If you're planing on buying your first home, you've probably got lots of questions. Buying a house is a stressful process for most of us, but it can be downright bewildering for a first-time buyer. With lots of things to sort out, from the mortgage application to the property survey, the stress is compounded by the often nail-biting wait for the deal to come through. In fact, 70 per cent of home buyers report waiting for at least three months for the house purchase to complete.
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So, with so much at stake, and so much room for things to go wrong, how do you secure the best possible deal on a property? How appropriate is it to haggle, and what do you do if you get gazumped? We have invited Ahmet Basman, a mortgage expert from Habito, for an exclusive interview. Here he answers your most common property buying questions.
How long does a typical home buying process take?
'Typically, from putting your offer in to getting the keys can take anywhere north of three months. We did a survey to dig deeper into this problem that showed at least 20% of people said they were waiting six months or more.
'That’s why we created Habito Go, a service that turns you into a cash buyer and fast-tracks the behind-the-scenes stuff like valuation and legal work. So you go from offer to getting the keys in as little as 10 days.'
Is it unrealistic to think my first offer will be accepted?
'The more competition for your property, the more difficult the negotiation is likely to be. Almost half the buyers we asked told us they had to make an offer on more than one property before being accepted, and it’s even worse in London. One in five Londoners are making offers on three or more homes before finally being accepted!
'The key things that sellers are looking for in addition to a good price (unsurprisingly) are speed and certainty. The sooner they can sell their property, the sooner they can buy their next home.'
What do I need to have ready before making an offer?
'First things first, get free, unbiased mortgage advice by speaking to a mortgage broker (like Habito!) to understand what you can afford to borrow.
'Have a look at your credit history and what debts you have – you don’t necessarily need to have everything paid, but just make sure it’s in order. For example, on your credit card, try not to owe more than 80% of your credit limit at any one time (so if your credit limit is £5,000, keep your balance at £4,000 or below), and make sure your spending doesn’t rely on credit.
'And remember to consider all the costs of buying a home, like stamp duty, legal fees, land registry fees, and moving costs. Habito can help you estimate most of those extra costs based on the price and postcode of your property.'
Will a mortgage in principle help me to secure the property?
'A mortgage in principle is an initial assessment from a broker of how much you can afford. An MIP tells agents that you’re serious, and can get your foot in the door when it comes to negotiations.
I't’s not always a good idea to put the maximum amount you can borrow on your MIP. We’ll match what the MIP says you can borrow to the price of the property – don’t reveal your hand if you can afford a higher amount.
'Watch out for estate agents who ask you to use their in-house broker – it could most likely affect your negotiating position if the agent knows the maximum amount you can borrow.'
What else can I do to put myself in a strong negotiating position?
'There are a couple of things that can put you in a really strong position at the negotiating table. For example, if you’re a first-time buyer or otherwise not in a chain (you’re not buying and selling at the same time), that can be really attractive because it means you can generally move a bit faster than buyers in chains.
'Obviously, being a cash buyer is very persuasive, so much so that you can often negotiate a significant discount off the asking price.
'Basically the quicker you can move, the better position you’re in. The research we did recently found 70% of sellers value speed and certainty just as much or more than getting their asking price. So if you can have the money sorted and move in quickly, that’s a huge bonus.
'With our new service Habito Go, you can do both – pay in cash upfront, and get your mortgage, valuation and conveyancing fast-tracked in the background. So you can go to the negotiating table and say, I have the money now and I can move in a few weeks. That’s really powerful.'
What’s gazumping? What should I do if I get gazumped?
'Gazumping is when, after you’ve put in an offer on a property and it’s been accepted, another buyer swoops in with a better offer. Until the contracts have actually been signed, sellers aren’t legally bound to sell you their property. In that time, you could have sunk a lot of money and time into applying for a mortgage, solicitors, valuation, and so on. It’s not terribly common, but it does happen.
'You can try and avoid getting gazumped by making your offer conditional on them taking the property off the market – don’t be shy about it. But that’s not always guaranteed to work.
'If you’re a cash buyer or using Habito Go, you’re taken a bit more seriously, and you can be more assertive. The quicker you can move, the less chance there is of something going sideways.
Do cash buyers always get a discount then?
'It's not guaranteed but evidence suggests that cash buyers pay 4.5 per cent less than those buying with a mortgage. Our first Habito Go customer saved in excess of £12,000 on his home purchase and ended up paying less stamp duty too.
'The estate agent’s goal is to sell at the best price they can, but achieving a quick and smooth sale is a key incentive for them too. Being a cash buyer helps to speed up the process and get things moving quicker.'