Why Today's Buyers Can't Afford To Ignore The Power Of A Home Survey
How the power of a home survey can help
As an inflated market and rocketing demand heap pressure on today’s buyers, many remain unaware of the true value a comprehensive survey could bring. A large proportion are instead rushing their purchases through to exchange, thanks in large part to the looming end of the stamp duty holiday. When the heat is on and buyers are eager to streamline the process, surveys are often the first place they look. A survey can seem like an unnecessary expense or a needless delay on top of an already-extensive timeline. But glossing over a survey – or at worst, neglecting to undertake one at all, it could be the biggest mistake a buyer can make
Finding the right survey
Many will believe themselves covered by the survey undertaken by the lender. This is a mistake – a lender’s survey is just that, designed to ensure the lender’s investment is protected by confirming the property’s rough value. It is required in order to complete the transaction, but doesn’t actually inform the buyer on the condition of the house. For that, there are a number of different surveys to choose from, depending on the type of property.
A Home Buyer’s Report is the standard survey that all buyers should look to seek out at a minimum. For a relatively modern dwelling that is of standard construction (brick and tile) the report will tell you about the most important and serious issues that need addressing. For properties that are a little older, have perhaps been altered or where you plan to do your own alterations, a full RICS Building Survey is recommended, as it is just that much more comprehensive.
Ensure that whichever organisation you select to conduct your survey is approved by the Royal Institution of Chartered Surveyors (RICS). It is the only way to guarantee a detailed report from a qualified surveyor. While it can be tempting to just go with the surveyor recommended by the estate agent, there will often be a better option out there. It is well worth the time and effort to find the best deal for you. The RICS website has a helpful tool, and Trustpilot provides reviews for you to research any companies you find.
What to do with the survey
Survey reports can be over-detailed and technical documents, but it is essential for the buyer to understand how to use them. If anything is unclear, go back to your surveyor and ask them what a certain section means – and more importantly, what your actions should be from it. The report should work for you. Beyond making a detailed assessment of the state of the house, a survey provides a long term plan of what the property will require in the future and offers an indication of whether you will likely run into a variety of issues in the coming years.
If the survey uncovers issues and you do decide to proceed the purchase anyway – a path many will choose thanks to market pressure – the report will still help you you budget for any immediate maintenance or renovation following exchange.
Aside from substantially de-risking the purchasing process, surveys also transfer some rare power back into the hands of the buyer. An agreed price is never the end of the story and negotiations can and should be reopened if the survey uncovers issues that effect the value of the property. While it is common for sellers to threaten to pull out of the deal, it is worth noting that issues found by one surveyor will likely be found by another in future, and it is best for the seller to acknowledge this and return to the negotiation table.
With this in mind, it’s also highly advisable for sellers to hire surveyors before listing their property. This will provide an accurate sales value but will also uncover any issues which could later be used to delay or disrupt the sale.
According to the Royal Institution of Chartered Surveyors, homebuyers spend an average of £5,750 on property repairs, due to the property purchaser not initially identifying property defects or understanding the true market value. Most buyers, especially first timers, don’t have this extra money lying around. Getting an appropriate and comprehensive survey is the best way to provide security and peace of mind in any property purchase.
This article first appeared in The Real Estate Textbook in January 2021
Why the pandemic has impacted surveyors the most
The continued question mark over the Stamp Duty holiday has led to a huge rise in buyers all desperate to complete quickly and this pressure is resonating throughout the professional market, from estate agents to surveyors and conveyancers. The home buying process is slow at the best of times but this huge spike in demand is making an archaic system creak even more slowly as various companies work through their client lists at different speeds and with different priorities.
For all those professionals working in the property industry, the pandemic has arguably challenged and impacted surveyors the most. PPE must be worn while conducting house visits and properties must be empty of residents before surveys can take place. While these measures are not too drastic, they do mean that even the smallest delay can have serious knock on effects, as it can be extremely difficult to rearrange after last minute cancelations.
On top of this, there are more factors out of everyone’s control. For example if a vendor catches COVID and needs to isolate at home, or if an elderly vendor doesn’t have the ability to vacate for long periods of time, purchases cannot progress until an appropriate time becomes available to conduct the survey. While these delays can incentivise buyers to cut corners when it comes to surveys, this can delay proceedings even further if issues are raised too late or, in a worst case scenario, will cost them far more getting fixed than they saved from the Stamp Duty holiday.
While the effects of the pandemic have not directly affected conveyancers too heavily, the archaic and inefficient system is incapable of handling the stamp duty driven rush. As information needs to be obtained from already overworked councils, there can be long and unexpected waits. These delays mean that rather than a steady flow of completions, the demand gets pent up and further stress and strain gets placed on the cracking system.
The silver lining to the pandemic is that mortgage providers have reacted to the demand, improving the necessary infrastructure. Mortgage approval rates have reached their highest level since 2007, and many providers are offering 90% LTV products. While this is great news for buyers, the bottlenecks of conveyancing and surveying mean that transactions aren’t completing any faster. The good news also doesn’t spread to everyone, as some banks are refusing to provide mortgages to self-employed workers if they took Covid loans or income grants.
If anything, these delays show that the government needs to do a lot more than providing savings opportunities to improve the housing market. The Stamp Duty Holiday, while it has boosted demand in the market, is now driving the property sector towards a crash, as a potential 100,000 buyers caught up in Covid-related delays could end up pulling out of deals. The government must support councils, conveyancers and surveyors to improve the very infrastructure of the UK’s system. Doing so will reduce completion times while not sacrificing the integrity of the system.
Rio Ferdinand Plays the Startup Game but Still Knocks Man City
(Bloomberg) — When Rio Ferdinand was in his 20s he had it all –- he was winning championships with Manchester United and acclaim as one of the finest defenders in European soccer. But he knew his career could end suddenly. So at the ripe old age of 27 he started planning for his retirement by opening his own restaurant in Manchester.
He can still remember the blowback from the brass at Manchester United who worried that tending an Italian eatery might be a distraction for their star center back.
“I was thinking about my afterlife,” said Ferdinand, now 41. So he told his bosses, “If you can give me a job for life, I’ll stop this now.”
Ferdinand’s retirement plan has since expanded far beyond dining. He loves digital innovation and technology plays and is constantly on the lookout for promising investments. He befriended Saul Klein, a founding partner at Localglobe, a London-based angel investor that provides seed funding to startups.
Virtually every Monday, Ferdinand likes to join Klein, a former venture capitalist at Index Ventures, and hear pitches Dragons’ Den style from entrepreneurs. One memorable proposal came from a firm that designed an artificial intelligence system to perform brain surgery. “There’s no need for a doctor to be there,” Ferdinand said. “There is some crazy stuff that comes through.”
Earlier this year, he agreed to serve as a “brand ambassador” for a London startup called Reliable Surveyors. The “prop-tech” company, run by Ray Harriot, offers prospective home-buyers an easy way to survey and inspect residences entirely through its app.
Using an alias to avoid attention, Ferdinand himself tapped the firm to size up a recent home purchase and was impressed by the way it translated jargon into plain English and educated customers on the ins and outs of a home purchase. Harriot said the two-year-old company is aimed at first-time home buyers.
“Reliable’s angle is very simple, make the consumer at ease, and help through what can be a stressful process” Harriot said.
Big Number
Five Ferdinand also has a taste for digital media. Years ago, he started an online sport-lifestyle publication called #5 Magazine – a nod to his jersey number – and now it’s morphed into a YouTube channel that streams five-minute segments on everything from interviews with Premier League players and coaches to freestyle tricks by his old teammate Cristiano Ronaldo.
The clips usually draw more than 300,000 views and at one time Ferdinand was hoping #5 could produce custom content for Premier League clubs. “I’m still waiting for them to call,” he said, holding up his mobile with a smile.
In his prime, Ferdinand was a no-nonsense center back — standing 6 feet 2 inches tall and in fighting shape, he looks like he could still do some damage on the field. He began his career in 1995 at West Ham United in London’s East End after being scouted by the team’s youth academy, and was transferred to Leeds United, then club, in 2000 for a British record fee of 18 million pounds ($23 million). Two years later, he was sent to Manchester United in a 30 million-pound deal, also a record.
During his 12-year career at Old Trafford, he played a key role in the run that netted six Premier League titles and the Champions League, Europe’s top tournament. He co-anchored the England international squad in 81 appearances and played in two World Cups. And with 10.6 million followers on Twitter, he’s still an influential voice in pro soccer as a match-day analyst for telecasts on BT Group Plc’s sports channels.
United vs City
He remains as immersed in the Premier League’s goings-on as ever. Turning to the news this week that a Silicon Valley private equity firm acquired a 10% stake in Manchester City, Ferdinand guffaws. He can’t believe his old arch-rival could now be worth $4.8 billion. “I don’t think that investment is a true reflection of Man City’s price, if I’m honest,” he said. “If they are worth that much, what is Man United worth?” Manchester United’s shares jumped 11% on Wednesday, giving it a market value of $3.1 billion.
Yet he said he’s wary of taking the next step and following peers such as Frank Lampard, the Chelsea player-turned-manager, and Ole Gunnar Solskjaer, Manchester United’s manager, to the touchline. “When I see pictures of Frank and Ole four months ago to where they are now, gray hair and losing hair, yeah, I think management is not something I am interested in at this moment in time,” he said with a laugh.
For Ferdinand, the broadcast booth and his business pursuits will do, at least for now.
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