6 things to check before you exchange contracts on a property
Whatever type of property you’re investing in, there are certain things that need to be in place before you exchange contracts. It helps to have a checklist that you can use as a reminder because it’s easy to overlook something when you’re trying to do too many things at once.
These six tasks may sound obvious, but it’s essential you tick each one off before you exchange contracts on a property.
1. Ensure your finances are in place
You should be sure your finances are in order to avoid any expensive delays. Funds should be available for the deposit or full amount. If you’re taking out a mortgage, make sure you have the offer in writing.
2. Calculate your monthly outgoings
Have you researched all the monthly outgoings that you will incur when you take on the property? For example, any service charges related to the building, plus its council tax band. You should also check out the Energy Performance Certificate (EPC), which rates the energy efficiency of the property. Poor energy performance will have an impact on the cost of utility bills.
3. Check all searches have been made
Talk to your solicitor to ensure all the relevant searches have been made. And, if a search throws up a query, make sure it’s resolved before you exchange. Don’t be afraid to ask your solicitor to explain any terms or clauses that you don’t understand.
4. Obtain the cost of any work that needs doing
A survey of the property might highlight work that needs doing. Look into the cost of any repairs, especially if they’re going to be major ones. If they turn out to be more expensive than you anticipated, you may be able to re-negotiate on the price.
5. Ascertain what will be included
Ask the seller to be clear about what’s included in the sale, e.g. fixtures and fittings.
Ascertain what they’re planning to take and what are they’re going to leave – and have it put in writing. This will avoid any arguments after the sale has completed.
6. Sort out your buildings insurance
Adequate buildings insurance is usually a condition of your mortgage. Therefore, you need to make sure it’s in place for when you complete on the sale of the property.
Once all of these aspects have been covered to your satisfaction, you can move forward to exchange contracts.
However, if you’re not happy with any of the information you’ve received, you have every right to delay until you’ve obtained the facts you need. Or, if it comes to it, pull out of the deal altogether.
Once contracts have been exchanged, you’re legally bound to buy the property. Therefore, be completely certain you want to go ahead before signing anything.