This may be one of the biggest transactions of your life. In the current market, there is a shortage of supply of second-hand properties. This, in turn, is pushing up the price. Another factor pushing up prices is the increased cost of building and the cost of funds to builders.
The key thing to be aware of is that your purchase will depend on at least a minimum of one other and maybe several other parties all moving house simultaneously with each transaction dependent on the other- this is known as a chain. So it is in our interest to be well organised and ready to close as soon as an opportunity arises.
Now, where to start? The first steps are to budget and plan.
The main difference between these is the house is stand-alone ownership. You own your house and do not have to answer to anyone. With a townhouse or apartment, it’s different;
When you agree to buy a house or apartment, the selling agent will require you to pay a booking deposit. This is usually €5,000.00 – €10,000.00, depending on the price. This booking deposit is fully refundable if the transaction does not proceed for any reason whatsoever. The agent will send you a sales advice sheet within days of you paying the booking deposit. This is the first step in the whole purchase transaction. The Agent will only take your booking deposit when the seller accepts your bid. The sales advice sheet will list the main terms of the sale with details of the price, estimated closing date, name of all parties and their Solicitors details. However, the house is not definitely yours at this stage (see the section on the exchange of contracts below).
You will be asked to pay a further sum on signing the contract. Usually, the amount will be 10% of the purchase price, less the booking deposit already paid by you. You should have selected your Solicitor early in the process. When engaging your Solicitor, you should get a full quote which should include Stamp Duty, PRA registration fees, law searchers and miscellaneous outlay.
The buyer pays the stamp duty. Residential property is subject to Stamp Duty of 1% of the purchase price ( up to €1 million and 2% above). In addition, you must register your purchase deed and the mortgage with the Property Registration Authority (PRA). Fees vary depending on the price of the house, starting at €600.00 for the purchase deed and a fixed fee of €175.00 for the mortgage. If the house you are buying has never been registered in the Property Registration Authority, your application will be a “first application”, which will take much longer and sometimes well over a year if the title is complex.
Your Solicitor will order title searches on the closing date. These searches are against the title and all the parties to the transaction- including you. This is a requirement of your loan approval. Planning searches may also be required. The search costs will vary depending on the title but allow up to €150.00, but on rare occasions may run higher, especially if there are planning searches.
A property survey is not necessary for every purchase but is very important for an old house or a house in a rural area. There may be issues with boundaries or road widening, septic tank, water supply etc. It is also essential if you do not have any experience in building or construction. A survey may save you from buying a property with hidden defects. A survey can cost in the region of €450.00 but maybe money very well spent.
The bank requires this valuation report to ensure that they are not lending to fund a purchase at an inflated price. The bank has a maximum loan to value levels. The valuation is to ensure they do not exceed those levels. These valuations will cost up to €200.00.
This is not essential but will depend on the number of belongings you intend to move. The cost will depend on the volume, the distance of the move and flexibility of the move. There is no set fee, so shop around.
Assuming you have paid a total of 10% of the purchase price between the Booking and Contract deposit, you will still have to pay the difference between the loan cheque and the purchase price. This amount will be paid by you to your solicitor ahead of the closing date.
Your budget determines what and where you may buy. This sets the limits on your options. Sometimes when prices are going up, it is important to move as soon as everything is set. Sometimes the property market prices run up very quick and overshoot. It would be best if you watched out for this. If this happens, the prices may come back down to realistic figures. With a short supply of houses in an area, many buyers chasing the houses available may push everything out of sync. It would help if you only trusted agents who are experienced and trustworthy.
This guides you through all the legal stages. This can be a stressful but exciting process for you. We are there to help you.
This is vital to the whole process going smoothly and as per your expectations. Planning means looking at everyone who will be impacted – your family, extended family, work, schools, shops, sporting commitments, commute times, leisure pursuits, health issues, holidays booked. The list is endless, but you should consider all the big headings.
This sets the parameters of what sort of home and where you can afford to buy. Working out the cost of the purchase is relatively straightforward. It’s the extras, and the amount of loan you will qualify for that are unknowns. If you already own, this will come into the budget as the equity from it will be a part of the budget for the purchase. We have been in an era of historic record low-interest rates- this will not last forever, and when the uptick comes, this will have a big impact on mortgage repayments.
This requires you to apply to your bank for approval. This process may take weeks. The bank will expect you to have worked out your budget and researched the market. The bank has maximum sums it may lend depending on your salary/savings/job prospects/ type of home.
It’s a good idea to instruct your solicitors at the outset of the purchase. Your solicitor is there to guide you and advise if any issues arise. You may not need any legal advice until you have secured your new house. However, if you do, it’s best to have them available and aware of your circumstances.
The best way to learn about the market is to view lots of properties in your price range and the area you wish to buy. You will quickly become aware of where the market is going. Of course, you will see some houses that will not appeal to you, but every time you view them, you will learn. Estate agents are very experienced and will share their knowledge willingly if asked.
Property is always a hot news story. Any significant shift in the property market will be widely reported. Sometimes the news will be stale, but you should know from first-hand experience what is happening. The importance of media reports is that it’s out there and influences what everyone else is thinking.
As soon as you get up to speed and know what you are looking for, start to be very focused. Do not waste your time on properties that do not meet your requirements. Instead, double up the effort on the area and property type that suits your needs and budget. This may mean you wait till the right one comes along, but this is a big purchase, and you want to do the very best you can.
In the end, you could spend the rest of your life looking at homes. That is not the object of the exercise. You are there to buy the best and most suited one for your needs. Having spent many hours researching and viewing, you have to make your mind up. You should have a number in mind. Narrow the list to a small number. Don’t make this decision on the spur of the moment. Sleep on it. Give yourself every chance to make the right decision, don’t decide late at night or if there are other issues on your mind. Once you have decided, go for it.
Contact the agent and tell them you are putting in a bid. The agent will indicate the asking price. They will also inform you of existing bids. You should note carefully what you are told. You can then make your bid. The agent will inform the seller of the bid.
If there are several others interested, they will then bid too. You are now in a bidding circle, and this may take days or weeks to shake out the weaker bidders till there are only one or two left. At this stage, the agent makes a call on the process. Either each party is asked to make their top offer in a sealed envelope, and the top bid wins, or it’s a private auction between the top bidders. The highest bid is not automatically accepted. When the seller decides to accept a particular bid, everyone is informed.
As soon as the seller accepts a particular bid, the agent then seeks the successful bidder to pay a booking deposit of between €5,000.00 – €10,000.00, depending on the price of the house. You should not delay making this payment. You should have this money ready to pay within a day or so of your bid being accepted.
Tell your bank your bid is accepted immediately. Processing the formal loan approval requires some time. Do not waste any time at the outset. You will have lots to do. Ensure that you get the exact address of the property at the outset, as the bank will process your loan approval using this information. If it is wrong, it will mean a loan approval will have to be amended, and that could take up to 10 days further down the line.
Your solicitor becomes very central in the purchase process from this point. It is key that they are ready to go with your contracts as soon as they are issued.
As soon as your booking deposit is cleared in the agent’s bank account, they will issues the sales advice sheet to the buyer, seller and solicitors. This sales advice sheet will state the core terms of the deal, price, parties, property, closing date, contents included, special conditions, amount of booking deposits and solicitors details. Be aware the sales advice does not mean you have a binding contract. There are a few more steps till the house is secured for you.
Dermot P Coyne
In contentious business a solicitor may not calculate fees or other charges as a percentage or proportion of any award or settlement. Note that no solicitor/client relationship or liability shall exist or be deemed to exist between you or our firm until a formal letter of engagement has been issued by us to you.
