Trying to sell privatlely, do i need a HIP?

Richard_Webster

What's to stop a buyer commissioning a HIP but failing to actually have it undertaken (i) at all; and (ii) until just after they've accepted an offer?

Commissioning means ordering the various searches, energy report etc. The incomplete HIP has to show that these have been ordered and some proof has to be given in the form of an acknowledgement from the people providing the EPC/searches.

Getting that acknowledgement will involve the commitment to the cost of these elements so nobody is saving anything.

Of course hardly anyone other than the buyer's solicitor is looking at the HIP, which rather defeats the Government's objective in spending millions on the whole half baked idea.

chriserenity

benood wrote: »

Isn't this the whole problem with HIPS - the buyer's solicitor ends up having to duplicate all the work done in the HIP anyway.

What do you mean? Why would the solicitor duplicate the work? 90% of the HIP are the same documents solicitors were using before. The only new addition apart from the optional documents is the EPC and thats for the buyer and mortgage lender (the lenders are waking up to the EPC now).

Well, FSA aside, the OFT can revoke an estate agent's licence for continually flouting the rules. It seems alot of people are just looking for ways to avoid HIPs, perhaps because when they read them they can't see much information of interest. Again, HIPs are primarily NOT for buyers, they are for their solicitors.

benood wrote: »

What's to stop a buyer commissioning a HIP but failing to actually have it undertaken (i) at all; and (ii) until just after they've accepted an offer?

Well, in terms of stick, you don't have to just order it, you have to either pay or agree to pay for the HIP so you risk being taken to the small claims court by the HIP provider. In terms of carrot, you really aren't doing yourself any favours IMO by seeking to avoid having the HIP on your home. The local solicitors I work with are relying increasingly on HIP documents and also more and more on the optional documents such as the home use and contents forms.

If you want specifics, I'll use an example: Someone is marketing without a HIP either because they put it on the market before they came in or they are purposefully breaking the rules. Time rolls on to February, then March when the market is hotting up again. Savvy buyers use the ABSENCE of a HIP as an indication of how long a property has been on the market. HIPs applied from:

4 bedrooms and larger = 1st August 2007
3 bedrooms = 10th September
1/2 bedrooms = 14th December

If I were a buyer I would ask "whats so wrong with it that its been on the market since whenever?"

I urge everyone thinking of 'avoiding' HIPs to consider the consequences beyond short term savings.

benood

chriserenity wrote: »

What do you mean? Why would the solicitor duplicate the work? 90% of the HIP are the same documents solicitors were using before. The only new addition apart from the optional documents is the EPC and thats for the buyer and mortgage lender (the lenders are waking up to the EPC now).
I urge everyone thinking of 'avoiding' HIPs to consider the consequences beyond short term savings.

If I were a buyer (or a solicitor for that matter) I would be wary of the veracity of any documentation produced by the vendor and I would want to independently verify it - would a solicitor's indemnity insurance cover them where a HIP has been put together to show the property in a positive light?

Having in the past taken over a year to sell a house I'd be very concerned about commissioning a HIP early on only for it to go out of date, that's the main reason I'd want to try and delay buying a HIP.

Richard_Webster

If I were a buyer (or a solicitor for that matter) I would be wary of the veracity of any documentation produced by the vendor and I would want to independently verify it - would a solicitor's indemnity insurance cover them where a HIP has been put together to show the property in a positive light?

People really don't understand do they?

What is there in a HIP that would show a property in a more positive light? In my area I haven't yet heard a buyer mentioning the contents of the EPC to me. That's provided by independent DEAs such as Chriserenity and can be good or bad. There isn't any way that the seller can really influence the EPC.

The rest of the documents are standard ones - Local Search, Water & drainage Search and evidence of title. What is there there that a seller could fiddle?

The only practical implication for buyers and their solicitors is that they don't need to do the Local and Drainage Searches. I use one particualr search provider to do my local searches. Other solicitors and HIP providers use different ones, but in the vast majority of cases there is little difference between them. It would be a very rare case where I would not be happy to accept the searches. The evidence of title is usually straight from the Land Registry so what is it that is so frightening that needs to be independently verified? I don't get it.

Evee2000

Richard_Webster wrote: »

People really don't understand do they?

What is there in a HIP that would show a property in a more positive light? In my area I haven't yet heard a buyer mentioning the contents of the EPC to me. That's provided by independent DEAs such as Chriserenity and can be good or bad. There isn't any way that the seller can really influence the EPC.

The rest of the documents are standard ones - Local Search, Water & drainage Search and evidence of title. What is there there that a seller could fiddle?

The only practical implication for buyers and their solicitors is that they don't need to do the Local and Drainage Searches. I use one particualr search provider to do my local searches. Other solicitors and HIP providers use different ones, but in the vast majority of cases there is little difference between them. It would be a very rare case where I would not be happy to accept the searches. The evidence of title is usually straight from the Land Registry so what is it that is so frightening that needs to be independently verified? I don't get it.

Richard

In your professional experience, having had the required documentation contained in the HIP up front, has this speeded up the exchange/completion times for your clients? If not, or out of curiousity, what additional items would be useful to include in the pack in order to quicken the process (I'm guessing things like warranties for double glazing, Fensa certificates, boiler guarantees etc). If you have found that in your experience thus far, the process has been quicker, how many weeks/days has the process been speeded up by? I realise that this is still early days for HIPs, but I hope you can answer my questions.

Thanks!

Pam

chriserenity

benood wrote: »

If I were a buyer (or a solicitor for that matter) I would be wary of the veracity of any documentation produced by the vendor and I would want to independently verify it - would a solicitor's indemnity insurance cover them where a HIP has been put together to show the property in a positive light?

Having in the past taken over a year to sell a house I'd be very concerned about commissioning a HIP early on only for it to go out of date, that's the main reason I'd want to try and delay buying a HIP.

In addition to the Richard's response I think its important to point out that not all HIPs are the same. As with all things you get your solid good quality products and your bog standard limited use bargain basement products.

HIP searches should IMO carry suitable indemnity insurance and should include the policy document and it should clearly state that the policy applies to the seller, the buyer, both party's solicitors, mortgage lenders and any other party relying on information contained therein so this is a non-issue. Very cheap providers may not insure the searches so it might be worth checking.

Regarding a HIP being 'in date' I've found solicitors opinions on when a search goes 'out of date' can vary between 3-6 months though technically its out of date as soon as its produced. We find that again, bargain basement HIP providers competing purely on price and offering only a standard product will likely leave you hanging with regards to replacing ageing documents. In the circumstance where a buyer's solicitor has a problem with the age of a search there are HIP providers who would replace them free of charge in this circumstance.


Yes, I'd also be interested in any good or bad effects as a result of HIPs from a solicitors point of view! Do you have an opinion on the home use and contents forms Richard - do you feel these would help you in your job/for the buyer?

Richard_Webster

In answer to the last two posts I think having the local search has slightly speeded things up in that if the local authority is slow, having it sent off at an earlier stage is a help. I think that is the only advantage at the moment.

The guarantees, certificates, planning permissions for extensions, home use form and fixtures list would be a help. Also the title very often includes a conveyance or transfer by the original builder which includes the covenants and rights etc that apply to the proeprty. This is not a required document, but to report sensibly to the buyer we will need to see it.

The problem with the Home Use Form or it predecessor, the SPIF, is that it didn't ask enough questions and so solicitors invariably have to raise additional enquires anyway.

People always seem to read questions like "Has there been any building work at the property?" as meaning "Have you done any building work?" As a buyer's solicitor the number of times I have wondered about the wonderful Victorian style conservatory that features in the estate agent's particulars and the sellers are saying there has been no building work!

This illustrates the point that for the information to be any use it will have to be closely edited by somebody with some experience, otherwise it can be nonsense. A lot of additional enquires are simply sorting out inconsistent answers by sellers in the SPIF. Trouble is that this editing would significantly add to the cost.

In extreme cases the seller cannot even sell the proeprty. I had a case a few years ago where a factory conveyancer had sent me a draft contract package for an apparently former Housing Assn shared ownership flat that was being sold by at the full market value. I innocently assumed that there would be some evidence that the seller had bought the other 50% but after a lot of pushing it turned out that she had not done so and there were clauses in the lease effectively preventing a"back to back" purchase of the other 50% using money from my client's purchase. It eventually became clear that the seller could not sell but not before my client had wasted a significant amount of money on the matter. This was entirely down to the naff seller's solicitors sending a misconceived and wrong draft contract package out. They should have spotted the point and told the client at the beginning that she couldn't sell at full market value but only to those nominated by the Hsg Assn. I fear we are going to get some of this kind of thing creeping into HIPS.

Evee2000

Thanks Richard

Another question springs to mind as I read your reply. What percentage of sales fall through for one reason or another due to the unexpected findings on the searches? Do you think that these failed transactions will be weeded out now that the searches are provided up front, or (as I suspect you will) do you think that this will not make any difference as the home buyer relies on their solicitor to check out this side of things for them anyway?

Chris - bargain bucket HIP provider - don't tar us all with the same brush! I am probably the cheapest out there right now and yes, I make sure that every HIP I sell is sold with search indemnity insurance. In fact I also ensure that the search company I use is subscribed to the PCCB and Search code!

Richard_Webster

What percentage of sales fall through for one reason or another due to the unexpected findings on the searches?

Very few, I'd say. Certainly it is rare for local search to show anything that is really very adverse- the mythical motorway in the back garden syndrome...

Usually it is just information like the trees on the property is subject to a Tree Preservation or the Council is proposing some speed humps in a nearby road!

You could get something nasty like a closing order on a house that a builder had refurbished but not complied with all the Council's requirements, but that would be rare.

Environmental searches aren't part of the HIP although predictably the people who provide them are lobbying for this! We do get the odd buyer who is put off by a nearby landfill or something like that. Unfortunately the more information there is out there the more there is for some neurotic buyers to get neurotic about.

Much more likely are issues about the condition of the property coming out of a survey, or a flat in a block where the management company has been struck off, or a leasehold property with a known difficult freeholder.