Many of us will have heard of the term ‘due diligence’ during the course of our work. Referring to undertaking research and taking the best advice to work out any downsides / pitfalls before proceeding with a binding decision, due diligence is an important step in providing protection.
Even in your own day-to-day life, you will likely carry out a form of due diligence – for example, if you were buying a new household appliance, or booking a holiday, you would probably take the time to read online reviews to help ensure you make the right decision.
The idea of due diligence is to ensure that you don’t waste money or pay over the odds, and that you can be confident of what to expect when you complete a transaction. Yet when it comes to buying a property, often one of the biggest purchases you will ever make, it seems we’re not always as keen to carry out the same level of due diligence.
Your mortgage company will do their due diligence – they will insist on a Valuation Report – often undertaken at the purchaser’s cost to provide reassurance the property is worth lending on from a financial viewpoint. However, this will often have no benefit to the buyers themselves.
So how should you – the purchaser – do your own due diligence?
One part of the process is appointing a solicitor – your solicitor or licenced conveyancer will undertake a number of ‘searches’ on your behalf to find out if information about your property and the surrounding areas might affect the property or your use of it in the future. Your solicitor will also be able to advise if there is anything unexpected in the legal documentation relating to the property.
But what about the condition of the property itself? Many buyers will have little building or construction knowledge and will therefore not necessarily know what to look out for in terms of spotting potential defects or issues. Appointing a Chartered Surveyor, who looks at houses day in, day out, and asking them to complete a Homebuyer Survey should form an essential part of your due diligence.
It is not uncommon for buyers to uncover thousands of pounds worth of issues that need addressing once they have moved into a property. Had they fully undertaken due diligence beforehand, and instructed a Homebuyer Survey, such costs could potentially be offset by seeking to renegotiate with the vendor. At the very least, even if a vendor chooses to proceed with the sale at the agreed price, they will be aware of the potential outlay and therefore be able to budget for it.
This is something we have many examples of, but just in the last month, we helped a couple who were buying a house – they instructed us to undertake a Homebuyer Survey at a cost of £400, during which we uncovered defects and disrepair totalling approximately £20,000. They had previously been completely unaware of these potential costs – so instructing us gave them several options. In the end, they were able to achieve a £10,000 reduction in the agreed purchase price.
For more information about the different types of condition survey reports available, or to obtain a quote, please get in touch. Our team of Chartered Surveyors work throughout Lancashire and can assist with both residential and commercial property purchases.