Buying without Estate Agent

OMAR

How does this work? I am buying a house from a best friend.....so do not want to pay estate fees

Also, if I have already given them a deposit (I am owed 20k)....how does this work with the solicitors and lenders?

Thanks in Advance,

holly_hobby

An estate agent initially facilitates property marketing, mediation between parties, and support during the sales process. They aren't a fundamental factor of selling a property - but a usefull tool in the sale process. With the svc charge being the responsbility of the Vendor.

There is nothing wrong with a private sale, you have just cut out the marketing and in effect the middle man.

You shall of course both need solicitors to facilitate the legal aspect of property ownership and registration.

Is this a cash purchase or do you require a mortgage ?

You have stated that you have already "given them a 20k deposit as it is owed to you" - whilst I can see where you care coming from, thats not quite the same thing in the eyes of the Solicitor or any Mortgage Lender - whom have a duty under money laundering regs to validate deposits not arrising from a proven sale of property.

Do you have verification or proof that the 20k is owed to you ? Was this a formal arrangement entered into ? Was it a lump sum loan, or just an accumulation of amounts of owed/loaned capital that has built up to 20k ?

You may find, and esp if you want a mge, that the 20k "deposit" - if not proven/documented as a legal arrangement, is actually viewed as a 20k discounted purchase price/gifted deposit. If viewed in this format, you may find difficulties in a lender/sol accepting it, as it is not from a close family member, but an unrelated 3rd party (in respect of an unregulated personal loan between 2 unrelated private parties).

Assuming that the aspects and basis of the 20k deposit are legally acceptable/workable to concerned parties - the best way to do this is ( and avoid having to deposit an amount of cash on exchange) is to exchange and complete on the same day.

The lender (if mge reqd) will certainly want a signed affidavit by the "debtor" stating that the 20k is given without reservation, i.e no requirement for repayment or charge of the property

You would be best having an initial chat with a licenced conveyencer, they will be able to advise of the legalities of such a transaction, if it is acceptable with respect to ML regs and any considerations that need to be made.

Hope this helps

Holly

kingstreet

OMAR wrote: »

I am buying a house from a best friend.....so do not want to pay estate fees

You don't pay the agent either way. In the UK the vendor has a contract with the EA and pays their fees.

OMAR

I know this...its to save my friend having to pay the fees

OMAR

I would be requiring a MTG on the property.....of around 100k....value of house 120/5k ish.....

Would it be best using the same solicitor?

kingstreet

OMAR wrote: »

I would be requiring a MTG on the property.....of around 100k....value of house 120/5k ish.....

Would it be best using the same solicitor?

Same solicitor as the vendor? You'll find you are unable to do so. You may be able to use different partners in the same firm if you have an existing relationship with them.

I'm with holly on the deposit issue. The fact your friend owes you money will not be allowed to interfere with the usual deposit requirement. If you intend to use the debt as your deposit, I can't see anyone being prepared to lend to you. Vendor gifted deposits are no longer available.

holly_hobby

LTV is circa 83%, you use different Solicitors/Conveyencers - before you do anything - you need to establish what issues there will be regarding your "deposit" being non-monetary but an allowance by the Vendor, in respect of monies owed.

Speak to a conveyencer re ML regs, and also any high street lender, just to get a feel on how the market would interpret your situation/deposit issue. As although technically it is not a vendor deposit (but monies owed), if there is no legal basis to support this - a lender will view it as a vendor deposit - and if so - you have no mge lender available to you.

Holly

kingstreet

I've just realised I used "vendor gifted deposit" in error in my last post. I believe the lack of an actual cash transfer is what will be the problem. I'd spend some time making sure it's acceptable to the lender before incurring any costs/fees.

Leon_W

Holly and Kingstreet are spot on.

By far your biggest issue is the deposit. If you can't prove it's money owed to you (and you'll need robust documentation) then you will not find anyone that will approve a mortgage.

Lenders will just look at it as a vendor gifted deposit which is not acceptable.

OMAR

Well what if the vendor just gives me a cheque which I use....to pay my solicitor/his solicitor......which in turn is just going straight back to them as I am buying their house?

Why would the Lender need to know technically.....?

Leon_W

It has to be cleared funds.

This is more of a problem than you realise.