House Buying Problems

[schueymcfee]

Had an offer on a house accepted and was waiting for the survey to come back to enable the bank to go ahead with the mortgage. Survey has come back recommending a full structural survey as they are unable to value the house due to "bulging outer walls", "recent signs of cracking", etc.

They've told me the seller needs to pay for this, approx £450 - now I spoke with the seller face to face when I viewed the house and it seems they're in a right pickle as they already have an offer on another house and are renting at the moment as this house is too small (two families getting together), and are stretched to the limit.

Just wondering what happens if the survey comes back with big money work that needs doing - I'm thinking subsidence - Does the seller have to get the work done so that my bank will lend me the money, or will the bank lend me the money if a lower offer is put in considering the work that needs doing?

Also, is buying a house with subsidence a no, no?

Thanks

[cymtriks]

If you want the house you could just do the work, and pay for it, yourself. Get a proper inspection done and a quote to fix it.

As for subsidence it depends how much there is, when it occured and how recent it is. Big movements happening quickly and recently are a big no no. On the other hand look at some old timber frame houses and stone cottages; completely wonky but the movement happened centuries ago and it still stays up.

[speedychrissie]

cymtriks said:

If you want the house you could just do the work, and pay for it, yourself. Get a proper inspection done and a quote to fix it.

the problem with this might come from the bank:
if you say you are going to do the work yourself then you will need the money from the bank (probably). so what happens if the house falls down while you are doing hte work?
apart from hte fact that you have nowhere to live, you will also owe hte bank a very large amount of money which you probably wont have any way of paying back!
so you may find htat the bank dont really want to follow this route.

chris

[smirnoff]

If you can get the vendor to pay for the survey then great, it's not usual though. Also I presume your mean a structural engineers report and not a full survey because they are very different.

If there is movement and it needs underpinning you might as well forget it. It should be covered by the vedors building insurance but they may need 12 months monitoring before they do any work.

A mortgage company will not lend on a property with a pending claim in most circumstances, and some insurers will not transfer a policy whilst a claim is going through.

I hope it is historic and then it should be fine.

Adrian

[pdV6]

What will probably happen is either:

(a) You walk away
(b) They get the work done to prevent (a)
(c) They drop the price to prevent (a)

If (c), then either:

(d) You still walk away
(e) Your mortgage lender refuses to lend
(f) Your mortgage lender places a hefty retention on the loan

If (f) then:

(g) You need to find other funds to pay for the work
and
(h) Your insurers may still refuse to cover the building, in whch case the lender won't give you a loan anyway!

Best result, therefore, is the vendor takes the property off the market, gets the work done and then puts it back on.

[schueymcfee]

smirnoff said:

If you can get the vendor to pay for the survey then great, it's not usual though. Also I presume your mean a structural engineers report and not a full survey because they are very different.

My mortgage advisor is saying that structural surveys are the vendor's responsibility and I shouldn't pay for it.

smirnoff said:

I hope it is historic and then it should be fine.

Cheers

[Rude-boy]

How much do you want THIS house?

I, personally would walk away. Regardless of whether or not you are happy to buy a house that has had to have remedial structural work fast forward 5 -10 years, would your then buyer be happy to accept the situation.

The most likely thing is that you will have the survey done, yes this is 100% needed, and it will suggest various works. The Sellers will have to notify their insurance co. and then they will process the claim and if accepted the work will be done through them.

Often you can have the benefit of the claim assigned to you and the work can be done then. But do you want the hassle of living in a semi-building site for 6 mths or however long it takes for the works to be done? Can you also afford the retention the lender will make, £15k was the most recent one i have seen for underpinning.

There is a lot more to it than I have time to post but you need to think VERY seriously about it, talk to your surveyor, to your solicitor (assuming you didn't go with a 'factory' in which case the words chocolate, teapot use as a spring to mind) and to your lender.

Bottom line, you have to consider if this is the house of your dreams and you are planning to live there for 10 years + or if it is a step on the way.

If it were me I'd walk, but then I work with property every day and have a very vivid imagination.




Edit to add this is not to be taken as legal advice, all usual disclaimers apply, always act on the advice of the professionals you have instructed to act on your behalf not internet ramblers, even if they do know of what they speak…

>> Edited by Rude-boy on Friday 26th August 10:28

[smirnoff]

schueymcfee said:

My mortgage advisor is saying that structural surveys are the vendor's responsibility and I shouldn't pay for it.

The trouble with the vendor paying for it is it isn't your report it is theirs. The engineer will only really talk to the person who paid for it not you. They usually cost between £250 and £350.

And the mortgage company will need their surveyor to see it as well, the worst retention I have seen for movement was a full one until the work is signed off.

If it needs work walk away!!

[schueymcfee]

Rude-boy said:

How much do you want THIS house?

Quite a bit as its the only detatched property in the town that isn't fetching massive money. (No, not because it's falling down, but because it's small )

Rude-boy said:

I, personally would walk away. Regardless of whether or not you are happy to buy a house that has had to have remedial structural work fast forward 5 -10 years, would your then buyer be happy to accept the situation.

The plan was to keep it and then BTL it when I eventually bought a place with my girlfriend

Rude-boy said:

Often you can have the benefit of the claim assigned to you and the work can be done then. But do you want the hassle of living in a semi-building site for 6 mths or however long it takes for the works to be done? Can you also afford the retention the lender will make, £15k was the most recent one i have seen for underpinning.

Well, I'm living with the girlfriend now, so building work wouldn't be a huge problem.

I'm sorry, I don't fully understand what you mean by "retention"

Rude-boy said:

Bottom line, you have to consider if this is the house of your dreams and you are planning to live there for 10 years + or if it is a step on the way. If it were me I'd walk, but then I work with property every day and have a very vivid imagination.

The plan was long term, to add to a portfolio eventually.

Thanks for the honest opinion though, much appreciated

Rude-boy said:

Edit to add this is not to be taken as legal advice, all usual disclaimers apply, always act on the advice of the professionals you have instructed to act on your behalf not internet ramblers, even if they do know of what they speak…

>> Edited by schueymcfee on Friday 26th August 11:02

[Rude-boy]

schueymcfee said:

I'm sorry, I don't fully understand what you mean by "retention"

A retention is something made by your lender.

For example you might be borrowing £100k but the lender could say that they will only release £85k on completion, holding a retention of £15k, until the works specified by the surveyor have been completed satisfactorily and their surveyor has re-inspected the property and authorised the release of the retention.

In other words you could be waiting a while for the balance of the mortgage advance to come to you and also would need to make up the shortfall in the meantime.

One other point I would mention is that once a claim on the buildings insurance policy has been made for something like this it is usually the case that the only people who will cover the property is the insurance co. at the time of the claim

[JonRB]

Looks like everyone has already covered the points I was just about to make - good job I read the whole thread first.

Yep, retention is the bugger. We were looking to buy a property that needed renovating before it could be let / lived in.

The lender wouldn't lend on a BTL basis on a property that wasn't lettable and if we went for a traditional mortgage then the retention was so high we couldn't afford to buy it.

We had to walk away in the end.

[schueymcfee]

Edited to say thanks Rude-Boy

>> Edited by schueymcfee on Friday 26th August 12:41