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All of these methods are offered by estate agents. Most properties are sold by Private Treaty, whereby a property is advertised at an asking price on the open market and when an offer is made, a sale price can be negotiated and agreed. At this point, the property becomes Sold Subject to Contract while the legal searches are carried out and contracts drawn up. When everything is in order and the sale/purchase can proceed, the contracts are signed and exchanged, the deposit paid and a completion date set. This process works to an unspecified timeframe and either party can withdraw from their sale or purchase up to the point of exchange of contracts – this is the contentious part of the current home buying/selling process in England and Wales. The transaction is legally binding at the point of exchange of contracts, and then the settlement of outstanding funds and handover of keys mark the transfer of ownership and completion.
Sale by Informal Tender is less common and is used if there are – or there are expected to be – several interested buyers. The property is advertised as normal on the open market. Prospective buyers are asked to submit a sealed bid (or ‘tender’), usually within a specific timeframe and then the vendor and their agent selects either the highest bid or the one from the most suitable buyer, whichever is the more important factor under the vendor’s circumstances. The property then becomes Sold Subject to Contract and the transaction proceeds in the same way as a Private Treaty sale/purchase.
The more unusual method is sale by Formal Tender, which combines the processes of both informal tender and auction. The legal pack is prepared before marketing and the property is marketed openly for a set amount of time, during which, bids are invited. Unlike Informal Tender, interested parties sign a contract and provide deposit details when placing their bid (or ‘tender’), and unlike Public Auction, all bids are confidential. The highest or most suitable tender is selected and upon acceptance the deposit is paid and contracts are immediately exchanged, legally binding both the buyer and seller to the transaction. With the legal work, deposit and contracts already in place, completion is set for a date usually within 28 days.
Your estate agent will be able to advise which is the most appropriate method for your property and your circumstances. If you’d like to discuss anything property-related, give us a call on 01392 204800.
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A Guide to Understanding the Costs of Selling a House in 2024
As a general rule of thumb, it’s always wise to shop around and compare quotes before selling or buying anything, making it even more crucial to do the same when selling a house.
Before you put your property on the market, you must understand the total cost of selling a property, considering many services charge a certain percentage of your home’s value instead of a fixed rate.
Property prices have skyrocketed, so you might have to pay more for such costs. This article offers a complete breakdown of these costs and what you can expect.
Estate Agent Fees
Most people choose to use estate agent services to sell their properties. While high-street agents charge a percentage of the selling price of your property plus VAT, a hybrid or online agent will usually have fixed charges for their commissions.
However, stay prepared to haggle on these fees because agents are expecting this, and if you’re successful, you’ll get the overall cost of selling your house lower.
Cost Overview:
- 75% - 3.6% + VAT of the final sale price.
- Around 95% of home sellers use high street agents over random cheap ones
- In the case you don’t sell your house, you don’t pay; a majority of agents follow the no-sale-no-fee policy
- For sole agencies, the average fee is expected to be around 1% -1.5% + VAT
- For multi agencies, expect a higher rate ranging between 2.4% - 3.6%
- For online or hybrid agents, fees usually vary between £600 - £1500 inclusive of VAT
Conveyancing Fees
You’ll have to hire a conveyancer or solicitor to deal with the legalities of transferring property ownership from one person to another. The fees include solicitors, land registry, search, and Stamp Duty Land Tax charges. These are bound to vary based on the type of ownership, i.e., freehold or leasehold.
Cost Overview:
- Fees for the sale of freehold properties range between £200 - £600
- Fees for the sale of leasehold properties range between £800 - £1,600
- If either of the properties has an ongoing mortgage, there will be an additional fee of around £50
- If you want to sell a leasehold property, extending the lease yourself is crucial; otherwise, you will have to supply the buyer with a Leasehold Management Pack, which can cost an additional £300-£800
Energy Performance Certificate (EPC)
EPC grades the energy efficiency of your house (A being the highest and G the lowest). It also suggests ways to improve your rating with additional costs, which can be purchased through the estate agent themself or by using the independent energy performance assessor on the government EPC register. Legally, this certificate is a must.
Cost Overview:
- Ranges between £35 - £150 + VAT
- The order for an EPC must be done before placing your house on the market
- The validity of an EPC is ten years, and it’s stored digitally by the government
- You can access the certificate via the EPC Register website.
- Having an EPC increases the chances of getting your house sold.
Removal Company Cost
After finding a buyer for your home, you need to book a removal company to move around all your possessions, such as furniture, electronics, etc. These rates will vary depending on how much stuff needs to move around and the distance.
Cost Overview:
- 1BHK prices range from £334 (0-20 miles) - £811 (100+ miles)
- 2BHK prices range from £487 (0-20 miles) - £1,037 (100+ miles)
- 3BHK prices range from £731 (0-20 miles) - £1,446 (100+ miles)
- 4BHK prices range from £1,042 (0-20 miles) - £1,837 (100+ miles)
- 5BHK prices range from £1,397 (0-20 miles) - £2,243 (100+ miles)
- Companies offer discounted rates for advance bookings
- An additional charge of £20 - £30 may apply if your household contents are not insured
Preparing House For Sale
Some estate agents suggest that you invest in basic home improvement projects that will increase the desirability of your property, which in return will speed up the property sale. Undoubtedly, the cost of these improvements or repairs will vary depending on what work is required, but these are some basic areas to look out for.
Cost Overview:
- A full house deep clean won’t cost a dime if you do it yourself, but if you use cleaning services, it can go up to £150
- Reparations charges also depend on the severity of the damage, which means it could be a minor DIY job or something major that costs £1000s.
- Redecorating is meant for the overall appeal, and if your house hasn’t been retouched in over five years, you should consider it. These can be simple jobs like fresh paint on the walls or complicated stuff like changing fixtures; this can cost anywhere between £50 - £2,000.
Mortgage Fees
You will have to pay extra fees if the house you’re selling comes with a mortgage. There are two main categories of mortgage fees, i.e., Mortgage exit and early repayment fees (ERC). The former is paid to the lender so they can close your mortgage once it’s settled, while the latter is for when you’ve paid your mortgage off before your fixed term has ended. In the case of an ongoing mortgage, it’s advisable to consider getting a new mortgage with a better deal.
Cost Overview:
- Depending on your lender, mortgage exit fees typically cost between £50-£300
- ERC usually costs between 1%-5% of your loan amount, although sometimes this fee may exceed the expected amount
- If either fee seems exorbitant, ask the Financial Ombudsman Service to review your complaint.
- If you’re choosing to remortgage, you’ll have to pay an arrangement fee (£1,000 - £2,000), booking fee (£100 - £250), and valuation fee (£150 - £1,500)
Taxes
Capital gains tax (CGT) is applicable if you're selling an asset that has gained more value since you purchased it, and this also applies to the current selling cost of your house. The tax rates vary based on your income and the gain size, and you only have to pay CGT on profits exceeding your annual allowance.
If you’re selling your only main home, you don’t have to pay CGT, which means it’s only applicable to let houses, second-home sales, and inherited property sales.
Cost Overview:
- CGT on residential property ranges from 18% - 28% of the gain and not the total sale price
- The tax-free annual allowance was set at £12,300 per person for the year 2022-23
- You can get deductions on any improvement or transactional costs involved in selling the property (solicitor, agent fees, etc.)
- Consult an accountant to calculate your CGT accurately and explore ways to minimise the liability.
Conclusion
It’s 2024, and it’s no surprise that the cost of selling your house will depend on various factors, such as the size of your property, ownership type, sale price, location, and the services you choose. With the help of our guide, we hope to answer as many of these questions as possible so you can make a wise decision throughout the selling process.
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We don't usually post reviews on the blog, but this one came in to us by email from a buyer, who isn't actually buying from us! Such lovely words we had to share...
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If you intend to handle the whole process yourself, rather than employing a solicitor, the first thing you need to do is to apply for probate – the legal authority you must obtain from the court before you can begin administering your late mother’s estate. As a key part of this process, the property needs to be professionally valued. This would be necessary even if you weren’t intending to sell, since the entire estate must be assessed for inheritance tax. What’s more, if some tax is deemed to be due, then it must be paid in full before probate can be granted. This can sometimes make things a bit complicated if you don’t have sufficient funds available to meet the tax liability, but if necessary your bank will normally advance the money, repayable via a charge on the property.
Most estate agents will happily provide a formal written valuation of the kind required for inheritance tax / probate purposes, in return for a small charge – typically around £50 - £150. Some may waive this fee, on the understanding that in due course you will instruct them to sell the property. Others will prefer to charge upfront for the service, and then deduct that amount from their commission, if and when they eventually achieve a sale.
In any case, as executor, you are entitled to be reimbursed out of the estate for any such expenses of this kind that you incur during the course of your duties.
As for the actual contents of the property, these also need to be valued for inheritance tax purposes – although in the case of ordinary household goods and personal possessions, you can easily do this yourself by providing a lump sum figure.
Once you have applied for probate, you can go ahead and put the property on the market in the usual way – although contracts cannot be exchanged until probate is actually granted. You should therefore ensure that your buyer is fully aware of the situation.
We have a highly experienced team of property specialists, who can help with probate valuations, sales and enquiries. For more advice, give us a call on 01392 204800.
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