Best practices for cash house purchase?
December 3, 2012 9:27 PM Subscribe
Best practices for a cash house purchase please? UK specific.
My wife and I are taking advantage of depressed prices and a slow market in East London to purchase a house. Semi-detached, brick, constructed in 1950, three bedroom with a loft, freehold, the couple who lived there were the original owners. The home entered probate in February and came onto the market in August. Its been marked down twice now and we made an offer (which has been accepted) for a quick cash transaction. We hope to complete the purchase in two weeks, and I've got some questions regarding best practices for cash transactions.
We have a Solicitor engaged for conveyancing, and the Surveyor is doing a building survey tomorrow (more involved than the home buyers survey). We've looked at the property and neighbourhood several times, and introduced ourselves to two of the neighbours. They seem very happy, it seems like folks move to this street and never leave. Overall the neighbours corroborated what we learned from the estate agent.
What else should we do to insure the transaction is clean and we're not purchasing someone else's problem? I already own a flat in Central London but bought it with a mortgage so I was more comfortable in that scenario since the bank was taking on risk as well, but in this instance we'll effectively be alone in the transaction.
I've pulled the title and flood reports from Land Registry, got the EPCs, the HIP will be provided by the Solicitor, the heating and drainage systems will be checked by a trademan before we purchase, and all funds will be transferred Solicitor to Solicitor.
I can't think of any other steps to take to protect our interests. Anonymous since I'm asking questions about large sums of money.
Thanks in advance for any help you might be able to give!
My wife and I are taking advantage of depressed prices and a slow market in East London to purchase a house. Semi-detached, brick, constructed in 1950, three bedroom with a loft, freehold, the couple who lived there were the original owners. The home entered probate in February and came onto the market in August. Its been marked down twice now and we made an offer (which has been accepted) for a quick cash transaction. We hope to complete the purchase in two weeks, and I've got some questions regarding best practices for cash transactions.
We have a Solicitor engaged for conveyancing, and the Surveyor is doing a building survey tomorrow (more involved than the home buyers survey). We've looked at the property and neighbourhood several times, and introduced ourselves to two of the neighbours. They seem very happy, it seems like folks move to this street and never leave. Overall the neighbours corroborated what we learned from the estate agent.
What else should we do to insure the transaction is clean and we're not purchasing someone else's problem? I already own a flat in Central London but bought it with a mortgage so I was more comfortable in that scenario since the bank was taking on risk as well, but in this instance we'll effectively be alone in the transaction.
I've pulled the title and flood reports from Land Registry, got the EPCs, the HIP will be provided by the Solicitor, the heating and drainage systems will be checked by a trademan before we purchase, and all funds will be transferred Solicitor to Solicitor.
I can't think of any other steps to take to protect our interests. Anonymous since I'm asking questions about large sums of money.
Thanks in advance for any help you might be able to give!
If you've got the cash and the house is empty, a full wiring survey wouldn't hurt.
posted by cromagnon at 12:03 AM on December 4, 2012
posted by cromagnon at 12:03 AM on December 4, 2012
(In case your solicitor does not) Check for planning applications relating to your immediate neighbourhood - those which are current but also any which were recently rejected (since they could be successfully appealed).
posted by rongorongo at 2:21 AM on December 4, 2012
posted by rongorongo at 2:21 AM on December 4, 2012
One thing to check is that your solicitors Deposit protection for client accounts will cover the entire amount.
Legal limits are currently £85,000 but they may have additional cover for any potential loss should the bank happen to fail on the wrong day.
posted by Lanark at 2:39 AM on December 4, 2012
Legal limits are currently £85,000 but they may have additional cover for any potential loss should the bank happen to fail on the wrong day.
posted by Lanark at 2:39 AM on December 4, 2012
It's not clear if this is the house you are going to live in or not.
If so:
- Check out neighbours. At night. Are they owner occupiers or rentals. If rentals, what kind of rentals are they (for example, in my experience shared houses of young professionals tend to party a fair bit at the weekend). What is the street like you back onto, which may affect noise in the summer months.
- Check the schools, even if you don't have kids, because it affects house prices.
- Ask the following questions: when were the windows replaced? How old is the boiler? How old are the carpets? When, if at all, was the flooring replaced? How old is the kitchen? When was the wiring done? This tells you about future expenses.
- What is the insulation like?
- When was the loft conversion done, and check how well it was done and whether it is legal (although your survey should flag this).
- Do a trial run of your likely commute at the time you would commute. Can you live with it?
- Check again whether you are buying on the basis of an easy commute, and what job situation factors might change that.
- Where is the sun, bearing in mind the premium on south facing gardens.
- Flight paths. Proposed flight paths under any variation of the plans currently being discussed.
If not:
- Treat your money as an investment. What are realistic rents, and what will be your take home from rental income and your likely capital gain?
- What else could/should you be doing with your money?
- Does the house and the area fit the profile of the tenant you think you're targeting. Who does the estate agent think is the target tenant?
Generally:
- Because the survey is for you, and you only, I'd ask if you can accompany the surveyor on his visit and also be very clear on what you are buying in terms of survey. It's your cash, so you want the most thorough survey, and not the mealy-mouthed reports you can get sometimes that meet the base level of requirements of the mortgage company. You're basically looking for things that will require a capital sum to fix or replace.
- Be very clear that you do, in fact, want to tie up that much cash. Because you could breeze a 50% LTV you have the pick of the mortgage market.
- It's always worth doing a like-for-like comparison on £/sq ft, bearing in mind most house sales are emotional, rather than on the economics of the place.
- Find local blogs and read around the area properly. In particular, do some research on your local parade of shops. Is it going upmarket, is it being squeezed out by something else.
- Where is your local supermarket? Go in and try and find the specialist stuff you like. Can you find it? If not, are you OK living in an area that may not gentrify soon?
- As a thought experiment, subtract features from the house and see if you still like it. For example, if it were more expensive, would you be happy living there. If the pub or post office shut, would you feel it was convenient.
- Look up the owners and/or property on duedil.com; has a business been run from the property?
- Do the newer owners on the street also look like they are in for the long haul? Lots of streets see longtime owners realise their capital gains and buy somewhere smaller or outside London. But because an older generation of homeowners have lived there for ages doesn't mean the attractiveness of the area is there. Before I bought I looked at some quite grotty streets that will remain grotty, despite the fact the owners had lived there for a while.
- Go onto the Met's crime data site and get a feel if it matches your expectations.
posted by MuffinMan at 3:39 AM on December 4, 2012 [5 favorites]
If so:
- Check out neighbours. At night. Are they owner occupiers or rentals. If rentals, what kind of rentals are they (for example, in my experience shared houses of young professionals tend to party a fair bit at the weekend). What is the street like you back onto, which may affect noise in the summer months.
- Check the schools, even if you don't have kids, because it affects house prices.
- Ask the following questions: when were the windows replaced? How old is the boiler? How old are the carpets? When, if at all, was the flooring replaced? How old is the kitchen? When was the wiring done? This tells you about future expenses.
- What is the insulation like?
- When was the loft conversion done, and check how well it was done and whether it is legal (although your survey should flag this).
- Do a trial run of your likely commute at the time you would commute. Can you live with it?
- Check again whether you are buying on the basis of an easy commute, and what job situation factors might change that.
- Where is the sun, bearing in mind the premium on south facing gardens.
- Flight paths. Proposed flight paths under any variation of the plans currently being discussed.
If not:
- Treat your money as an investment. What are realistic rents, and what will be your take home from rental income and your likely capital gain?
- What else could/should you be doing with your money?
- Does the house and the area fit the profile of the tenant you think you're targeting. Who does the estate agent think is the target tenant?
Generally:
- Because the survey is for you, and you only, I'd ask if you can accompany the surveyor on his visit and also be very clear on what you are buying in terms of survey. It's your cash, so you want the most thorough survey, and not the mealy-mouthed reports you can get sometimes that meet the base level of requirements of the mortgage company. You're basically looking for things that will require a capital sum to fix or replace.
- Be very clear that you do, in fact, want to tie up that much cash. Because you could breeze a 50% LTV you have the pick of the mortgage market.
- It's always worth doing a like-for-like comparison on £/sq ft, bearing in mind most house sales are emotional, rather than on the economics of the place.
- Find local blogs and read around the area properly. In particular, do some research on your local parade of shops. Is it going upmarket, is it being squeezed out by something else.
- Where is your local supermarket? Go in and try and find the specialist stuff you like. Can you find it? If not, are you OK living in an area that may not gentrify soon?
- As a thought experiment, subtract features from the house and see if you still like it. For example, if it were more expensive, would you be happy living there. If the pub or post office shut, would you feel it was convenient.
- Look up the owners and/or property on duedil.com; has a business been run from the property?
- Do the newer owners on the street also look like they are in for the long haul? Lots of streets see longtime owners realise their capital gains and buy somewhere smaller or outside London. But because an older generation of homeowners have lived there for ages doesn't mean the attractiveness of the area is there. Before I bought I looked at some quite grotty streets that will remain grotty, despite the fact the owners had lived there for a while.
- Go onto the Met's crime data site and get a feel if it matches your expectations.
posted by MuffinMan at 3:39 AM on December 4, 2012 [5 favorites]
We got a survey done still - I think we organised it through the estate agent from whom we bought the house. We got that middle level one but wished we'd got the tippedy top one ... But they didn't have HIP packs when we did it. Ask your conveyancer?
posted by LyzzyBee at 8:05 AM on December 4, 2012
posted by LyzzyBee at 8:05 AM on December 4, 2012
This thread is closed to new comments.
posted by singingfish at 11:03 PM on December 3, 2012