Selling property: an overview
This article provides an overview of the legal process involved in selling property and addresses a host of common concerns raised by vendors.
Many sellers ask for a deposit equal to 10% of the purchase price, but your solicitor may advise you to accept less. For most buyers, the amount of the deposit they pay will hinge on the size of the mortgage they need to fund the purchase. In recent times, mortgages over 90% of the purchase price have become less common. Added to this, there are fewer properties on the market now. Therefore, many sellers can afford to be picky and demand no less than a 10% deposit.
Finding a solicitor
Legal costs can range from about £200 to £1,500, depending on the work involved and the value of the property. Given the expense, it's important to understand up front how a solicitor will charge you. The law firm should provide a breakdown of costs and an estimate of their fee.
It's also important that you have a good personal relationship with your solicitor. Only hire one that you trust and feel you can work well with. If in your initial meeting you feel the solicitor is unhelpful or dismissive, consider carefully whether you really want him or her to represent you.
Depending on your circumstances, you may want to take advantage of a solicitor matching service , which can help you find a quality-assured conveyancing solicitor in your area for free .
Estate agents calculate their fees as a percentage of the final selling price of the property. Standard commission is between 1.5-2.5%. The following expenses are normally included, but read the fine print of your estate agents contract just to make sure:
- advertising costs;
- costs incurred in preparing particulars of sale, including photographs;
- a 'For Sale' board;
You may decide to enter a 'sole agency' agreement, where you have one estate agent contracted to sell your property. This means that the estate agent will have the exclusive right to sell your home.
Alternatively, you may agree a 'joint agency' contract and appoint two estate agents to act together for you in selling your property. Both estate agents share the commission when the property is sold regardless of which estate agent actually finds the buyer.
You can also appoint numerous estate agents under a 'multiple agency' contract, but only the estate agent who sells the property will be entitled to the commission.
If you've already vacated the property and the buyer doesn't need a mortgage or to sell his property first, exchange of contracts and completion may only take a few days. If, however, the buyer needs a mortgage and you're still in the property, exchange of contracts normally takes 4-6 weeks, then completion takes another 2-4 weeks -- so you're looking at around 6-10 weeks in total to complete the legal process of selling your home.
Home Information Packs
On 21 May 2010, the new Conservative-Liberal coalition scrapped Home Information Packs. Selling a home will become cheaper as a result of scrapping the packs. Previously sellers paid £200-400 to gather the information contained in them (e.g., searches of local land charges, water and drainage, local authority enquiries, etc). With the exception of Energy Performance Certificates (which are required by EU law and rate a home's energy efficiency) buyers will now have to bear this cost.
Accepting an offer and changing your mind
Even if you accept an offer, you can still change your mind and accept a higher one from someone else so long as you do so before 'exchange of contracts'. After exchange of contracts, the sale and purchase of the property become legally binding and you should not accept other offers -- in fact, you will be subject to severe sanctions if you do.
Draw up contracts for sale and purchase
Your solicitor will obtain your property title deeds from your mortgage lender (if you have an outstanding mortgage). Your solicitor will also prepare and send a contract for sale to the buyer's solicitor. If you have an outstanding mortgage they will request a settlement figure from your current mortgage lender(s) and settlement figures from any other secured loans registered against the property. Finally, they will communicate with the purchaser's solicitor and negotiate a date for completion.
Exchange of contracts
At this stage, the purchase and sale of the property become legally binding. You can no longer accept any offers from other buyers. Once you have authorised your solicitor to exchange contracts, they will conduct a short telephone conversation with the other party's solicitor, a completion date is agreed and the deposit is paid.
Pre completion preparation
Your solicitor then will prepare a final settlement account for your approval; they will collect any balance of funds required from you if the sale of your property does not cover all outstanding liens on the property and your solicitor's legal fees. They will then approve the deed of transfer and arrange for you to sign it.
Day of completion
On the day of completion, the buyer's solicitor will wire the purchase money into your solicitor's account. Upon receipt of the funds, your solicitor will give the transfer deed and Land Registry certificate for the property to the buyer's solicitor. The sale is then complete. The buyer is then free to pick up the keys and move in.
Your solicitor will pay off all registered liens and notify HM Land Registry of the sale. Any remaining money out of the sale proceeds will then be given to you.
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