Ordering a property search is an important stage in a residential property transaction and it can also be a cause of delays.
Order searches early for faster transactions
Transactions often stall after sale agreed because buyers delay appointing a conveyancer and transferring the funds needed to order searches.
tmgroup’s data on searches ordered shows a 63% uplift in orders the week of 11 May when agents began to re-open. The Zoopla Cities Index (May 26, 2020) reported that sales agreed rose steeply that week, but it is unlikely that searches for these deals were ordered immediately. This suggests that in the week of the 11 May, there was a surge in searches ordered for properties that reached sale agreed either pre-lockdown or during lockdown. Given the low level of sales agreed during lockdown, it is probable that these orders related to pre-lockdown sales agreed 2 months previously.
Searches can take days or weeks to return with delays currently more prevalent due to staff being furloughed in Local Authorities (LAs) and Water Companies which form part of the supply chain. So, it’s possible that 10 weeks or more could have passed between sale agreed and the searches being returned. Ultimately this means transactions takes longer and payment of commission is delayed. If the searches for these properties were ordered at listing or sale agreed, these transactions could be several weeks further on.
To reduce delays some agents, particularly those dealing with higher value properties, order searches at listing. This can cost the seller several hundred pounds and the conveyancer who subsequently acts for the purchaser won’t always accept those searches. However, with evidence from the trial of the new NAEA sales protocol suggesting that increased up-front information reduces transaction times, agents might have a reasonable justification for the increase in cost.
If the cost of a full search is too much to bear, it’s important to note that a full search pack contains a document called an OC1 and a Title Plan. This information can be used to help sellers accurately and quickly complete the TA6. The OC1 and Title Plan cost just six pounds and can easily be ordered through search providers like tmgroup or shortly, via mio. If ordering searches at listing is unviable, agents are increasingly using conveyancing quote and instruct platforms, like tmconnect, to speed up the appointment of a conveyancer. This simple to deploy platform allow agents to source conveyancing quotes, from their preferred law firms; appoint a conveyancer and get the funds on account via the buyers’ debit or credit card, as soon as an offer is accepted. This can result in searches being ordered within minutes of a sale being agreed. Increasing integration between conveyancing platforms and the mio sales progression platform also means that agents, conveyancers, buyers and sellers all have a single view of the chain and receive updates each time a milestone in a transaction is completed. This makes sales progression easier and significantly reduces calls and email between the parties to a transaction.
Search availability during lockdown
Joe Pepper, CEO of tmgroup, “on the 20 March, our entire team were moved to remote working. We have continued to service our clients throughout lock-down and were well placed to help mitigate any delays the lockdown caused. Over the past few weeks, delays have reduced as some of our suppliers have amended their practices to meet the current challenge”
Search providers source information from over six hundred suppliers. The supply chain has undergone significant digital transformation in the last decade. However, some suppliers have failed to embrace the change with a few LA’s still operating paper-based systems although, adoption of electronic ordering has increased since lock-down started. The variances in operating models means that even in normal operating conditions some LA’s take longer than others to produce searches.
What do searches ordered tell us about regional property market trends?
Searches ordered reflect actual transaction levels, so they are a useful barometer of property market activity. The data is also available several weeks ahead of HMRC data which may relate to transactions that reach sale agreed as much as 6 months previously.
Regional data on searches ordered from tmgroup does, in many cases, support the insight contained in The Zoopla Cities Index (May 26, 2020) which, reported “a strong rise in demand in the English coastal cities of Portsmouth, Southampton and Liverpool and other key cities such as Newcastle, Oxford and Leeds.” tmgroup’s searches ordered league table shows both Leeds and Newcastle Local Authorities appearing in the top 20 with the top five being Northumberland, Maidstone, Newport, Buckinghamshire and Leeds.
Figure 1: Searches ordered, via tmgroup, by Local Authority (27April 2020 – 31 May 2020)
It remains to be seen whether the demand for properties in Cities such as Newcastle and Leeds will continue to rise as home working becomes more prevalent. Data from tmgroup is already showing strong demand for searches for largely rural counties such as Gloucestershire, Devon, Monmouthshire and Hampshire. The growth in demand for rural locations is also underlined by a review of the most popular regions, as defined by searches ordered. Unsurprisingly the Home Counties tops the league, but this may reflect an increase in people electing to move out of London. This is followed by the North East and the South West which are two of England’s less populated regions.
The value of Property Searches
Property searches are one of the least understood components of a property transaction but the information they contain, combined with analysis of search ordering data, provides factual insight for property professionals and consumers. The value of this insight is often overlooked but if it’s deployed at the correct point in the transaction by someone who understands how to interpret it, it can play a valuable role in informing buyers, improving transactions times and reducing fall throughs.