Home Information Packs - are you for them or against them?

Jorgan_2

As I understand it, there is one company willing to offer indemnity insurance to Home Condition Inspectors. They will probably work on the basis of the most expensive property an Inspector is likely to inspect & work a premium from there.

I don't think they actually have a body in place to licence the Inspectors though, so they can't be licenced & therefore carry out any work.

A number of large surveying companies have recently stopped training or have decided not to train their surveyors to become Home Inspectors.

BobProperty

Jorgan wrote:

As I understand it, there is one company willing to offer indemnity insurance to Home Condition Inspectors. They will probably work on the basis of the most expensive property an Inspector is likely to inspect & work a premium from there.

Is that for the first year?

I really can't believe the whole system. Let's say the typical cost is £400 to the vendor. How many could you do and write up in a day (bearing in mind they are of a standard format) 1? 2? Let's say 1. So five a week = £2000 and all you needed was a training course a Pc and a printer? I could do two a day and pay someone to write them up so can I earn £4000 a week gross doing this? Who needs to be an estate agent? :rotfl:

I genuinely am concerned about the insurance aspect as I can see a lot of these Inspectors making mistakes and missing things. Given that houses are the biggest purchase most people make (and, as we see on this forum, get very passionate about) then people are going to sue because of the amounts of money involved. Unless Home Inspectors are going to be statutarily exempt from certain aspects of their reports then expect a lot of NoWinNoFee cases chasing their insurers. If they are going to be exempt from parts of their reports then those parts won't be "worth the paper they're written on ". (And hey let's all go on a training course and earn £4000 a week)

Jorgan_2

BobProperty wrote:

If Joe Public wants them all registering or being licensed then someone will have to carry the costs. If I remember correctly that's how it is in the USA, all "realtors" have to undergo training and get licenses to practice. Typical "realtor" fee is about 5-6%. Is Joe Public happy with that?

No Bob, I don't think they are. It seems everyone wants to get the highest possible service levels but are not willing to pay for it.

newmoney_3

Personally think they are a great idea. Why should a seller do a survey to find out something was wrong with the house and then have to do another survey on another property. It makes much more sense for the homeowner to do the survey as then you only need to do it once.

BobProperty

Jorgan wrote:

No Bob, I don't think they are. It seems everyone wants to get the highest possible service levels but are not willing to pay for it.

I think we both knew that, I just thought I'd make the point publically. Yes, let's license EAs but then you have to pay the price for it.

BobProperty

newmoney wrote:

Personally think they are a great idea. Why should a seller do a survey to find out something was wrong with the house and then have to do another survey on another property. It makes much more sense for the homeowner to do the survey as then you only need to do it once.

But that's the problem, you still do need to get another survey done, or at least a valuation unless you are a cash buyer. If you are a cash buyer and know what you are doing you don't need a survey, but then neither did the vendor
And of course there's no chance that the vendor could influence a report they've paid for, is there?

Jorgan_2

Last time I looked on here 56 people had voted as to whether HIPs is a god thing or not. I'm intrigued to see what people actually think the pros & cons are for HIPs.

Bob, most of the surveyors I have spoken to reckon they will be able to do an 2 Inspections a day on an average property, if they get something out of the ordinary or big than the norm its going to drop back to one a day.

BobProperty

Jorgan wrote:

Last time I looked on here 56 people had voted as to whether HIPs is a god thing or not. I'm intrigued to see what people actually think the pros & cons are for HIPs.

Bob, most of the surveyors I have spoken to reckon they will be able to do an 2 Inspections a day on an average property, if they get something out of the ordinary or big than the norm its going to drop back to one a day.

So 10 a week at, at least, £400. Or maybe only 5 big ones a week at £1000. These Inpectors will be turning up in Bentleys. :rotfl:
Anyway, I came back as I've just received an email with this info in it:
http://www.bsa.org.uk/mediacentre/press/hips.htm
Some other people don't seem too impressed.

Jorgan_2

Very long post warning.

I said earlier in this thread that I thought HIPs was flawed, thats a fairly general statement to make so I've stated the reasons why here. It is a long post.

Many people seem to think that HIPs will be the Holy grail, answering all problems associated with the current house buying & selling process. It won’t. Chains will still collapse for all manner of reasons, buyers/sellers can change their minds.

Buyers & sellers will still be able to withdraw from the process without any redress, so its no different to the current system. If a buyer has marketed his property to by a certain property, he will have paid out for a HIP, assuming he is selling a property and if his seller withdraws from the sale, he is out of pocket. No different to the current system.

80% of homebuyers do not have a survey when buying, the majority of people buying with a mortgage have a mortgage valuation, this is not a survey. Under HIPs 100% of sellers will have to have a survey carried out on their property. Those buyers that already pay for a home buyers or structural survey will probably still have their own survey carried out on their purchase. If they are selling as well, it will be an additional cost that they haven’t had before.

The Government seems to think that buyers will obtain the HIP on their property, have an offer accepted, get their mortgage offer & exchange & complete. The majority of buyers will have to employ a solicitor to read & understand the contents of the HIP. So there is no difference to the current system.

Marketing a property, either via an agent or privately, without a HIP could result in a fine of £200. This could be for every day that the property is on the market, depending how diligent your local trading standards office is.

A HIP provider has 14 days to prepare the HIP, if after this time the HIP isn’t complete, but they can show due diligence in trying to obtain the necessary information, a property can be placed on the market, without the risk of a fine. For many leasehold properties, it can take weeks, even months to obtain the all the necessary information from management companies etc, so the seller will pay out for a HIP, the information isn’t forthcoming, the property goes on the market and a sale is agreed. The buyer could still be waiting months for all the information to get to their solicitor. Not really any different to how it is now.

The figures that have been quoted for producing a HIP, usually £600 – 800 are for freehold properties with straight forward titles. Leasehold properties will cost more, because there is more work involved for the HIP provider.

The Government claim it will stop gazumping. HIPs has the potential to increase gazumping as, in theory, all the information a buyer needs will be present in the HIP, so it comes down to who can complete fastest.

Did you know that as a prospective buyer you will probably have to pay to receive a copy of the HIP? Estate Agents & HIP providers are allowed to make a reasonable charge for providing a HIP to a potential buyer. In paper format the average HIP for a freehold property is about 100 pages, for a leasehold property it could be up to 150 pages thick.

HIPs may restrict the number of properties coming onto the market, potentially pushing prices up. Nobody really wants to see a massive jump in house prices, least of all Estate Agents. We’d much rather sell 100 houses a year at an average price of £180k than 50 at £200k.

Currently if someone isn’t happy with their agent, they can subject to contract, change agents fairly easily. This practice may change under HIPs. Whilst the home owner will probably pay for the HIP, it is the Agent marketing the property that is legally liable for the pack. Therefore if a seller has sourced there own HIP provider, the Agent may not recognise the provider & refuse to market the property with said HIP in place. The seller may therefore have to get another HIP from a provider the Agent recognises. There are something like 140 companies that currently claim to be HIP providers, Agents will not be able to check on the validity of all companies.

HIPs will have to be paid for by the seller, any agent offering free HIPs will be covering the cost in their increased fees. Many are talking of 2.5 – 3% on a sole agency. If you don’t want to pay up front for the HIP, many providers are looking at offering deferred payments so that when a property is sold the fee will come from the proceeds. If a property is withdrawn from the market, they will be looking to cover the fee either in a lump sum payment or spread over a number of months. It means you will be effectively signing up to a loan agreement when instructing the HIP provider.

If a property is taken of the market for more than 28 days, a new HIP will be required when it is re-marketed. This does not apply to properties that are off the market because a sale has been proceeding & then falls thru. So anybody who takes a property off the market for the quieter months, say August or December may want to think twice before doing this.

All the above depends on their being enough Home Condition Report Inspectors in place and they can get Indemnity Insurance & licensed. Last I heard there were 400 qualified Inspectors, the governments own figures say we need 7,500. A number of large surveying companies have decided not to train their surveyors to become Home Inspectors.

BobProperty

(Jorgan - did you get to the office too early this morning? )
I have already made some of these points previously on here and elsewhere, but since this thread has brought things up to date I'll post a revised version on here. I would also like to see some replies from EAs.

Something Jorgan raised, we will now have the possibility of EAs chasing clients who have changed EA for the price of the HIP they prepared for them. So EAs can add debt collection to their list of professional skills.

What is an incomplete HIP? Will EA's be allowed to market property with a near empty document with lots of blank pages saying "awaiting information". If the local Trading Standards are enforcing this they'll manage to prosecute 1 EA a decade with the resources they have.

If the "can't market until have a HIP" is strictly enforced, then a class of property I will call "might be coming onto the market" (MBCOTM) will be created. EA goes to view a property, signs up vendor and initiates getting HIP done. Now is anyone really going to tell me that the EA is not going to tell anyone about this property until a near complete HIP turns up in his office? Of course not. So he will phone his regular investor clients and say "I've got this property which MBCOTM, if it does would you be interested?" Any investor who is interested will go and have a look. Now imagine the market is going mad and rising rapidly (been there done that). An investor who takes a fancy to it offers close to the asking price. Vendor wants a quick deal to get a rung up the property ladder and agrees. So what's happend? The property has never been offered to Joe Public because of the time needed to create the HIP. By the time the deal goes through there will be a HIP but no one will care what's in it as the deal is done. Result, (apart from someone having to pay for a HIP that wasn't needed), there is created a two tier market. Contacts of the EA and then Joe Public.

Given the resources of Trading Standards then what happens to private sales. Even if the vendor was caught selling without a HIP, which in my opinion is extremely unlikely, they could just say "Oh sorry, I only put an advert in the local paper, so I was only marketing it for 1 day." Maximum fine £200. A lot cheaper than a HIP.

Combine the two previous paragraphs. Will the EA bother with a HIP if the deal gets done in days? Vendor might well go along as it will save them £100's. EA won't have put signboard up as that would draw attention to the deal. Trading Standards won't have the right to check the EA's books to see which sales didn't have HIPs, will they?

What happens in situations like inheritance buy outs. Say mum passes away and leaves house to 2 children. One needs house and has money, other already owns a house. This is a property they know initimately as they've been in and out of it all their lives. Child A offers to buy out share owned by Child B. All very normal and not uncommon. Are the rules such that a HIP will be required?