First time buyer checklist and evaluation

babuttzi

Hi forum
We are a couple in our 30s currently renting. We'd like to buy a flat to live-in in London zone 2-3. Our goal is to build equity for a more wealthy future long term.
We are interested in a flat we viewed, a two-bedroom in a warehouse conversion advertised at £500k.
We are inexperienced and have primarily the following doubts:

1. What professionals should we hire and at which point of the buying process? For instance, should we hire a mortgage advisor / a surveyor / a solicitor before or after placing an offer?
2. What tools can we use to assess the potential appreciation of the flat over 10-20 years?
3. What tools can we use to know the current value to offer?
4. What are the best practices in the negotiation phase with the seller? Is it common practice to offer much less in order to ultimately meet half way?

Thank you very much!

grumbler

1. I'm no expert, but I think you need to have your mortgage agreed in principle for making an offer. Generally, you can get it with or without a mortgage adviser. And IF you need a surveyor you hire him after your offer is accepted.

RelievedSheff

As first time buyers go and see a mortgage broker. They will guide you through the whole process. 

You will need a mortgage in principle before any offers will be accepted or viewings accepted in some cases.

Any offer you make will be subject to survey. The survey comes after the offer acceptance.

No need to employ a conveyancing company until after the offer is accepted.

With our two purchases we have gone in with our full and final offer straight on the table. No faffing around trying shave a few grand off here and there. We seal the deal and get on with it. 

Don't even bother trying to calculate appreciation in value. That's a fools errand. Find a place based on what you want to live in and where you want to live. Any appreciation is a bonus but not a given.

rottcodd

babuttzi said:

Hi forum
We are a couple in our 30s currently renting. We'd like to buy a flat to live-in in London zone 2-3. Our goal is to build equity for a more wealthy future long term.
We are interested in a flat we viewed, a two-bedroom in a warehouse conversion advertised at £500k.
We are inexperienced and have primarily the following doubts:

1. What professionals should we hire and at which point of the buying process? For instance, should we hire a mortgage advisor / a surveyor / a solicitor before or after placing an offer?
2. What tools can we use to assess the potential appreciation of the flat over 10-20 years?
3. What tools can we use to know the current value to offer?
4. What are the best practices in the negotiation phase with the seller? Is it common practice to offer much less in order to ultimately meet half way?

Thank you very much!

Certainly not an expert, but also a couple here in our 30s renting in London, and are currently in the process of purchasing our first property (have exchanged contracts)

1. Before hiring anyone, we viewed a few properties. These were "non-serious" kinds of viewings, where we weren't really intending to put an offer in anywhere, but just wanted to see what kind of places we could get for our money, to help us have a clearer idea of budget and just get used to the whole viewing experience. When we started to view more seriously, we used a simple online mortgage broker to get a Decision in Principle (didn't involve a credit search or anything), so that we had that to show the estate agent when we wanted to make an offer on a property so they would take us seriously. When we did finally make a offer, the second it was then accepted we then immediately instructed a solicitor, and formally applied for a mortgage through a mortgage buyer. You might want to consider approaching a mortgage buyer BEFORE putting in an offer somewhere, particularly if you have any unusual circumstances, but we didn't bother until we had an offer accepted. ONce it is accepted, be prepared to immediately instruct solicitor and mortgage broker (so spend some time before lining them up so you know who you are going to use). 

2. I can't really help with that. You can look at average house price rises and that kind of thing, but nobody can really tell you with much accuracy how much it would be worth in 20 years time. Presumably predominantly you will be buying this house to live in so that's it's primary purpose. How much it will be worth in 20 years time not only depends on the market but also on your personal situation in 20 years time that will dictate what price you are willing to accept for your property. Generally speaking, on average, over a long enough time frame, houses tend to go up in value. I'm not sure you can say much more than that. 

3. Assess similar properties in the local area and see how much they sold for (check the land registry and rightmove). We always under offered by a little bit which sometimes worked and sometimes didn't. We took that attitude because we knew we were in a good position (FTB, no chain) and that the kinds of properties we were looking at there didn't seem to be that much competition for at the time. Remember that after your offer is accepted, you can then carry out a home survey and also pay for a valuation just to double check that the offer you had accepted is reasonable. We had two valuation surveys of the place we bought (one we paid for as a part of the general survey, and another that our mortgage company did), and both agreed with the offer we made. If however, it was valued less than what we offered, then we could then use this as a point of negotiation with the sellers to lower our offer. 

4. This is what we did with the first offer we made - we under offered by about 8%. They went down a little bit but not that much, so then we raised it by a little bit but not that much, and then they accepted it. That house eventually fell through. The second time we went straight in and under offered by just 5k because we really wanted it, and we got it. There's no right answer to what is the appropriate amount to over or under offer by. It depends how badly you want the place, plus roughly how much similar properties in that area are going for. 

Mutton_Geoff

A. Don't use the agent's recommended mortgage broker and
B. Don't use the agent's recommended conveyancer.

NameUnavailable

With a budget of £500K you can get a freehold house in some zone 3 areas which will probably be a better buy if you are looking to increase equity.

If you are buying a flat try to find one that is a shared freehold with peppercorn ground rent and over 900 years on the lease.

Vannaa

Mutton_Geoff said:

A. Don't use the agent's recommended mortgage broker and
B. Don't use the agent's recommended conveyancer.

After my own due diligence I did both of these things on a recent purchase and was very happy with the service I received from both.

Mutton_Geoff

Vannaa said:

Mutton_Geoff said:

A. Don't use the agent's recommended mortgage broker and
B. Don't use the agent's recommended conveyancer.

After my own due diligence I did both of these things on a recent purchase and was very happy with the service I received from both.

That is good to hear and of course these firms wouldn't stay in business long if they didn't provide good service but can you honestly believe they truly work with your best interests at heart 100% of the time?

Having a meeting with a broker and an MIP to hand plus choosing and appointing a solicitor/conveyancing firm ahead of making an offer puts you immediately into the "serious motivated buyer" camp compared to those that fall back on agent recommended firms because they turned up unprepared.

It's called the 6P rule.

When the OP says "Our goal is to build equity for a more wealthy future long term" they should carefully consider whether they are buying a home or an investment. Building equity doesn't make you more wealthy until you downsize (usually later into retirement). For the OP, that could be 30 years time.