Don’t let your sale or purchase fall through
Searching for a new home or selling a current property can be an uncertain, yet exciting time in life. Moving home often coincides with larger life changes and can come with a wide array of emotions. One thing is certain though– the buyer or seller will want to be sure that their sale or purchase will complete. Unfortunately, many things can happen between an offer being accepted and exchange of contracts that may cause the initial agreement to collapse.
In the past two years in the UK, three out of ten homebuyers have seen their purchase fall through, despite having had their offer accepted by the seller. In addition to causing uncertainty, having a purchase fall through is also costly. The process of buying a house is a lengthy one, taking two to three months on average, and during this time expenses can accrue for legal fees, surveys, mortgage valuations and brokerage fees. An average of nearly £3,000 is spent during this process which cannot be recovered should the buyer or the seller pull out.
Purchases can fall through for a variety of reasons, from buyer financing rejections to the buyer being outbid by a higher offer after theirs has been accepted. Whatever the cause, knowing what to look out for can help to protect you against any interference with the agreement. Here, Caroline Doman, Senior Associate in our Residential Conveyancing department, shares the top reasons why property transactions can fall through and offers her expert advice on how to prevent this from happening.
Top reasons property deals can fall through
· Buyer financing rejections: If a buyer’s application for a mortgage is rejected, they will not be able to follow through with buying the property. Before accepting an offer, sellers should ensure that the buyer has obtained a mortgage in principle, which makes it more likely that they will receive final approval from the lender to proceed with the purchase. You should also ensure that you or your agent follow up with the buyer throughout to ensure that their mortgage application is on track.
· Valuation is lower than the sales price: A lender will only lend up to the value of the property. If it is appraised at a lower amount, the buyer will not be able to secure the full mortgage and will potentially have problems making the final purchase.
· Buyer cannot sell their own home: If the buyer must sell their home in order to purchase a new one, be wary. This is known as a ‘chain’. Problems can arise if there is an issue with their sale. This may cause delays which can have a knock on effect on everyone in the chain and lead to sellers pulling out.
Tips to prevent the deal from falling through
· Know the warning signs of a buyer or seller backing out: Failing to return papers, make payments to third parties, return phone calls or missing appointments are all signs of cold feet.
· Understand the buyer’s circumstances: If your buyer has a related sale, make sure that they have accepted an offer and the sale is progressing at a reasonable speed. If your buyer is in rented accommodation, ensure that they are able to serve notice and leave the property within the timescales that you want to complete. Your estate agent should be able to get this information from anyone making you an offer.
· Show an interest in the transaction: The seller can get nervous about the sale progressing if they do not feel like you are invested in the purchase. If you make sure that your searches are applied for promptly and you are actively following up with your lender to progress your mortgage offer, this can help to ease any concerns that the seller may have.
The process of buying or selling a home does not have to be as complicated or daunting as it may seem. It is important that all parties are open about their wishes, particularly relating to the time frame, and that they do not hide how they are truly financing the purchase. Effective communication is key and removes suspicion between the buyer and seller. Buyers and sellers should be mindful that this is “their” move and we will do everything we can to work to your requirements.
Whilst your sale or purchase falling through is a possibility, understanding the reasons it can happen and taking steps to try to prevent it happening can improve your chances of success. It is also important to have the guidance of a legal adviser throughout the entire process.
If you are thinking of buying or selling your home and are looking for advice, contact the Blanchards Bailey Residential Conveyancing team today.
Senior Associate – Residential Conveyancing