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How to Avoid the 10 Worst Property Selling Mistakes

Mistake #10

Not Instructing Your Conveyancing Solicitor Early

(England/Wales)

***May, 2010 - HIPs were scrapped, however, Energy Performance Certificates – which show how energy efficient a property is – were retained.

 

Post August 1st 2007 (when Home Information Packs*** are introduced), this is going to be more important then ever. 

Now is not the time to give you a full explanation of what a HIP contains or why they are being introduced. Irrespective of the hype, fundamentally Home Information Packs are just:

“A collection of standard legal documents with an 

Energy Performance Certificate tagged on”

The reality is that buyers and sellers are not going to find much of any real interest or value in them. Instead they’ll find that HIPs will:

        Make selling a property more expensive. The expected costs are 350-500 although most vendors will be given the option to pay for their HIP out of sale proceeds (on a deferred payment plan).

        Introduce upfront delays because you need your HIP in place before you’re allowed to put your property on the market.

These are just things we’re going to have to live with and it really not worth your while getting under the skin of the new legislation. However, what is worth giving some thought to is:

“Who should you choose to arrange your Home Information Pack?

Unfortunately most unsuspecting vendors will choose poorly because they’ll be receptive to estate agents that offer HIPs for free (or on a deferred payment plan).

Please think carefully before accepting the offer of a totally free HIP. As we all know, there really is no such thing as a “free lunch” and you’ll find that the cost of the HIP will most likely be wrapped in a higher commission fee.

Cost is one consideration but it’s really the amount of control (over you and your sale) that you’ll be giving away that should worry you. 

With this in mind we’d like to make you aware of the possible repercussions of allowing an estate agent to pay for your HIP:

        Many Estate Agents may be using HIPs as an opportunity to make extra profit from you through marked-up prices. What will the agent charge you if you don’t actually move or sell?

        If you become unhappy and want to change agent, you will probably have to pay a withdrawal fee to release yourself (and your HIP) from the agency agreement. Will this withdrawal fee to be more than the “cost-price” of your HIP? Only time will tell. 

        Prepare for the possibility of having to sign a contract that gives the agent “Sole Selling Rights”. This means that even if you find a buyer yourself, you’ll still have to pay the agent’s commission. 

        Having control over your HIP may well give agents greater leverage in being able to lock you into using services (e.g. conveyancing and financial) that they’ll earn commission from. These services are seldom the best value and in some cases overpriced due to the incorporation of the agents referral fee.  

So to whom should you go to for your HIP? It is very unusual for vendors to have reason to switch solicitors during a property transaction and as trusted and fully regulated professionals they are the clear favourites for this job. 

Using a solicitor to arrange your HIP will allow you to:

        Retain the ability to easily fire an under performing estate agent and go elsewhere (without having to pay a withdrawal fee).

        You’ll also be able to negotiate a sole agency agreement on favourable terms. This will allow you to market your property privately alongside the estate agent and give you the opportunity to avoid having to pay the agent, if you find a buyer yourself. 

      This is an important thing to consider because with so many effective private sale marketing websites out there, cutting out the estate agent and saving 1,000's is a very achievable thing to do.

  •   Negotiate a reduced selling commission with estate agents. For example, on a 250k property, even if you’re only able to negotiate a reduction on their “all-inclusive HIP” fee of 0.25%, you’ll have saved 625 + VAT.

In summary, the best advice we can give you is to shop around for a recommended solicitor and instruct them to put together your HIP before you choose your estate agent.

It’s understandable to have initial reservations about this however, these days most conveyancing solicitors work on a “No-sale, no-fee” basis. This means there is no cost or risk in following our suggestion – only benefits.

Written by Gavin Brazg - www.TheAdvisory.co.uk


Use these links to view the other 9 Mistakes 

Mistakes 1 - 2 - 3 - 4 - 5 - 6 - 7 - 8 - 9

 

 

 

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