In UK, Due to its outstanding universities, vibrant culture, and many employment possibilities, London is home to many Americans who strongly bond with the United Kingdom. Due to the falling prices of homes and the strength of the dollar against the pound, now is a great time for Americans to buy in the capital. So, here’s what I think are some of the biggest differences between buying a house in the US and the UK.
Financial Support
In the United States, the first step in buying a home is talking to a bank or mortgage broker to find out how much you can afford. Serious buyers will get pre-qualified, which means the lender has checked their credit and verified their documents to approve a certain loan amount and interest rates (usually for a specific period). In the UK, lenders will provide a “mortgage in principle,” which gives an idea of the mortgage amount and interest rate. But this won’t have been done through a formal application so they won’t know as much about your situation.
Recruiting A Agent
In the US, the next step is to hire a real estate agent to get you into every house that might interest you. They will talk to the selling agent on your behalf and help you write the contract that will be presented to and negotiated with the seller’s agent. The seller normally pays a sales commission shared between the selling agency and the purchasing agent (about 6%) and will only list with one agent at a time.
Estate agents, who work for the seller, make up most of the market in the UK (vendor). For a single agent, the seller usually pays a 2% commission. However, if the seller decides to hire more than one agent, the fee will be around 3%. In the UK, people who want to see a certain property must sign up with the agent listed on it, and that agent can only show the properties they have.
This can be inefficient because busy professionals and foreign buyers have to deal with several agents and set up viewings at different times. In the United States, your buying agent will usually go with you and be your guide the whole time. As a real estate agent, this was one of the things that surprised me the most when I moved to London: people buy the most expensive thing they’ll ever buy without anyone directly helping or guiding them. Instead, they have to rely on the estate agent who works for the seller.
Making A Proposal
In the US, if a buyer decides to submit an offer on a certain property, they do so after consulting with their agent and writing out the price and other stipulations (such as subject to a home inspection, appraisal, and financing being obtained). The buyer’s agent then gives the offer to the seller and talks with them until they agree on the price and terms. Then, a legally binding contract is signed, and a deposit of about 10% is usually held in escrow until the job is done. The contract calls for the next appraisals or inspections to be done.
If problems are found, the buyer may decide not to go through with the deal, renegotiate based on the problems found, or remove the condition and move forward. In the UK, the offer is driven to the estate agent who works for the seller. Once the offer is accepted, both sides hire lawyers, and a sales memorandum is sent out with a summary of the details.
Process of Closing When it comes to closing, there is a big difference between the UK and the US. In the UK, either party can back out of the deal until the contract is signed. This can happen weeks or months after solicitors have been hired and title searches, surveys, valuations, and financing have been done. For example, the seller can accept a higher offer (called “getting gazumped”), or the buyer can back out. This leaves both sides very vulnerable during this time. Both parties are legally bound when the contracts are exchanged, and the buyer will put down a 10% deposit.
A completion date is usually set a couple of weeks later, though sometimes simultaneously. At the end of the process, the lawyers will ensure that the rest of the money is paid and that the keys are swapped. In the United States, the buyer hires a single attorney or title company to handle all the legal work and the transfer of ownership. At the closing, all the paperwork is signed, including the loan papers and the money from the bank. After a few days, keys are given out if the money has been cleared.
