subject: Selling a Property in Scotland - A Guide to the Scottish System of Selling Your Home [print this page] Selling a Property in Scotland - A Guide to the Scottish System of Selling Your Home
Should I Buy or Sell First?
If you are selling your home to buy a new one, one of the most pressing questions you will have is whether to buy first or sell first. If the housing market is good and there are lots of buyers, a person will normally buy first and then sell their own property relying on a buoyant market to sell their own house quickly. In a downturn, however, it is usually less riskier to sell your property first and then buy, in the hope that there will be plenty of choice in the market. Coordinating a purchase and sale does require some careful thought to avoid the need for temporary accommodation and bridging finance. Coordinating the dates of entry for the purchase and sale is therefore very important and many people do manage to move out of their old property and into their new one on the very same day.
Marketing Your Property
In these challenging times, more and more people are considering carrying out their own property marketing to avoid estate agency fees, but you have to ask yourself whether you really will have the time, contacts and advertising power to make this a successful strategy. The internet is certainly a great place to advertise privately and many sites, such as Tepilo, allow sellers to advertise their properties for free, but we would recommend caution if you are in any doubt you'll be able to properly commit to the marketing of your property.
Properties in Scotland are mostly marketed and sold by Solicitor estate agents. Although independent estate agencies do exist in Scotland, they are not as popular as down south. Around 90% of properties in Edinburgh are marketed and sold by Solicitor Estate Agents who mostly do a good job for their clients. However, your Solicitor estate agent should be chosen with care, as not all are up to date with good estate agency practice and many have now been found wanting after the burst of the property bubble (when properties virtually flew of the shelves).
Prepare Your Property for Sale
Before you put your property up for sale, you need to have a good, long hard look at it with fresh eyes. It may even be worthwhile having a friend or family member look over your property to give you a frank appraisal of what needs done (but only if you think your relationship will survive this critique intact!). It is astounding just how many people think their property is the bees knees, when in fact there are some serious problems which could potentially put buyers off. Some of the biggest school-boy errors we see include: poor maintenance, unappealing front gardens, clutter, garish decoration and uncleanliness. It is true that most people make up their minds about a house within a few seconds of drawing up outside it, and most of us will, at some time or another, have chosen not to view a property because it looked uncared for from the outside. Therefore, if you're going to sell your house successfully, you've got to roll up your sleeves, do some work and make sure you get the basics right.
Find a Solicitor and/or Estate Agent
Most properties are sold by Solicitor Estate Agents in Scotland, although there are plenty of independent Estate Agencies around too. The advantage of a Solicitor Estate agent, theoretically, is that they can do both the marketing and the conveyancing "in house" and they have access to local Solicitor property centres which have good marketing clout and reach. However, not all Solicitor estate agents are good marketers and there are plenty of good independent estate agents out there that really know how to shift properties. Your choice really depends on your locality and you should ask around to see who's really clinching the sales. Solicitors should be asked for a quotation of their fees and outlays and you should study this carefully and question anything you don't understand. If you are employing an independent estate agent you should be mindful of the wording of the contract they offer. Many will seek sole selling rights within an agreed period, which means that they will be entitled to commission whoever makes the sale - even if it was actually you! They will also often demand a long contract which should be resisted. Six to eight weeks should be sufficient. If the estate agent is instrumental in bringing around a sale, then they are entitled to their standard commission, but if they fail to bring about a sale they are entitled to a reasonable remuneration for the work they have done and any outlays incurred.
We recommend that a pre-sale valuation of your property is made by no less than three solicitors/estate agents. You should use their visits wisely to ask them about the service they offer and how many recent sales they've successfully made in your area and for what price.
When you've chosen a solicitor you must inform them of your mortgage lender so they can obtain the title deeds or land certificate for a pre-sale check. It's also important to let them know of any alterations and extensions you have carried out, so that they can check planning permissions and completion certificates are in order.
Approach Your Mortgage Lender for a Redemption Statement
If you will have a mortgage to be paid off from the proceeds of your sale, then give them a ring to find out how much is required to pay off the loan. Bear in mind that there can sometimes be "early redemption penalties" on some deals which can be very expensive to pay off. You really need to work out what the free proceeds of your sale will be and don't forget to take off the costs of moving, such as stamp duty on any new purchase, the Home Report, advertising, removal costs, survey fees and fees for any new mortgage (which can be very expensive).
The Purchasers Information Pack (PIP)
The Home Report Pack is paid for by you, the seller, and must be completed and made available to prospective purchasers of your house before marketing begins. There are three parts to the pack:
(1) The Single Survey
Since 1st December, 2008, sellers have been required, under the Housing (Scotland) Act 2006, to provide prospective purchasers with a Purchasers Information Pack (PIP) which includes a seller's survey carried out by a RICS qualified surveyor. The Single Survey contains an assessment by a surveyor of the condition of your home, a valuation and an accessibility audit for people with particular needs. Importantly, your buyer will have a statutory right to claim damages if the survey does not meet the necessary legal requirements. (Although we have seen very few surveys that are really worth their salt)
The main idea behind the single survey is that because a "single survey" is provided for potential purchasers by you, the seller, costly multiple surveys paid for by each of the buyers is avoided. However, this scheme, introduced by the Scottish Parliament with very little support from the Scottish public, was really largely unnecessary as the problem of multiple surveys was already solved by the legal profession making most offers simply "subject to survey", with only the successful purchaser having to commission a survey. Many buyers are still sceptical about accepting what is written in a survey report commissioned by the seller and you may find that buyers commission their own surveyor. This may simply be because the single survey does not address all the issues the potential buyer would like to investigate about your property.
(2) The Energy Report
The Energy Report contains an assessment by a surveyor of the energy efficiency of your home and its environmental impact. It also recommends ways to improve its energy efficiency.
(3) The Property Questionnaire
This questionnaire is completed by you, the seller, and generally asks for additional information about your home, such as its Council Tax banding and factoring costs.
If you think you will have trouble paying for a Home Report up front, speak to your solicitor as there is a scheme that allows you to defer payment of the Home Report until your house is sold.
Fixing a price
A property may be offered at a "fixed price", "offers around", or by "offers over" (the "upset system").
In setting a "fixed price", you are effectively saying that you will accept the first offer at that fixed price, although you are not legally obliged to do so. Newly built homes are nearly always sold at a fixed price and older homes are very often sold at a fixed price during poorer market conditions.
In the "offers over" system the property is advertised at "offers over" a stated figure, with the "offers over" price set typically 10% or more less than the actual estimated value. Interested parties are invited to make blind bids at a "closing date" with the seller normally accepting the highest offer.
"Offers around" is a relatively new pricing structure to Scotland which has really come about as a result of the valuation contained in the single survey. The offers around price will be typically very close to the single survey valuation.
Deciding on a sale price and method is really more of an art than a science, but it is certainly the case that very popular and desirable properties should never initially be advertised at a fixed price. This is to avoid the situation that you end up with lots of fixed price offers when you could have invited bids at "offers over" or "offers around", fixed a closing date and achieved a far greater price.
Setting a realistic sale price for your property should not be difficult and is really a matter of common sense. There are lots of internet sites (e.g. Registers of Scotland/ Zoopla) that will allow you to look up recent house sale prices in your area and you should be able to compare your property with those recently sold to come up with a sensible price. It does not pay to be greedy, especially during a buyers market! Your solicitor/estate agent should have a good idea of achievable prices and you will certainly need their expertise if your house is unique or unusual in any way.
Viewings
In Scotland, there are traditional "open viewing" times which vary depending on where you are in the country (although these often aren't as popular in a poor market). Thursday evenings between 7pm and 9pm are very popular, as are Sunday afternoons between 2pm and 4pm. Outwith these times it is normal for viewers to ring you, or your solicitor's property department, for a formal appointment. There are a few accepted wisdoms when it comes to showing your property. Firstly, always start and finish in your best room, secondly, always allow viewers to enter a room first and don't stand either in the doorway or the window blocking the light and thirdly, try not to mention any negatives! You should remain positive and upbeat about your property and explain all the benefits of living there.
Fixing a Closing Date
Once your property has been marketed and there appears to be several interested parties, your solicitors will set a closing date for offers. At the closing date, it is usual to accept the highest offer, but there may be other factors such as the date of entry proposed by the buyer which may mean a slightly lower offer is more acceptable. You should consider each offer carefully and it may help if you know the buyers own position. For instance, is the purchase dependent on them selling their own property and have they got mortgage or other finance in place?
Concluding Missives
As the offer for your property will contain a variety of conditions, it is normal for there to be an exchange of "qualified acceptances" between solicitors until all these conditions have been settled and agreed by both parties. The contract usually takes the form of "missives":- a missive of offer, generally followed by further missives adjusting the terms and finalized by a missive of acceptance which "concludes the bargain" between the parties.
Invariably you will be including in the sale of your property "moveable" items of property such as carpets, curtains, washing machines, cookers and other appliances which should always be clearly specified in the missives. Equally it is good practice to mention anything in particular which isn't included in the sale price. Missives will also deal with assigning warranties over to the new owner for things such as damp, rot or infestation which are normally guaranteed for around 25 years.
On concluding missives, you as the seller will be legally bound to convey your property and the buyer will be legally bound to pay the purchase price. If either party fails to carry out their side of the bargain, without valid legal reason, they will be likely to suffer serious financial penalty. The missives will detail the essential terms of the agreement including the parties, the price and the date of entry, which is the day you actually receive the purchase price and give vacant possession of your property in return.
Concluding missives normally takes around 10-14 days on average, but can sometimes take longer. The period from conclusion of missives to actual settlement takes an average of 6 weeks, but again can sometimes be longer or shorter. In contrast to the English system, in Scotland there is only a brief period in which the missives are actually "open" and parties can walk away. The effect is that sales generally move quicker in Scotland. If, however, your solicitor is not managing to persuade the other side to conclude missives within a reasonable time frame, you must seriously question why they are stalling to conclude the bargain. We have had personal experience of gazundering in Scotland, which is unbecoming of a professional solicitor.
Settlement of the Transaction
On the date the transaction settles, your solicitor will obtain a cheque for the purchase price from the purchaser's solicitor and in exchange your solicitor will hand over the Disposition of your property, any other title documents and of course the keys.
After settlement of the transaction has taken place, the conveyance of your old property, which is normally in the form of a Disposition, is registered by the buyer's solicitor in the Land Register of Scotland at Meadowbank in Edinburgh. It is at the very moment of registration in the Land Register that legal ownership (a real right in the property) passes to your buyer.
If the property you sold was mortgaged then you would have granted your lender what is known as a standard security over the property, which is the legal document which secured the mortgage companies loan to you to purchase the house. The mortgage debt secured by the standard security will be paid off (redeemed) out of the proceeds of your sale by your solicitor, with the lender granting you a discharge of the Standard Security, which is registered in the Land Register of Scotland.
