Fix it if it's broken, but don't make it worse.
Take it one step further. How would you feel, and what would you do, if the survey results were bad news?
A mandatory survey lies at the core of government proposals to speed up property sales and thereby gazump would-be gazumpers.
Let's start with an admittedly exaggerated definition of gazumping to highlight a hidden aspect of many property transactions.
Imagine buying a bottle of milk and, just as you and the merchant are about to exchange cash for merchandise, another buyer jumps in front, offers more money and succeeds in buying the last bottle of milk in stock.
Especially when the property market is booming, house-buying is often an auction. Unfortunately many buyers think that they are engaging in an ordinary purchase. You agree a price and a product or service changes hands.
You can always find a bottle of milk elsewhere. With gazumping, the prospective buyer is usually out of pocket for a survey or legal or other fees and may suffer other loss or inconvenience.
Buying a property will never be like the virtually instantaneous transactions that occur when we buy groceries, but if the process is greatly accelerated potential higher bidders - gazumpers - simply won't get a look-in. You are safely out of the shop with your purchase before you can be out-bid.
Under the current system, many time-consuming processes don't begin until after the buyer makes an offer. Under the proposed new system, would-be buyers would be greeted with a seller's pack.
This could include a survey, a copy of the property's title deeds, a copy of the lease or recent service charge accounts, results of standard inquiries such as local searches and a draft contract.
The Law Society supports the government's initiative "wholeheartedly", agreeing that "a pre-prepared seller's pack will dramatically speed up the house-buying process and reduce the chance of being gazumped". On only one point does the Law Society quibble - the survey.
Other interested parties such as the Royal Institution of Chartered Surveyors (RICS) and the Council of Mortgage Lenders also have their doubts, although for reasons of their own.
The Law Society doubts "whether buyers will be willing to trust a survey arranged by the seller. Home-buyers are likely to want to commission their own survey which will mean additional expense and time, which would be good news for surveyors but not for consumers".
RICS notes that the new system will mean additional costs for sellers and would mean radically overhauling the current system.
Currently, the surveyor is responsible to the party who commissions the survey. According to RICS, this new seller-pack survey would be similar to the current home-buyer's report in its level of detail but would not include a property valuation. Would this be adequate?
For old or unusual properties or those located on a hill or otherwise susceptible of subsidence, home-buyer surveys are inadequate.
The original surveyor often recommends the commissioning of one or more specialist surveys. In addition, surveys often do not provide definitive findings on the most important aspects of a property.
The proposed seller-pack survey does not correct these shortcomings. Admittedly, few buyers currently commission their own survey, preferring to save the money and take their chances.
If a survey is mandatory, most buyers will obtain more information about the property than they otherwise would have obtained, as the majority do not commission surveys at all. Additional information is a clear benefit. But if a survey indicates many problematic areas and a need for additional surveys, buyers and sellers alike might develop second thoughts.
Faced with a wonky property, the buyer might walk away completely, ironically shunning a property on which they otherwise might have taken their chances. And the prospect of selling such a property might similarly induce the seller to withdraw it altogether. The new system might inadvertently depress the market or introduce new problem areas.
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|Publication:||Sunday Mercury (Birmingham, England)|
|Date:||Oct 24, 1999|
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