplier is 4.5 times income single or joint an income off £13200 would be needed , if it was a couple buying their first home the income needed is achievable jointly for this price ranged flat in the North of England  .

House £145000 minus 10% deposit would leave a mortgage needed £130,500 divided by 4.5 =£29,000 income needed single or joint, as you can see the difference between prices in the North and the south are very significant.

So in summary without help it is easier to get on the property ladder the further north you go, but if your work is in the south or most of your family live in the South then there are some other ways you can get on the property ladder as below.

First-time buyers can apply for new Help-to-Buy: Equity Loan (2021-2023) scheme from 16 December 2020.

The new Help to Buy loan from Homes England allows first-time homebuyers who are eligible for an equity loan to borrow up to 20% (40% in London) of the purchase price of a newly-built home. Customers pay a deposit of 5% or more and arrange a mortgage of 25% or more to make up the rest.

Buyers will not be charged interest on the equity loan for the first 5 years. Interest fees start at 1.75% and rise each year in April by the Consumer Prices Index (CPI) plus 2%. Buyers pay a monthly management fee of £1 for the life of the equity loan.

Homebuilders are getting into contract for the new scheme and starting to market their new build homes. Buyers are advised to check with their homebuilder that they are registered for the scheme before applying.

Eligible first-time buyers will be able to reserve their homes from mid-December and get the keys to move in from 1 April 2021.

Mortgage options for parents who want to help first-time buyers If you want to help your child buy a home but don't have enough savings to give or lend them the cash, there are several options you can consider. Guarantor mortgages A guarantor mortgage involves you using your savings or your home to help your child get a mortgage. By putting down money or property as collateral, you'll be able to reduce your child's risk profile, making it easier for them to get a home loan. The drawback with guarantor mortgages is that if your child defaults on their mortgage payments, you'll be responsible. Guarantor mortgages also often come with higher rates than traditional deals.

 

 

Stamp duty Holiday problems

 

Stamp duty Holiday problems

One Wednesday July the 8^th the govt started the stamp duty holiday in the England to stimulate the property market due to the initial damage done to it by the March full National Lockdown and pausing off the housing market, this and pent up demand stirred up by the lockdown has caused a huge surge of people buying and selling property and instigated a mini property boom.

Although this is good for house prices and movement in the economy it has caused issues, firstly the influx of mortgage enquiries to lenders has caused queues for underwriter review, sometimes as much as 2 weeks to just review a case in the first instance. This is not such an issue if the first review does not generate a need for further documents,  if further documents are needed then the case goes back into a queue for another long period . This is when the advice would be to use a knowledgeable mortgage broker who can underwrite the case fully before submitting it so that once reviewed nothing else should be asked for.

Another stumbling block is when a survey is needed for the mortgage; Surveyors are down on staff due to illness or having to self isolate and they are rushed of their feet with the sudden influx of new enquiries, these can be delayed by up to 3 or 4 weeks. 

The big issue that is now getting worse is the searches needed from local Authorities, you have the perfect storm currently huge demand caused by the SDLT holiday and COVID 19 staffing issues , self isolating and people at home sick with the virus . Areas around London have been particularly hit hard due to the location and the large surge in cases over the winter period. Search companies that provide searches to conveyancing firms have traditionally supplied standard searches that cost the same for whatever local authority covers the area of the property in question, so it makes searches more affordable and easier for s conveyancer to order through the search provider’s online portal.

The other type of search is called an official or direct search this is when the search is ordered directly with the council, the main issue with them is the price is different for each local Authority it varies from £150 plus vat up to as much as £500 plus vat and in normal circumstances the search providers searches although slightly slower than are adequate on good value for money. The issue now is that councils are allocating most of their staff to official searches as they get paid more for these and search companies searches are being put on the back burner with stupid estimates of months being quoted as far up to October 2021.

In summary the SDLT holiday, was not though out properly by the government and was rushed out to try and stimulate the economy, but the fact that people will have spent money on applying for mortgage, getting surveys done and possibly missing the deadline of 31^st March 2021 then not affording the cost of being able to complete and having to pull out of the transaction. Might have been better to allow them to complete the transaction if it was started between a certain date than having a deadline that has caused panic and possible financial loss.