Deciding to sell your home
Appointing an estate agent
Alternatives to estate agents
Preparing your home for sale
Appearance counts
The offers stage
Progressing the sale
Money laundering
Deciding to sell your home
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Selling
There are many factors that prompt people to sell their home. Perhaps a new addition to the family means more space is needed, or children leaving home means you want to downsize. Perhaps your work requires you to relocate, or do you simply fancy a change? Whatever the reason, selling your home is a lengthy and arduous task so make sure you have considered the alternatives:
o Build an extension or loft/cellar conversion
o Rent out a room
o Rent out the whole property and buy another with
a buy-to-let mortgage
Timing
If you are selling your home and hoping to buy another, you have to think carefully about at what stage you want to start looking for a new house. There are three ways to do this:
o You can buy and sell simultaneously. It will save you storage and rent costs but can put you in the stressful position of being at the whim of a chain
o You can sell your house and then rent while you find another - though property prices may rise while you wait
o You can sell your house but request several months between exchange and completion in order to find yourself a new property however, this may compromise your buyer
Whichever way you choose, it is best to at least have an offer on your own property before looking for a new one - bridging loans are expensive and should be avoided at all costs.
Top tip
Remember it can take a while to get your home ready to sell and even longer to prepare the marketing material. If you want to sell your house in spring, start preparations in early January.
When to sell
Choosing the right time
The property market invariably reaches its peak in the spring - this is when most buyers are looking and when most properties are up for sale. Another advantage is that a property will always look better in the spring when the flowers are blooming and, who knows, the sun might even be shining. Although a good property will sell in winter, it may take longer.
Research the property market well too. Unless you are forced to, never sell during a property slump. Similarly, don't sell when a neighbour has their property on the market - too many For Sale signs in a street can arouse suspicion.
The Home Information Pack (HIP)
In a bid to speed up the home buying process, the government plans to introduce the HIP in 2006. This pack will contain a survey, local authority searches, copies of any relevant permissions or warranties and the title deeds for the property. The pack will be compulsory for anyone selling their home and will cost between £500 and £1,000.
Appointing an estate agent
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What an agent can do for you
Nearly three quarters of vendors sell their home through an estate agent and, if you lead a busy life, you will probably need to rely on one too.
An agent can:
o value your home
o prepare your property particulars, complete with pictures and a floor plan
o contact a wide range of potential buyers
o advertise your property in the press, on the internet and in their window
o organise viewings and accompany the viewers
o identify genuine buyers
o negotiate a purchase price
o form a link between you, your buyer and your solicitor right up to completion
Choosing an agent
Estate agents have a mixed reputation. You will be paying a substantial commission, so make sure you choose him/her with care. To be safe, you should:
o Check they are an associate of the Royal Institution of Chartered Surveyors (RICS), the National Association of Estate Agents (NAEA) or the Society of Valuers and Auctioneers (SVA)
o Get a personal recommendation
o Check local For Sale signs and see who seems to be selling property like yours
o Pop in and do a spot check. Do you receive a friendly welcome and helpful attitude?
o Some people even go as far as vetting potential agents by getting a friend to pose as a buyer
o Compare costs on a like-for-like basis
Top tip
Watch the wording that estate agents use in contracts and read them very carefully before signing. Never agree to give an agent 'sole selling rights' as this means you will have to pay them full commission even if you find a buyer yourself
Alternatives to estate agents
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DIY selling
This option is not for the extremely busy or the easily stressed but it can save you a small fortune in agency fees, and there is no reason why you shouldn't be successful.
Property details
o Fix an asking price for the property (you can use estate agents valuations to help with this - they will usually do it for free in the hope they end up with your custom)
o Draw up property details and advertisements
o Market the property as far and wide as you can
Advertisements
o Take some interior and exterior shots of your home. Make sure they are taken on a bright day. Try and accentuate attractive features
o Take measurements of every room
o Write a brief description of your home (type of property, number of bedrooms, condition, etc)
o Use words like 'stunning' and 'beautiful' to capture people's imagination but don't overdo it
o Write a brief description of each room
o Describe items included in the sale price
o Write a brief description of the location of the property and include directions on how to find it
Adverts
o Are there any local papers with a good property section? This would be an ideal place to advertise
o Are there any websites that might be appropriate? There are many websites now specifically designed to sell property. They are often very cheap to advertise with
o Specialist housing magazines are ideal
o Put a double sided For Sale sign up outside your
house. The sign must be no larger than 0.5 square
metres and should state 'Viewings by appointment
only' and have a phone number.
Other ways to sell your property
Auction - this is usually only appropriate for unusual properties but a property auctioneer can advise you. The advantage is the speed - the transaction is complete within 28 days. Approximately two and a half per cent of the selling price will go to the auctioneer.
Swapping or part exchange - where the party with the most expensive property is paid the difference. Be sure to get a proper survey done and that both properties are going for their full market value. The advantage of this method is that only one lot of stamp duty is payable, this can be split between both parties.
Some housebuilders offer part exchange packages. The housebuilder will offer you a percentage of your home's open market value, although this will not be as much as you would get if you sold your home through an estate agent. In return, you buy one of its houses. This is a good option if your house is proving difficult to sell or you need to shift your home in a hurry. Make sure you get some independent valuations before you accept an offer from a housebuilder.
Preparing your home for sale
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The presentation of your house can make the world of difference when it comes to selling but it is important not to go overboard. You could spend thousands installing a designer kitchen or landscaping the garden - improvements that simply won't realise their value. A good rule of thumb is never to spend more than one or two per cent of the asking price preparing your property, unless major work needs to be done.
Vital improvements
o Thoroughly clean the entire property
o Store clutter out of sight but be sure it won't fall out should viewers open a cupboard
o Do all those little jobs you have been meaning to do - re-grout the tiles and mend the dripping tap. If your viewer thinks the house is well maintained, he is more likely to want it
o De-personalise your house. The potential buyer needs to be able to imagine himself living there so the less evidence of you, the better
o Smell is important, especially if you smoke or have a pet. Use air-fresheners and aromatherapy oils, open the windows or revert to the timeless trick of baking bread or making fresh coffee. It may be obvious but it works
o Play the lifestyle trick. Leave intelligent books on the coffee table and have classical music quietly playing, it may impress your potential buyers
o Leave lights and side lights on. Increase lightbulb wattage in particularly dim rooms
o To maximise the light you could even consider taking down the curtains
o If you have a lot of furniture, it might be worth putting some in storage so your home doesn't look too full
o Send noisy children or pets somewhere else
o Clean the bathroom and make sure the loo
seat is down
o If it is summer, leave the windows open so your house feels airy. If it is winter, crank up the heating so it feels cosy.
The other do's and don'ts
Do
o Clear out your garage and put your car outside (preferably freshly washed)
o Make sure beds are made
o Put out fresh flowers
o Tidy your front garden. This will be the first thing a viewer will see. Give your front door a lick of paint and place some potted plants by the step for a warm welcome
o Be friendly but don't oversell your property or local area - this may make the viewer suspicious and you sound desperate
Do not
o Leave the cat litter tray on show
o Have a shower just before a viewing, as the condensation may linger and could set
alarm bells ringing
o Try to conceal flaws such as damp with a
coat of paint
o Leave the TV or radio on full blast when talking to viewers
o Cook any strong smelling foods just before viewers are due to arrive
o Leave washing hanging on airers or radiators
Appearance counts
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Key areas
There are certain aspects of a house that are particularly important when it comes to potential buyers, and these need to be looking at their best in order to achieve a good price and a rapid sale.
Kerb appeal - the second your potential buyers pull up outside your house, you want them to love the way it looks. First impressions are vital so make sure the windows are clean, the façade has a fresh lick of paint and the lawn is mowed. Try planting flowers or installing tubs to give a splash of colour, conceal bins and drain coverings. It might also be worth sprucing up your front door - make sure the doorbell works, that the letter box is clean and there are no obstructions.
Hall - not a big selling point in a home but it is the first area viewers will see. Wash down all the walls and re-paint if necessary. Ideally the hallway should be a light, neutral colour.
Try hanging a large mirror to increase light and if there are lots of pictures, take them down leaving just one or two. Put away all coats, shoes and hats.
Kitchen - widely touted as the most important room in the house from a buyer's perspective so well worth a little elbow grease. Use an abrasive cleaner and if necessary give the walls a fresh coat of paint - white emulsion is probably best. Replace, or paint over, any highly coloured or patterned tiles. If cupboard fronts are dated, change them for something neutral or paint them. If you have scruffy or dark lino flooring, change it for something cheap, cheerful and light - if you are feeling particularly brave you could try laying wood laminate flooring, which makes any room look more sophisticated. If you have an evening viewing, don't cook particularly pungent foods before the viewers arrive.
Back garden - the garden is a huge selling point in any home so make sure you have tidied it up. There should be no trace of weeds, children's toys or peeling paint.
Viewing advice
Viewings
Be on hand to answer questions and point out the lovely aspects of your home but don't badger viewers. Research shows that it is usually the female that will make the final decision on buying a property, so make sure you speak to her and make eye contact. And don't forget to offer your viewers a drink.
Security
Always remember that people coming to view your house are strangers. Put away all valuables, such as jewellery, mobile phones or expensive gadgets, and make a feature of a panic alarm system, if you have one fitted. If you live on your own, always ensure a friend is with you while potential buyers look around the property. If you are worried about the validity of viewers, ask your estate agent to accompany them to your house.
Make sure all viewings are arranged by your estate agent. If someone knocks on your door by chance, don't let them in. Instead, refer them to your estate agent.
The offers stage
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Offers
The chances are that after ten to 15 viewings, someone will make an offer. Though the offer price is important you need to consider other factors too - a fast sale is a safer sale and this can be worth several thousand pounds in itself. You or your agent need to identify whether the buyer is in a position to move quickly: You'll need to know:
o If they have a property to sell themselves. If so, is it under offer?
o If they have a mortgage offer in principle. If so, this means they can proceed in the purchase
o If they are involved in a chain
o If so, is this likely to hold you up? How many
people are involved?
o When do they want to complete?
A low offer
Unless the amount offered is insulting, never dismiss a low offer. Ask yourself the following questions:
o Has your house been on the market some time?
o Is the buyer likely to increase the offer?
o Are you likely to get a better offer elsewhere?
o Is your asking price realistic?
o Can you afford to accept this offer?
o Can you afford to lose this buyer?
Negotiation
You can always try to negotiate - if you are using an agent, this is when their experience should help. Ask your buyer their reasons for the low offer and give your own for wanting more. To speed things up you could tell them the lowest price you will accept.
Top Tip
It's not wise to take your property off the market if your buyer's home is still for sale. Their sale might take ages - you may miss out on other buyers.
If your home is stuck on
the market
If your home doesn't sell within three or four months, you really need to have a think about why (unless there's a slump in the market). There are three main reasons for a property 'sticking' on the market:
A lazy agent - is you estate agent really trying to sell your home? Are you still getting viewings? Agents often get bored with properties that aren't easy to sell and stop trying. If this is the case, you may need to instruct a new one. A new agent may have a fresh approach to marketing your home. Alternatively, you could think about selling your home privately, without the help of an agent.
Bad presentation - have a really objective look at your home from a buyer's point of view. Have you really done everything you can to make it appealing? Ask your agent or friends you trust for honest advice.
Overpriced - there is no point being greedy and waiting for the asking price if it is unrealistic. Check other local house prices and ask your agent for their thoughts.
Progressing the sale
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Accepting an offer
Once you have agreed a sale price with your buyer and they have provided you with the name of their solicitor, it is courteous to take the property off the market. You or your agent should confirm things in writing and send a copy to the buyer. Include:
o The property address and price
o Items included in the sale
o Both parties solicitor's details
Securing the sale
There are various agreements that can be entered into at this point to add to the security of the sale. Pre-contract deposit agreement - Each party pays a deposit of around 1.5 per cent of the asking price to a stakeholder and signs an agreement that they will exchange within four weeks. If either breaks the deal, both deposits go to the other party
Lock-out agreement - This prevents you continuing to show the property to other buyers. The agreement can be verbal, or the buyer can pay a sum.
Survey
The first real sign that the sale is proceeding is when your buyer commissions a valuation and/or survey of your house. This is only a problem for you if the valuation is less than the agreed sale price, or if the survey shows defects.
Either of these can be used by the buyer as a premise for renegotiation or even backing out of the sale altogether. Before dropping your price on the pretext of a defect, make sure you see a copy of the report. Is the price drop appropriate for the cost of repairing the defect?
Gazundering
The price you settle on is down to you, but do take advice from your agent, solicitor and, if necessary, commission your own survey. Gazundering (trying to artificially lower the price at a crucial stage in proceedings) is a common practice.
Exchange and completion
The legal side of selling is fairly straightforward as the buyer's solicitor does most of the work. You will be required to:
o Fill in forms such as the seller's property information form and a fixtures, fittings and contents form. This is where you have the chance to sell any of the contents of your home to the prospective buyer
o Provide evidence of service charge and maintenance charges
o Provide any building certificates necessary
o Sign the sale contract. The process will move at a faster pace if you go in to your solicitors and sign the contract in person, rather than rely on the postal service
Your solicitor will notify you when exchange has taken place, at which point the buyer will have given his deposit to your solicitor.
Completion will take place on an agreed date after the exchange. Any balance will be transferred to you. As soon as this happens, you no longer own the property - you should move everything out and hand over the keys.
Money laundering
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Safe as houses?
According to the Royal Institution of Chartered Surveyors (RICS), money laundering is 'the concealing of the identity of illegally obtained money so that it appears to have been obtained from a legitimate source'. As very few questions were asked about the funds used in resale and mortgage transactions, the housebuying system was being abused. The government picked up on this worrying trend and changed the way existing regulations were applied. Before 1 March 2004 only members of RICS who offered investment advice or arranged mortgages were bound by the anti-money laundering regulations. Now they apply to a wider range of people. Estate agents and dealers in goods who accept cash payments of €15,000 (around £10,000) or more are now bound by them.
I am who I am
Estate agents and their staff are now obliged to obtain 'satisfactory evidence' of the identity or organisation involved in a property transaction. Both the vendor and the purchaser have to provide evidence of who they are, where they live and when they were born. An estate agent will normally require one form of photographic identification, ideally a passport or a new-style driving licence, as well as confirmation that you live at the address of the home you are selling or moving from. Estate agents will not accept a mobile telephone bill as proof of address.
Taking action
There are many times during the housebuying process when you will have to provide identification. This normally includes when you apply for a mortgage, when you instruct a conveyancer or solicitor and when you appoint an estate agent. The company or service provider confirming your identity will take a copy of your identification and keep this on file for five years alongside all supporting documentation relating to the transaction
Measures estate agents are taking to combat money laundering
The Money Laundering Regulations 2003 require estate agents to set up internal controls to combat money laundering.
These include:
o The establishment of identification procedures in respect to those wishing to establish a business relationship or a one-off financial transaction
o The establishment of a detailed record-keeping procedure
o The set up of an internal reporting procedure, including the appointment of a money laundering reporting officer
o The establishment of internal procedures and communication to prevent money laundering.
Top tip
When you need to provide proof of address, you can present a bank or building society statement or a credit card bill.
Costs and contracts
Sole agency - the agent has exclusive rights to sell your home. Not always the best option from a seller's point of view but it does have the advantage of lower fees, typically around two per cent of the selling price.
Joint sole agency - you sign up to two agencies who agree to split the commission. This can be just as expensive as multiple agency (around 2.25 to 2.75 per cent of selling price) and therefore often pointless.
Multiple agency - you instruct as many agents as you like and whoever sells your property gets the commission (typically 2.5 to 3 per cent of selling price).
Flat fee - more associated with property shops than agents. Make sure you know exactly what they'll do for the money and remember that it will be non-refundable even if they don't sell your home.
Bargaining powers - estate agent fees are usually negotiable.