Conveyancing on the cheap – or, you get what you pay for.
Buying a property can be one of the single most expensive (and often stressful) purchases many people will make.
Everyone wants their transaction to go as quickly and smoothly as possible, but at the same time, no one wants to spend money if they don’t have to.
For this reason, we are often asked how to cut corners, or what parts of the transaction we can do without, in order to keep the costs down.
Whilst we would never encourage you to scrimp on the legal side of things, as that can end up costing you more money in the end than you were trying to save in the beginning, we can make a few suggestions of steps you can take that might help you save a few pounds.
Try to sell your property yourself
Firstly, you could try to sell your property yourself rather than selling through estate agents. Most estate agents charge a percentage of the sale price, and average estate agents’ prices are between 1% and 2% plus VAT.
Whilst that may not sound like much, if you sell your property for £500,000, 1.5% commission plus VAT is still going to cost you £9,000 gross!
That is obviously a large amount of money and probably makes the legal fees pale into insignificance by comparison!
So, you can put your own listing on websites such as RightMove and Zoopla.
However, the downside to some of these methods is that you will have to do much of the work, such as setting up appointments, showing people around, negotiating the price and all the follow up that is necessary. Estate agents often do a great deal of work after the sale has been agreed, to make sure the transaction stays on track.
There are also companies like Purple Bricks and that work on a low level fixed fee commission, which you pay up front. So, whilst the cost is very low compared to what an estate agent would charge you, an estate agent will only charge you if they make the sale, whereas the fixed fee companies will charge you whether or not the property sells. So, there is obviously a risk.
What’s more, some fixed fee companies will expect you to do some or all of the work yourself. If you have a full time job or don’t like the idea of having to show strangers around your home, you may decide that an estate agent, no matter how expensive, is good value for money but don’t be afraid to negotiate prices with them. There are always deals to be done.
Mortgage valuation and arrangement costs
If you are borrowing money to make the purchase, there will be mortgage arrangement fees to pay, which can be quite significant.
However, you can ask your mortgage broker to have this added to the mortgage so that you don’t have to pay it up front, at a time when you’ve obviously got a lot of expenses.
Another place where you can cut corners is with the surveyor. If you are buying with a mortgage, your mortgage company will want a survey done, but this will be a fairly basic report, mostly focusing on the value of the property rather than the condition or any faults or problems.
You can choose to have a more expensive survey, but you will have to pay the extra for this. You may decide that having looked around the property yourself, you have a good idea of what the condition is, and whether there are any signs of problems before you decide if a more detailed survey is necessary.
If it is, don’t be afraid to shop around amongst local surveyors to see who can offer you the best deal.
What about the physical cost of moving? When coming up with their budget, people often forget that they may need a removal company. Friday is the most popular day of the week to move, because everyone wants the weekend to unpack and get straight.
So, if you are willing to move on a Monday or Tuesday, a removal company might be willing to offer you a better deal. If you don’t have that much to move, and/or you’re fairly fit and healthy, you may decide to do the moving yourself, but at the very least you may need to hire a van and rope in a few mates which might still cost you a round of drinks or two.
Don’t forget to read the meters when you move out of your old place and move in to your new place. As soon as you’ve taken the readings, ring them through to the service provider promptly. If this isn’t done, there is a risk that money could be wasted in you being charged for utilities used by others. The moving date might also be a time to shop around and see if you can get a cheaper deal from your service provider.
Finally, the legal fees are obviously a large part of the cost of any move, and this is somewhere where clients will often ask us what they can do to reduce the fees.
Ultimately, however, you cannot avoid legal fees altogether. There are some parts of the transaction, such as the dealing with the Land Registry and your mortgage company that only a firm regulated by the Law Society can undertake.
However, there are still parts of the legal process that you can try to do more cheaply.
For example, there are parts of the transaction you can go without, but that always comes with a risk.
For example, we may recommend that you take out insurance against certain risks, such as a Chancel Insurance or an indemnity insurance if, perhaps, there is some paperwork missing. You don’t have to take our advance, and unless your lender insists, you can decide not to take out the insurance we recommend.
Some firms will charge you legal fees whether or not the transaction completes, although they are likely to only charge you for the work they have done. So, if for example, the sale falls through halfway through the transaction, you should only have to pay half the fees. However, if you are cost conscious, there are firms who will only charge you if the sale goes through.
It’s also good to know that you probably won’t have to pay your solicitors until completion takes place although there may be some expenses you will have to pay up front.
By delaying the payment until completion, the legal fees can be met from perhaps the mortgage funds or proceeds of sale of any property you are trading in, which will aid with cash flow.
Some conveyancing firms keep their fees down by employing licensed conveyancers and paralegals, who are supervised by a solicitor, rather than having a whole team of solicitors. Unqualified staff is more cost-effective, and so long as they are properly supervised by a solicitor, they should provide you with a good quality service.
At the end of the day, it is entirely up to you how careful you want to be with your money and we will do everything we can to make the process as cost-effective for you as possible. However, do remember that sometimes the lower cost can mean higher risk, and can end up costing you more in the long run.
Disclaimer – our articles are designed to give you guidance and information. There is no substitute for proper direct advice, particularly as everyone’s circumstances are different. If anything in this article may affect you, please contact us for advice that is specific to your circumstances.