Buying and selling property can be a stressful and costly process. This is why everyone wants a smooth transaction. With that being said, no one wants to pay money if they don’t have to. It makes sense to want to save as much as you can when purchasing a home, considering how significant of a purchase it is. This is why we are often asked how to cut corners or what parts of the transaction we can ignore to save money. We would never encourage you to scrimp on the legal side of transactions, although you can save money there in various ways, as that can end up costing you more in the end than you’re saving upfront. However, we can make a few suggestions of steps that might help you save a few pounds.
Sell the Property Yourself
First, you could try selling your property yourself rather than selling it through an estate agent. Most estate agents charge a percentage commission on the sale price, and the average price is between 1% and 2% plus sales tax. The commission could cost you as much as £9,000 if you sell your property for £500,000. That’s a lot of money; the legal fees should be manageable by comparison.
You have the option of listing your property on websites where you can sell the property directly to the public. However, the drawback is that you will spend much of the time doing the work instead of relaxing and watching the money roll in. There are also companies that work on a low commission, but you pay them upfront, whether or not the property is sold. An agent, however, will only charge you if he or she makes the sale.
Add the Mortgage Arrangement Fee to the Mortgage
When you are borrowing money to purchase a home, there are mortgage arrangement fees to pay. The surveyor will also want to do a survey to make sure the property is in good condition. If you have enough money saved for a down payment of at least 20% of the purchase price, or you are paying the full price at closing, you can ask the lender to add this fee to the mortgage so that you don’t have to pay it now. Since your lender wants to get as much of its money back as possible, they will be happy to do this.
Keep in mind that a home inspection is more thorough than a survey; therefore, it will cost more money. Most lenders will not compensate you for lost time or inconvenience unless there is a major problem with water leakage or structural concerns. Either way, shop around with local inspection companies to find one that will do a quality job at an affordable price.
Consider Moving Costs
What about the hidden costs of moving? When people are creating their budget, they sometimes forget that they may need a removal company. Moving on a Friday is one of the most popular because it gives people time over the weekend to unpack their belongings and fix any damage made to their property. However, that means that you may have to move on a Monday to get a deal with a removals company. You may decide to do some of the moving yourself, but at the very least, you may need to rent a van and ask your friends for help. This may cost you a few drinks or chips and curry down the pub.
When moving homes, remember to check the meters before you move out and into your new place. New meters should be read as soon as possible, but it is especially important to record the figure from old meters before anyone takes possession of your old place. Unless you read the meters in your old home, you might be charged for utilities used by others or from which you have already moved.
Consider Conveyancing Fees
Finally, legal fees are obviously a large part of the cost of any move, and they are unavoidable. Even so, you can’t avoid them entirely. There are some parts of the transaction you need to hire a firm regulated by the Law Society to handle. These include dealing with the Land Registry and your mortgage company.
However, there are still parts of the legal process where you can save money. For example, some types of insurance can be done without; however, that means you take on additional risk. For example, we may recommend taking out insurance against certain risks such as indemnity insurance if, perhaps, paperwork is missing. You don’t have to take our advance or even accept the insurance we recommend; however, your lender may require that you take out the type of insurance that we recommend.
Not all firms charge you legal fees if the transaction never completes. Some firms, however, will charge you for every part of the transaction, even if it doesn’t complete. Therefore, if the sale falls through halfway through the process, you would have to pay half the legal fees. However, there are firms that only charge you if the sale goes through. It’s also good to know that most transactions require a deposit upfront. The party that is purchasing the property usually puts down some money to show that they are serious about completing the transaction. This deposit usually comes in addition to legal fees if the buyer can afford them. If the buyer cannot afford legal fees, then a solicitor might waive the costs in exchange for an even larger deposit. The legal deposit is there to protect the current owner from being left with unpaid debts and helps with cash flow because it is often taken from the mortgage funds or from the funds from a property that is being traded-in.
Conclusion
We hope this article proves to be useful when it comes to helping you save money when buying or selling property. While the process may seem costly at first, the tips we’ve listed above should help make things more manageable for you. Feel free to reread this article when buying or selling property to help save on costs.
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