Why should you get a survey report before purchasing your property?
THEODORA MICHAELOUDIS >
Consultant SolicitorThu 22 August 2019
Considering a price reduction in Conveyancing
When making an offer on a property, you might compare prices of properties in the area and attempt to reach a compromise on the asking price to reflect the market value. Ideally you aim to reach an agreement on the price from the outset. However, it is possible that your survey may indicate that the property has certain problems that require immediate attention in terms of requiring repair works, which could cause you to now question your original offer.
Making an Offer
When making an offer on a property, it is possible that you have not yet requested a survey or are still waiting for advice from specialists/experts. Always aim to get these reports done as early in the transaction as possible to improve your chances of negotiation with the seller. The survey could reveal that work is required on the property which could end up costing you thousands. Have you really budgeted for inheriting these problems? Sometimes, it is sensible to walk away from the transaction depending on the extent of the problems. However, there are times where simple negotiations with the seller could mean you can both reach a financial agreement as to the cost of the works. In addition it can be agreed; who will do the works and when the works will be done.
Depending on the nature of the required works, it may even be possible for the works to be completed before exchange, or in between exchange and completion. Your solicitor/legal representative will act in your best interests to ensure your position is adequately protected in the legal paperwork.
Agreeing a Price Reduction
If you do manage to agree on a price reduction and if you are purchasing with the aid of a mortgage, the lender needs to be notified of the price reduction and of the new price agreed. Your solicitor will notify the lender. The lender then needs to agree to the price reduction and may issue a revised mortgage offer to reflect the reduction in the price. Depending on the amount of price reduction, the lender may alter the amount they offer. It will not be possible to exchange until the lender has given a reply and where relevant issued a revised mortgage offer. This is to ensure your mortgage position is adequately protected before you do commit to the purchase. Your solicitor/legal representative will also request a revised contract from the seller’s solicitor/legal representative to reflect the new agreed price.
What if you cannot agree a reduction in the price?
There are times when a price reduction is not agreed by the seller and you may decide you still want to proceed with the purchase. In these circumstances, it is still important to obtain advice from experts and quotations so you know exactly what your position is before you commit to an exchange of contracts. You do have to balance your options and consider whether the price you are paying for the property is fair in view of the works required and whether you would be prepared to instruct contractors to carry out the required works once you have purchased the property.
For further guidance, please contact Theodora Michaeloudis.
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