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Selling your home can be stressful, particularly at a time when property prices are sinking and buyers are scarce. Getting the right advice has never been more essential: This guide helps explain how estate agents work, what it will cost to sell your home, what you need to do in order to sell your home and how you can help make sure that you get the right price when selling your home.
- What is my house worth?
- What do estate agents really do?
- What happens when I accept an offer?
- What will it cost to sell my property?
- How can I make the sale happen?
- What paperwork should I prepare?
- When is my property actually "sold"?
What is my house worth?
Your property is worth what someone will pay for it, and unfortunately in the current climate this may not be as much as youd hoped! You may well come away from discussions with your estate agent, if you decide to use one, with the impression that valuing property is an art not a science and a black art at that! However, an accurate valuation is essential and should be your first step when considering a sale. If you want a sale in a falling market, make sure not to over-value your home, or you could be waiting a long time.
You can gain some idea of the value of your property by reference to the large number of regular monthly surveys of the housing market carried out by institutions such as Halifax, Nationwide, Cheltenham & Gloucester, Barclays, Royal Institution of Chartered Surveyors, Hometrack, Rightmove, etc., etc. Take a look also at your local papers and the prices being quoted in the property section. Check your local estate agent's windows.
Best of all, if property has recently changed hands in your street, try to find out what the asking price and the final selling price were (they won't always be the same as you may find out for yourself, especially at a time when buyers are hunting for bagain prices!). Ultimately, however, the only proof you will have of the accuracy of the valuation and the selling price at which you offer your property is the number of people who come to view it when you have put it on the market.
What do estate agents really do?
The role of the estate agent is to bring properties onto the market at an agreed price and introduce potential buyers. Nearly all of us trying to sell our homes will do so through an estate agency, but don't think you have to stick with the same one if they're not bringing any potential buyer round. You could also market the property yourself to avoid agent's fees. However, this may take up more of your time and you may suffer without the benefit of professional advice, which could be invaluable in a market slump.
Initially the agent will assess your property and suggest an asking price. This figure will have taken into account the propertyıs condition, size, location and local demand. Once you have given instructions to an estate agency to market the property, it will:
- Produce sales particulars on the property to give to prospective buyers
- Agree a marketing strategy, which may include advertising in the local press
- With the seller's permission erect a "For sale" board outside the property
- Encourage prospective buyers to view and show them around the property
- Provide the seller with regular feedback and progress reports
- Negotiate between the potential buyer and seller on any offers received
By law the agent is required to advise the seller of all offers received regardless of the selling stage (unless the seller has told the agent otherwise).
What happens when I accept an offer?
Once a sale price is agreed "subject to survey and contract", your estate agent will write to you, the buyer and both sets of solicitors to confirm the property sale and requesting the solicitors draw up a "draft contract". They will, with your permission, erect a "Sold subject to contract" board outside the property. The agent will also monitor the sale with the solicitors, and if appropriate mortgage lenders, surveyors and builders until "exchange of contracts" when the property sale is legally binding. At this stage the agency will also present you with its bill for the sale!
Moneyextra's mortgage calculators can help you work out what you can afford
What will it cost to sell my property?
By law, all estate agents are required to explain their charges before you sign any agreement. They are also required to pass on all offers promptly in writing. Once you have decided to sign up with an estate agent, do not sign a letter that says charges will be payable for introducing a purchaser 'ready, willing and able' to buy, you could find yourself having to pay commission if for any reason you withdraw before contracts are exchanged.
Agents normally charge commission based on a percentage of the selling price. Shop around for quotes. Do remember that the cheapest may not be the best. Ask friends or family for recommendations. Alternatively ask some other sellers shown on the agent's books what service they are receiving.
Signing up to a sole agent will be cheaper than signing up with two or more. However, you may prefer to avoid giving your agent sole selling rights unless you are really sure about doing so, otherwise you'll be stumping up commission even if you sell privately.
If you are using a sole agent you may prefer to limit the "sole agency" period to only a few weeks. This will provide an incentive for the agent to concentrate on selling your property. If you're not happy you can soon swap agents. Multiple agents may be more expensive but you may receive more potential buyers and sell faster.
Some agencies have started to impose a minimum fee. This can be as high at 3% for multiple agency. At the very top end of the market, agency fees can go over 5%. Most agents charge between 1.5% - 2.5% per cent for sole agency and between 2.5 - 3.0% for multiple agency. If you do decide to go for multiple agency, it may be best to choose one of the small independent firms in your area as well as one of the big corporate agencies.
House-swapping, if you can arrange it, may be cheaper but remember stamp duty is still payable on the difference in value between the two properties, even if the difference is less than £125,001.
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How can I make the sale happen?
Once you have decided to sell it is obviously important to make your property look its best for prospective buyers. Consider your property's major and minor faults and whether they would influence a prospective buyer against making an offer. However, don't take a lack of offers personally - it may be no reflection of the appeal of your home, particularly in a property slump. An estate agent may help by advising what to consider repairing to make your property easier to sell. It may prove uneconomical to repair certain faults or make various improvements such as installing double-glazing. Doing so may increase the property's value but it may do so by less than the cost of installation.
On the other hand, putting off repairing a leaking roof or not replacing a rotten front door may put off potential buyers altogether. Such repairs may be considered a wise investment. You should also make sure that minor faults are sorted out such as dripping taps or loose light fittings. If you neglect them any potential buyer will probably notice it!
Keeping your home clean and tidy is a must. This is a good opportunity for a spring clean, clearing out unwanted clutter to give a feeling of more space. Clean the kitchen and ensure there are no cooking smells when you receive a potential buyer. Tidy the garden, cut the grass and remove dead plants. Consider keeping pets out during prospective buyers' visits, or at least ensure there are no animal smells.
You may want to splash paint around to brighten the place up as well but you should avoid redecorating with bright and bold colours, stick to neutral colours that won't offend. While you are not yet legally required to keep a "log book" for your house, you may find it easier to sell if you have neatly to hand such documentation as damp-proof and woodworm warranties; receipted invoices for any work done on the property (roofing, decorating, etc.); warranties for new boilers; certificates from the Local Authority Building Control.
A potential purchaser will also be interested in your running costs, so have bills for gas, electricity, water and council tax to hand for them to view. Also be clear about "fixtures and fittings" - will you be selling curtains and carpets with the property? List the items to be included in the sale.
What paperwork should I prepare?
"Seller's packs" were first put forward in the Homes Bill in December 2000. However, this particular piece of proposed legislation never made it onto the statute books because, the following spring, Parliament was dissolved for a general election. Now called Home Information Packs (HIPs), seller's packs are back.
Home Information Packs (HIPs) were brought in on a phased basis from 1 August 2007 and since 14 December 2007 every home put on the market in England and Wales, no matter what size, must have a Home Information Pack.
Your home information pack must include an Energy Performance Certificate (EPC) from an accredited Energy Assessor, who visits the property to collect the relevant data and creates the certificate. This data includes the date, construction and location of the house and relevant fittings (heating systems, insulation or double glazing, for example).
You are required to provide a potential buyer with a copy of the Pack, or any document from it, on request and within the 'permitted period'. These duties do not apply to sellers in cases where an estate agent is responsible for marketing the property. The 'permitted period' is either 14 days following the request for copies, or, if later, the day on which a payment for copies is received.
When you send a Pack to a prospective purchaser, you must not charge for the Pack itself, but you may make a reasonable charge for copying and posting it.
The following compulsory documents must be included in a Home Information Pack:
- Home Information Pack Index
- Energy Performance Certificate
- Sale statement
- Standard searches
- Evidence of title
- Additional information for leasehold and commonhold sales, where appropriate.
Some documents in the Home Information Pack are optional. These include:
- Home Condition Report
- Legal summary
- Home use/contents forms
- Other documents - rights of way, ground stability and actual or potential environmental hazards such as flooding and contaminated land. Sellers will also want to include guarantees and warranties for work already carried out on their homes.
How much preparing your HIP will cost will depend on your property. Low-cost pack providers tend to charge around £200 but others may charge significantly more. The government originally claimed that putting a HIP together would only add around £340 to a seller's costs
Fail to provide a Home Information Pack, or supply an incomplete pack and you could be liable to a fine of £200 (Source: Home Information Pack Regulations 2007). You may also find it impossible to attract a buyer!
When is my property actually "sold"?
Under existing legislation covering England and Wales (but not Scotland) the deal between purchaser and seller of property does not become legally binding until contracts have been exchanged. Any offer to buy that you receive will have been made "subject to survey and contract" which means that neither you nor the buyer is legally bound to go through with the transaction and each may withdraw without incurring a penalty right up to the point of exchange of contracts.
To exchange contracts you need to appoint a solicitor or licensed conveyancer who will do the legal work involved. Your solicitor or conveyancer will:
- Release details of the deeds to your buyer's solicitors
- Answer any questions the buyer's solicitors may ask about your property
- Draw up a "Contract of sale" for you to sign
- Exchange the contract on your behalf
- Receive the deposit from the buyers solicitor
Once you have exchanged contracts there is no going back. Both parties are now legally committed to completing the sale. Backing out may incur legal action as well as high costs. Once contracts have been exchanged the property is, in fact, no longer yours to worry about. The buyer assumes responsibility for it and for insuring the building.
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08 July 2008 İ Moneyextra.com
Our senior editor Robin Amlôt recommends you should consider taking independent financial advice before acting on any article. Please contact us for help with your individual circumstances if any assistance is required.