If you think of purchasing a property, whether it’s for your first time, or you’ve been bought before, there can be quite a few things to think about. What will help you is to approach the process in a step by step, logical manner, and be prepared!
The first person to be speak to is an independent mortgage advisor, who should be able to give you an overview of the process, as well as providing some useful information such as ‘costs of moving’ like survey costs, legal fees, taxes, and estate agents. The advisor will also be able to give you an indication of what amount you’re likely to be able to borrow, and monthly costs which can be used to set a budget to determine the purchase price of the new house.
If you need to sell in order to move, the next step is to contact estate agents. You may have an idea of what you think your property is worth, because neighbours have recently sold, but for most people effective valuing and marketing of the property will require an agent. As with most things, it’s ‘the norm’ to contact 3 different agents, and to meet them all before selecting a favourite. Don’t be driven simply by the value stated, or the fee being charged, also consider the service and terms of contract. It’s also worth asking all the agents if they have any tips about the presentation (staging) of the house, that could improve your chances when viewings take place … 3 opinions are better than just 1, and if there are common tips, they’re probably worth following.
So now you have an idea of your budget, it’s likely that you’ll want to start scouring the internet, local papers, and estate agents windows for a new property. When you want to arrange viewings of properties, it’s very likely that you will be asked “who have you spoken to about your mortgage, and do you have an ‘agreement in principle’ … What is an ‘Agreement In Principle’, and why do Estate Agents ask for them?
To obtain an ‘A.I.P’ your mortgage advisor will provide your details to a lender, which will then compare your requirements with its criteria, and also carry out a credit search / score. When the application is successful, the lender ‘Agrees in Principle’ that it would be prepared to lend the amount that you require to buy a new house upon receipt of:
- Some further details, and a completed ‘full application’ form.
- Evidence that the information provided is correct.
- A survey that confirms that the value & condition of the property is satisfactory.
Lenders withdraw, and launch new products on a regular basis, and often at short notice. An ‘agreement in principle’ doesn’t (unfortunately) secure a particular product. It just means that the lender will be able to lend using one of the products that is available at the time when a full application is received. However, it’s also worth noting that, when you obtain an ‘A.I.P’ you are also not committing to use that lender for your mortgage. When you find the house that you wish to purchase, your mortgage advisor should carry out another search of ‘the market’ and help to submit an application to the lender offering the best and most suited option that’s available on that day.
There are a few principle reasons why Estate Agents are keen to ask if you have an ‘A.I.P’:
- The agent has an agreement in place to refer potential clients to a favoured mortgage advisor. This might a person who works within their office, or it could be someone external to whom they pass your contact details. If you agree to work with that advisor, the estate agency will receive a share of any fees / commission payments that the advisor receives. Agents are keen to refer as many clients as possible, naturally If you don’t have an advisor, and /or haven’t arranged an A.I.P this is a great opportunity to try and persuade you to meet their advisor.
- The fact that you have done some research, looked at mortgages, and have an ‘Agreement In Principle’ will mean that you stand out from many of the possible buyers that an agent may need to deal with. It can show that you are serious, that you’re motivated, and that you’re a ‘quality buyer’ – Imagine that you are an estate agent and that each time you view a property it might take you 10 mins to drive to the house and back, and you’ll spend 15 mins at the house with the client. If you viewed just 4 houses with that person, you’ll have invested over 2 hours of your time. Would you want to waste 2 hours of time trying to sell a house to someone isn’t a serious quality buyer.
In reality it often takes a number of viewings to find the house that’s right for you, and as the old cliché goes ‘time is money’.
- The average time that it takes to buy a house in the UK is around 8-10 weeks. This means that after you’ve viewed a property and put an offer forward, you’re beginning a relationship with the agent that could last for 2-3 months. It will be reassuring for an agent to think that they are dealing with a person who’s motivated, and who will do what is necessary for a sale to progress smoothly and as quickly as possible. Also, when the estate agent contacts a vendor to put an offer forward they will give some basic info about the person, as well as the price. If you’re serious, and the agent has confidence in you, then that will come across. If there’s more than one offer on the table, it could (and I’ve seen that it does) sometimes make a difference to who the house is sold to.
If you have any questions regarding your mortgage and protection arrangements, or about the house buying process, please get in touch. You will find links to e-mail, website, and other contact details below.
Article was originally posted elsewhere (movingex.blog.co.uk@ 2012-05-31– 12:49:40) Content remains relevant, which is why I have added it here. Tips based on observations made both whilst working inside estate agency offices, assisting clients to purchase, and of course purchasing properties myself.