Confusion among first time buyers could prove to be a costly mistake
The last thing you want when buying a home is confusion about the process.
But, sadly, new research suggests this is the case among a good proportion of first-time buyers, with many left ‘extremely confused’ when it comes to the various stages of buying a property, the responsibilities of the professionals involved and what is expected of them as buyers.
Some 67% of first-time buyers incorrectly identified the surveyor or the estate agent as the one to carry out local searches on a property, such as environmental, water/drainage and chancel repair liability. This is, in fact, the responsibility of the conveyancer, with only a third (33%) calling this right.
Costs and budgeting are also major factors when buying a home, but the research revealed that first-time buyers could be underprepared or underfunded thanks to misunderstandings over the outlays involved with a property purchase.
Some 36% didn’t realise they bear responsibility for paying for a survey, believing this to be down to the seller, the buyer and seller together, or the mortgage company to cover the bill.
Meanwhile, only 63% said they knew that the buyer pays for a mortgage valuation, HomeBuyer Report or Building Survey.
Stamp duty confusion
Despite all the headlines about stamp duty being abolished for the majority of first-time buyers, many don’t know about this exemption, with 24% wrongfully believing that it is paid by the seller.
This suggests the Chancellor’s momentous tax giveaway last year has not had the effect it desired, with a lack of understanding about who actually pays stamp duty. Another 8% believe stamp duty is a payment the buyer makes to the seller, while a further 7.5% believe it’s something that is charged by solicitors.
The true reality of solicitors’ fees, however, will offer first-time buyers a more pleasant surprise, with the majority of respondents massively overestimating how much they will need to shell out on conveyancing. Asked how much fees would be likely to cost on a £250,000 property, nearly 70% (69%) estimated around £1,500 – significantly up on the actual average of £550.
Too much jargon
There is a lot of jargon used in the home-buying process, much of which can prove confusing to the uninitiated. Around 60% of first-time buyers said they planned to secure a mortgage in principle (where a lender agrees to lend based on an initial assessment of a buyer’s circumstances) before putting in an offer on a property, while 55% had a grasp on the true meaning of ‘exchange’.
Some 37% incorrectly believe it’s the date where they collect the keys and move in, when it’s actually only a legally binding contract between seller and buyer for the sale and purchase of a home, with completion happening at a later (pre-agreed) date.
Unexpected costs and transactions falling through could both be issues for first-time buyers if they don’t properly understand the basic fundamentals of the home-buying process.
Of course, purchasing a home is rarely completely straightforward, and anyone expecting a walk in the park will be left disappointed. However, those that are as well-prepared as possible are likely to be able to deal better with issues or bumps in the road if they do occur.
First-time buyers also need to have a good understanding of the roles of the different professionals involved in a house purchase – from agents and surveyors to conveyancers and removals experts – to ensure the process is as smooth as possible.
What’s more, first-time buyers need to know who pays for what and what this is likely to cost to ensure they set a realistic and manageable budget and don’t spend what they don’t have.