Buying a property with Neilsons

It is crucial that you understand at the outset all the costs that you are likely to encounter in relation to your transaction to budget efficiently.

If you are lucky enough to be a ‘cash buyer’ then you will not need a loan to cover the cost of the purchase upfront. The majority of purchasers, however, will require a mortgage to pay off the purchase price over a longer, affordable period of time.

The mortgage secures the property for you as the purchaser and you pay off the mortgage over a set time frame (usually between 25 and 35 years). A mortgage will include interest, which is how the lender makes money from the transaction. The benefit to you is that a mortgage makes purchasing affordable by paying off the loan each month.

The mortgage landscape has changed beyond recognition over the years and lending criteria varies from lender to lender. That is why it’s never been so important to take advice.

The market can often change daily and that’s why it makes sense to talk to professionals who have their finger on the pulse with detailed knowledge of a wide range of lending criteria. It is matching this criteria to your personal circumstances which will ultimately determine the lender and product most suited to you.

Deposits

You will also need to save for a deposit for the mortgage. In the current market, although some lenders have recently introduced smaller deposit mortgages, you will need a deposit of at least 5% of a property’s value to obtain a mortgage. The lender would then lend you the remaining 95% of a property’s value.

5% is the minimum, but you can save as much as you like for a deposit and the mortgage deal offered to you will depend on how much of a deposit you have.

You should note that, if your income supports it, you can borrow up to 95% of the valuation or the purchase price if lower than the valuation, but if you Offer more than the valuation then all of the funds over the valuation has to come from your savings – even although your income may allow you to command more of a mortgage.

The mortgage lender will not lend more than 95% or the value of any property.

Noting Interest and Offering

The first thing we do once you have found a property you like is note your interest with the Selling Agents. 

This tells us whether there is any competition. Noting Interest acts as a holding exercise and the Selling Agents will generally notify us of any developments e.g. if a Closing Date is set. Currently, in Edinburgh, around 20% of properties go to a Closing Date. If the property is on at a Fixed Price, they may sell it to the first party to offer the Fixed Price and any Notes of Interest are disregarded. You have to move quickly with a Fixed Price property.

We’ll review the Home Report, and you can also download a copy of the Home Report directly from the ESPC or the Selling Agent’s website.

The tactics that we adopt in submitting an Offer will be determined by a number of factors – whether there is competition, whether the property is just on the market, whether the property is on at a Fixed Price and someone else is chasing it and most importantly what you can afford to offer. We will discuss this with you and then submit an Offer.

The Offer is a legal document which forms one leg of a contract for the purchase. It refers to Standard Clauses, the terms of which have been agreed by Solicitors in Scotland so that the wording of individual clauses is not a matter which causes delay.

The most important parts of the Offer that affect you are the price, the date of entry and what items are included in the sale. The price is a very important matter that we will discuss with you. 

The ‘Date of Entry’ is the date you get the keys and the date on which you pay the purchase price.

This is determined in the case of a first time buyer by the speed at which the mortgage can be processed and usually for a First Time Buyer, it is around six or eight weeks from the date the Offer goes in.

The items included in the sale are usually the items specified in the sales particulars but if you agree any additional items be sure to let us know so that these can be written into the Offer and form part of the contract.

The Home Report

The Home Report is a very useful document containing an Energy Efficiency Report and Seller’s Questionnaire but most importantly, a full survey on the property carried out by the seller’s surveyor. The Home Report is a legal requirement in Scotland for all properties marketed on the open market. It is an impartial and detailed survey of the property’s condition and each aspect of the property is scored on a scale of 1-3.

1 = The surveyor is happy with what they have seen.

2 = Keep an eye on it and proceed with caution.

3 = Do more research and further investigation before proceeding.

We will discuss the Home Report with you and consider if you are in a position to submit the Offer, based on what we have established about your negotiating position when we noted interest.

The Offer is submitted ‘subject to survey’. You may find that it is strange that we offer subject to survey when there is a Survey Report available to you in the Home Report but your mortgage lender may not accept Home Report Surveys as a matter of principle; they may not accept reports from the Surveyor who carried out the Home Report Survey (mortgage lenders have a panel of accepted Surveyors); or the Home Report may be regarded as out of date.

What happens therefore is that as soon as the Offer is accepted verbally you have to check whether the Home Report will be acceptable to your mortgage lender.

Some lenders will accept Home Report surveys from almost any lender.

Some lenders will accept Home Report surveys only from those surveyors on their approved panel.

Some lenders will not accept Home Report surveys at all and in that case you will have to pay for an independent valuation carried out on the instructions of the lender.

If it is acceptable, but more than three months old, the sellers will normally pay for the Home Report to be “refreshed” (updated) to reflect any change in valuation or deterioration in condition.  The refreshed Home Report is sent to us and we forward it on to you for final approval.

We then “lift” the subject to survey clause and your Offer is then unconditional.

When the Offer is unconditional (i.e. the subject to survey clause has been lifted) the sellers’ Solicitor will prepare a Qualified Acceptance of the Offer which we forward to you. If we are happy with the amendments made to the Offer we send a letter back formally accepting the qualifications and holding the contract as concluded. The Offer, Qualified Acceptance and letter in conclusion of the contract are called the missives and only when all the points are agreed do you have a binding contract. Note that we sign the missives on your behalf in most cases.

This stage is called ‘Conclusion of Missives’ in Scotland and is the equivalent of “Exchange of Contracts” in England. Because we sign missives on your behalf it is important that you are aware you will be tied into the contract for the purchase legally without signing anything and so if there is any reason why you would not want to be tied in to the deal by the time we believe that all of your financial ducks are in a row you must tell us as soon as possible.

Conveyancing is the legal process by which ownership is transferred from one party to another.  

This is a highly technical process but much of it is carried on quietly and efficiently on your behalf without you being notified of each technical stage in the transaction, unless we think there is something that requires your input or approval such as confirmation of the boundaries of the property.

Missives

Generally the process starts with the submission of an Offer to the Selling Solicitor. The clauses in the Offer which are of most importance to the clients are the price, the date of entry and what items are included in the price.

Most Offers nowadays refer to the “Scottish Standard Clauses” which is a schedule of Offer clauses – the wording of which has been agreed Scotland wide by Solicitors.

These relate to such matters as the titles, the Local Authority records affecting the property, alterations and any documents relating to dry rot, wet rot, woodworm or rising damp.

The Offer puts the ball in the seller’s court and the seller’s Solicitor will go through each clause with the seller to make sure that the position is adequately covered.  The seller’s Solicitor then prepares a “Qualified Acceptance” which puts the ball back in the purchaser’s court and the purchaser’s Solicitor will determine whether the position can safely be accepted by the purchaser. The letters passing between purchaser’s and seller’s Solicitors are called the missives.

Assuming the purchaser’s Solicitor finds the position as presented to be satisfactory a letter will be issued to the seller’s Solicitor accepting all the modifications made to the original offer and “holding the bargain as concluded”. This creates a binding contract and is called conclusion of missives. This equates to “exchange of contracts” in England.

Because the stage of conclusion of missives commits both parties to the deal contractually, the practice has grown up nowadays for Solicitors to hold off concluding missives until the purchaser has their mortgage Offer through and/or if there is a sale involved until the sale missives are concluded.

Title Deeds

The seller’s Solicitor will then send the title to the purchaser’s Solicitor and these will be checked carefully. The title may be registered in the Old Sasine Register in which case a bundle of titles will be passed to the purchaser’s Solicitor or in the more modern Land Register which is an Ordnance Survey Map based system in which case the Land Certificate will be passed to the purchaser’s Solicitor.

The purchaser’s Solicitor will then make observations on the title and in relation to any other points which arise from the Home Report (in particular the Surveyor’s observations) and the replies from the seller’s Solicitors will be discussed with the purchaser to ensure that everything is satisfactory.

The purchaser’s Solicitor will then prepare a Disposition which is the document transferring title to the purchaser. The purchaser’s Solicitor will also revise the draft documentation prepared by the seller’s Solicitors which updates the Search in the Registers of Scotland and also includes a draft Discharge of the seller’s mortgage deed. When the seller’s Solicitor has approved the draft Disposition the seller will be called upon to sign the hard copy of this. 

Some years ago the Government introduced regulations designed to prevent Solicitors being used to launder drug money or the proceeds of crime by criminals. When we receive money from clients we are governed by very strict rules which oblige us to check carefully where any funds we receive has come from. 

We will explain in detail how to ensure your source of funds and finances are all in order prior to settlement, Neilsons have a large team of dedicated Anti-Money Laundering staff to guide you through the process at the relevant stages. 

During this period the purchaser’s mortgage lender will be processing the application and when it is approved will issue an Offer of Loan to the purchaser and Loan Instructions to the purchaser’s Solicitor.  The purchaser’s Solicitor will prepare the mortgage deeds and will update the purchaser with the financial position and request the purchaser to pay the balance of price, fees and outlays as previously quoted. The purchaser’s Solicitor will also then request the mortgage funds from the mortgage lender.

You will note that all of the financial aspects of the transactions come through the Solicitor.

The purchaser’s Solicitor then issues a cheque for the purchase price to the seller’s Solicitor and this is normally sent the night before to be “held as undelivered” on the morning of the date of entry.

The night before the date of entry the seller’s Solicitor also sends the signed Disposition in favour of the purchaser, the title deeds and in the majority of cases, the keys, to the purchaser’s Solicitor, again to be held as undelivered.

What happens on the date of entry?

On the date of entry, provided the finances are in place, the Searches are updated and clear and all of the conveyancing observations have been satisfactorily addressed, the purchaser’s Solicitor will contact the seller’s Solicitor and state that the cheque can be cashed.

In return the seller’s Solicitor will confirm that the titles and keys can be held as delivered and will confirm the approximate time at which the property will be available for occupation by the purchaser.

One of the most common questions we receive is ‘What time do we get the keys?’ and the answer is there is no set time. The availability of the keys is determined by the sellers moving out, your mortgage funds coming into our Bank Account and if selling, your purchasers being able to pay the price over to us. We have no direct control over any of these and therefore can’t give you any exact time until it all falls into place on the day.

We normally arrange for your mortgage to come in the day before, to avoid delay in this connection.

You come in to sign the Deeds a few days before the Entry Date and leave us one key to your place, which we send to the Purchaser’s Solicitors the night before the entry date to be “held as undelivered”. This means they hold the keys to our order. 

The Seller’s Solicitors send us a key for your new place “to be held as undelivered.”

We then have to wait for everything to fall into place. 

You load up in the morning and wait for our call. The purchaser’s Solicitors call us to say they are happy for us to proceed.

We ring the seller’s Solicitor to check if their clients are clear and if so we send over the purchase price.

We call you and ask you to call in to collect your keys to the new place. Based on the time of our call you let us know when you will be clear of your own place. You leave the remaining keys in the property when you leave it for the last time.

We phone the purchaser’s Solicitor and confirm that they can hand over the keys to the Purchasers but tell them not to attempt access until after the time you have given us.

We’ve created a helpful checklist here explaining this process in more detail, advice on what to do when you get the keys, alongside useful contacts to notify your change of address to.

Working out what you can afford isn’t just about the purchase price – it’s about understanding the whole financial picture. That’s why we use a detailed Budget Planner system which is exclusive to Neilsons. The ‘Budgetplanner’ shows you how everything – including the estimated fees and outlays – stacks up financially so you are able to see the total cost of the transaction.

This gives you a clear, realistic overview of the total cost of your move, not just our fees. We will never just issue you with a simple estimate with fees and outlays – these are only part of the story.

Instead of guessing, you’ll see exactly what funds are required to make the deal work, or how much money you’ll have left once everything is complete.

The budgetplan looks at the overall picture including the price, mortgage, selling price (if selling) existing mortgage (if applicable), all fees and outlays and then calculates what you need to make the deal stack up or the surplus at the end.

Knowing where to look and when can give you a real advantage in East Central Scotland’s competitive property market.

Most homes sold by Solicitor Estate Agents appear first on Edinburgh Solicitors Property Centre (ESPC). Properties listed by Solicitor firms are usually published on ESPC 72 hours they appear on the national portals for effective double launch marketing – which means serious buyers often start their search there. We recommend signing up for property alerts via Neilsons and with MyESPC.

Estate agents who are not Solicitors cannot advertise on ESPC, so they rely solely on other platforms such as:

• Rightmove
  
• Zoopla
  
• S1Homes
  

Solicitor Estate Agents typically advertise on these portals too – but ESPC remains the only place where you’ll see all solicitor-listed properties in one place, often before anywhere else.

That’s the really clever part. 

The tactics you should adopt and the price you offer depends on various factors including any competition, the state of the market, the seller’s position, your own position and luckily we have the experience and tech tools –  many of which are exclusive to Neilsons’ clients only – to assist to guide you to the right decision given the circumstances. 

In short: we don’t guess – we guide you using market insight, technology and real world experience, so you can Offer with confidence.