The Hidden Truth: A Guide to Uncovering Fees in the Home Buying Journey

Every First-time Buyer (FTB) embarks on a journey fraught with challenges, each step can feel like a battle in the quest for the keys to their new home. From navigating the maze of mortgage options to negotiating with sellers, the road to home ownership is riddled with obstacles. Yet, amidst these familiar struggles lies a lesser-known adversary, one that lurks in the shadows, but which it is crucial that you are aware of as it catches many unsuspecting buyers off guard: the battle of the hidden fees.

Picture this: you've weathered the storms of property viewings and offer negotiations, feeling like a seasoned warrior in the battlefield of real estate. But just as victory seems within reach, a new foe emerges, threatening to derail your plans and drain your resources. This unexpected adversary comes in the form of hidden fees, and one of these in particular are those associated with Anti-money laundering (AML) checks.

As a first-time buyer, arming yourself with knowledge is your best defence against these hidden foes. Understanding the nuances of AML checks and knowing when and where they may surface and any costs which are associated with them can mean the difference between a smooth journey to home ownership and a costly setback.

Understanding Anti-money laundering (AML) checks:

AML checks have become an integral part of the home buying process in the UK. They are designed to prevent money laundering and ensure the legitimacy of funds used in property transactions. These checks involve verifying the identities of buyers, sellers, and other parties involved in the transaction, as well as confirming the source of funds being used for the purchase. Over time, the laws relating to AML checks have demanded stricter and stricter requirements when carrying out these checks. You can’t get away from them, they have to be done.

The repetitive nature of AML checks:

One crucial aspect that first-time buyers must grasp is that AML checks are conducted at three key stages throughout the home buying process. First, estate agents will perform AML checks after an offer has been accepted. Second, mortgage lenders will conduct AML checks during the mortgage loan application process. Finally, the FTB's solicitors will undertake AML checks before they take on the FTB as their client. And right now each party is responsible for carrying out their own checks independently so its not possible to get them done altogether.

The potential for unexpected fees from Estate Agents:

Now, usually mortgage lenders have dedicated departments for conducting AML checks in-house, and solicitors often follow suit. However, when it comes to estate agents, the scenario can differ. While some larger agencies may handle AML checks internally, many opt to outsource this task to professional third parties.

Unfortunately, this outsourcing incurs a fee, adding to the already substantial costs of purchasing a home. These AML fees can vary widely, ranging from £30 to £120 or even higher. While intended to cover the cost of conducting AML checks, some agents may tack on additional charges. The lack of uniformity in AML fees across agents can catch first-time buyers off guard, leaving them feeling financially exposed. Without the ability to shop around or choose another agent for the same property, buyers may feel cornered into paying these fees, particularly if they were not disclosed upfront. 

Addressing the issue of unexpected fees:

Traditionally, it is assumed that costs incurred from estate agents are covered by the seller, because they are the client, right? And so the prospect of unexpected fees, especially at a time of excitement and anticipation, can be disheartening for first-time buyers. Feeling trapped or blindsided by these fees can evoke emotions of frustration, anger, and mistrust, especially if it wasn’t known beforehand that they would have to pay them. However, there are proactive steps that FTBs can take to mitigate this risk and ensure transparency in the home buying process.

Recommendation: Inquire upfront about potential fees:

A crucial recommendation for first-time buyers is to inquire upfront about any potential fees they may incur during the home buying process. Specifically, when booking viewings with estate agents, FTBs should take the opportunity right then and there to ask whether there are any costs they could expect to incur if their offer is accepted.

By proactively seeking clarification on potential fees, first-time buyers can arm themselves with the information needed to make informed decisions and avoid surprises later on. This simple yet vital step empowers FTBs to navigate the home buying journey with confidence and clarity.

In conclusion, the journey to home ownership is a transformative experience filled with moments of excitement, anticipation, and perhaps a few unexpected challenges along the way. Which is why reducing the likelihood of those battles can help smooth the way. Proactively understanding and addressing the issue of unexpected fees, like those associated with AML checks, is essential for first-time buyers to navigate the home buying process effectively.

Empowering you with knowledge, one essential aspect of the home buying journey at a time. If you're a first-time buyer preparing to embark on the home buying journey, consider booking a strategy call with me to equip yourself with the information and confidence needed to navigate through the process successfully.

Pictures from Unsplash