Preparing yourself and your property for the market
When you call your estate agent around, how much information do you have to hand about your property?
From the many conversations I have with prospective sellers, I have come to realise that few are really aware of all the substantive issues or are properly prepared to market their property after we have called by.
With that in mind, I thought it would be useful to provide some pre-valuation appointment tips so the agent and owners can be relatively sure of what is on the table.
Who and what is the valuation for? Sale, Probate valuation, tax purposes, thinking of a re-mortgage ? Are you even the owner? Now and then, I turn up to carry out a valuation to discover that the person I meet is a tenant who is therefore not strictly able to request a valuation on the property as it is not theirs. They may be thinking of buying it and want to negotiate from a position of strength with the owner. But, who is going to pay our fee when it is sold? Probably not the seller and the tenant will most likely want to do a private deal, so, should we give our expertise for free? Are you sole or joint owner; should the valuation report go to all parties? Be upfront with the agent so they can advise properly.
Make sure you have to hand all relevant information regarding issues such as:
Any unusual restrictive covenants?
is it listed?
what grade listing?
is there a flying freehold?
any garage or parking?
Is that garden or patio yours or do you only have sole use or not?
Agents may assume you own all they are looking at, when in fact you don't, so let them know what is yours and what is not.
We have so many leasehold properties in Brighton and Hove, where there are shared pathways to front doors, especially front patio areas at basement level. Often, the owner of the front flat will claim ownership of the front patio only for the buyer to discover when they see the lease plan, that its a shared area...oops!
What fixtures and fittings are you leaving? Be accurate. wood-burners, fitted mirrors and shelves, blinds, floor coverings, plants; the list goes on.
Critical is the leasehold freehold situation with flats and maisonettes, and some houses, particularly mews houses.
Many sellers of flats say they have the freehold, so they do not have a lease. They almost always do and if they don't, it's quite likely they will not be able to sell, except to a cash buyer. Lenders want a lease as that is the binding agreement looking after the whole building, not just your bit.
The freehold is effectively the land that the building is on. If you own a share, that is not your flat, it's the freehold share. You still have a lease. The lease binds the owners in a shared building, whether shared freehold or just leasehold, to manage their relationship over the flats, the common parts, inside and out, and to basically play ball over living in a shared building, paying their share of all bills, insurance and any other outgoings.
So, when we come along, we need to know:
the length of lease,
whether or not you have a shared freehold of the building or mews land.
Do you pay ground rent and how much?
We need to know how much you pay in service charge every year and does it include buildings insurance.
Sometimes the maintenance/service charge includes for instance, redecorating of external walls but not window frames, or it may include a monthly clean.
These are all critical factors in giving a seller a realistic valuation as all these factors affect the value and saleability of the property.
Currently, we are in a period where many flats, converted in the 1970s to 1990s, have leases now considered too short for lending by financial institutions. With the tightening up of lending criteria, if a property goes to the market with an eighty-five year or less lease, the buyer is likely to ask for a lease extension to 125 or even 999 years to be included in the sale price. This requires the seller to negotiate with the freeholder, usually via a managing agent, to pay to extend the lease. This can lead to protracted negotiations as the freeholder can see the seller is in a cleft stick and then bumps up the price to maximise their profit on the deal.
There are several local professional values, members of RICS or SAVA, who can act for the seller and negotiate to settle a realistic price. BUT, you don't really want to be starting this process when you are in the middle of a sale process with a buyer. So, check your lease and discuss it with the estate agent you invite in, to ensure you are clear on your rights and your responsibilities.
Of course, if you are a shared freeholder, you need to negotiate with the other freeholders and you may agree to have all your leases extended together. This is certainly the best option as you just have to engage a solicitor to extend the lease or create a new one. This is the time to look carefully at the lease and ensure it is 'fit for purpose'. Some leases from 20-50 years ago have completely irrelevant and unnecessarily restrictive clauses whilst missing some which modern living in the 21st century require!
Even if you are a leaseholder with no share of freehold, it may be better for you and the other leaseholders to approach your freeholder as one, as you may get a better deal working together on the lease extension or even negotiating to buy a share of freehold.
We all hope if we stick our heads in the sand, some of these problems will go away. Unfortunately, they do not; they get worse! So, before you get your agent around, do some preparatory digging through your paperwork, perhaps get in touch with the solicitor you used when you bought the place you are going to sell, and get as many facts as you can.
Then, when we turn up to discuss your plans, we are able to give you good, clear, unambiguous advice so you can make good decisions. You know it makes sense!
Paul Bonett F.N.A.E.A. M.A.R.L.A.
Follow me @bonettpa and @bonetts