Surveys are more than just a one-trick pony. While most people understand that a survey will find defects in a property before you buy it, many people don’t realise the second big benefit of having a professional survey done: Renegotiating Asking Prices After A Survey! Because on top of knowing what you’re buying, you can also save yourself a significant chunk of money on your house purchase if repairs are needed.
A lot of home buyers wonder why they should bother having a survey done at all. But there is a lot of value in knowing what you’re buying ahead of time.
When we prepare a survey for a residential property, our highly experienced, RICS qualified surveyors will scrutinise every accessible inch of the property. We will see much more than the buyer will be able to see during a short viewing while they’re being rushed around by an estate agent. This allows us to give our clients a true appraisal of the condition of the property, warts and all.
Not only does this mean we can tell our clients exactly what they’re buying and what’s wrong with it, but how much any necessary repairs will cost too. In a level 2 report, if we find repairs that are necessary, we will refer our clients to contact competent tradespeople who can provide cost estimates for the repair work. In a level 3 survey however, we will provide surveyor’s cost estimates for repairs as standard.
So when you’re commissioning a survey, you should check with the surveyor whether you will receive cost estimates, because not everyone offers this!
So the real question is, how does a survey help with a house purchase? Simple. Once the costs are known, either through contractor quotes or the surveyor’s estimates, buyers can build up a picture of the real purchase cost of the property. Time and time again we find properties with significant hidden defects that require immediate attention – and it isn’t unusual for the repair costs to be in the thousands of pounds – sometimes in the tens of thousands. We’ve never known repair costs to be lower than the cost of the survey, and they are usually much, much more!
This information means that buyers can go into a purchase with their eyes open, and make informed decisions. If you’re already stretching your budget, you might decide to buy something else altogether. But more often than not buyers will use the information to renegotiate the purchase price.
The first step in the renegotiation process is contacting the estate agent, explaining the surveyor’s findings and cost estimates, and telling them that you will need to reduce the agreed price accordingly to cover your unexpected repair costs. The agent will then pass this on to the seller, who may or may not be willing to reduce the agreed price.
There isn’t really a ‘normal’ response to expect here. Everyone, whether buyer or seller, is different and driven by different factors, so there really is no normal! For example, a seller who’s been struggling to sell their property for months and is desperate to move might be more willing to reduce the agreed price, while a seller of a super-desirable property who is fielding multiple offers might decide they’re not budging an inch.
Remember that the vendor is not under any obligation to accept a reduced price, but it’s common that they will. You might find that they counter with a reduction in price, but one that doesn’t quite meet your initial request. It will then be down to you to decide whether or not to accept the counteroffer.
There is one thing you need to be aware of if you’re going to ask for a reduction. If you’re buying using a mortgage, a reduction in price of, for example, £10,000 won’t give the buyer an extra £10,000 in liquidity. This is because the mortgage company will likely reduce the amount of money lent accordingly. It goes something like this:
If you’re buying with a 25% deposit, a reduction in the asking price of £10,000 will leave only £2,500 extra cash in the buyer’s pocket due to the effects of leveraging. But over the course of the mortgage this £10,000 saving will be considerably more, as interest won’t be paid on money not lent. The leveraging effect means that even where repairs are found to be needed, buyers will need to carefully consider how they will afford the repairs.
If you’re buying without a mortgage, then you’ll see the full benefit of the reduction pretty much immediately. In fact, we recently completed a survey for a cash purchaser who negotiated a further £10,000 off the asking price as a result of our survey findings, which meant they saved eight times as much as they paid for their level 3 survey straight away, as a direct result of having the survey done. This is a very normal result.
With this in mind, we’re baffled that many people buy a property (often the most expensive purchase of a lifetime) without having a professional checking over the property to help them save money. Our clients see surveys not as a necessity, but an investment, giving them peace of mind and often leading to a reduction in purchase price too.
If you’re looking to invest in a high-quality survey on your new home, then you can call our expert team on 023 8155 0051, and we will be happy to help. We can give you clear advice on the condition of the home you’re looking to buy, and highlight any hidden costs so that you go into it with your eyes open.
For more expert advice on surveying and property matters, check out our range of informative videos on our website or YouTube channel. Harrison Clark Chartered Surveyors is here to guide you every step of the way!
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Tim set up Harrison Clarke Chartered Surveyors in July 2017 following a series of public and private sector surveying roles, having previously worked for the University of Cambridge, Rund Partnership, Goadsby, and CBRE.
Tim has degrees in building surveying, construction project management, and business administration.
