You’ve Agreed a Sale, What Next?
Often the relatively easy bit is to agree the sale of your property. The best Estate Agents are the ones that keep the sale on track.
Once a sale is agreed you will need to use a Solicitor or Licensed Conveyancer to act for you on your sale (and your new purchase, if applicable). Picking the right Solicitor is as important as picking the right Estate Agent to minimise the chances of your property sale falling through.
Why sales fall through
There are various reasons that a house sale might fall through, including the following:
- The Buyer can’t get a mortgage. Before you accept an offer, ensure the Buyer has an “in principle” mortgage offer, which means that they have been checked out by the Lender and will be able to get a mortgage of an amount equivalent to the value of the property.
- The Buyer’s mortgage is not confirmed. Even when someone has a mortgage in principle, this decision can sometimes be reversed once a full application is submitted and further checks on credit status and income are done. You should never agree to take your property off the market until the Buyer has had your property surveyed and their mortgage offer is confirmed.
- The survey may highlight reasons why the property does not meet the expected value, or the Surveyor might just reduce the value of the property because his analysis of recent comparable sales shows it to be worth less – not that uncommon in a slow housing market.This is somewhat bizarre because obviously someone is prepared to pay the price agreed, and the value of a house is what someone will pay for it! In these cases the Buyer has to decide whether to proceed anyway (which will require them to put in a larger deposit), or you have to decide whether you’ll reduce the price to the newly proposed value of the property.Alternatively, both parties can compromise – often the best solution. There is a high chance that the property will be valued at the same level for any future potential Buyer, as they may be getting a mortgage from the same Lender, so if you’re not flexible at this stage you could be waiting a long time before you sell.
- The Buyer changes their mind and your house sale falls through! This happens far too often and wastes time and money. Despite various supposed Government initiatives, in England and Wales there is still no way of preventing this. All you can do is try and ascertain whether your Buyer is serious from the outset.
- The Buyer reduces their offer prior to exchange of contracts, known as Gazundering. Gazundering can happen and, although if done purely out of greed it is morally wrong, it is impossible to prevent under the UK conveyancing system.Gazundering by unscrupulous people will usually happen at a late stage i.e. the day before exchange, in the expectation that you will have no alternative but to accept the reduced offer. In such a scenario you have to decide what your best course of action is – accept the reduced offer, or refuse it.Sometimes the Gazunderer is bluffing (more likely if they are residential buyers who have an emotional attachment to the new property, rather than Investors). It is important to keep calm and talk to them to find out why they have reduced their offer. There may be reasons beyond their control.
Once exchange has taken place, the Buyer is legally bound to buy the property, and the Seller is legally bound to sell the property. Typically, completion is agreed for between a week and 4 weeks hence, giving both parties the opportunity to pack, finalise removal arrangements, and so on. Both parties are then bound to complete on this date.
Disputes do sometimes arise when a Buyer and Seller have different priorities or preferred timescales. For example, someone trading up might be keen to complete their sale as soon as possible after exchange of contracts. However if selling to a First Time Buyer who is living in rented property, such a buyer may want to complete at the end of their rental period to avoid paying both rent and mortgage payments at the same time. Both parties will feel they are being reasonable based on their circumstances.
Problems can occur when either or both parties have not made their situation clear early in the negotiations and only introduce their requirements for completion shortly before exchange. As neither is likely to want to withdraw from the transaction for this reason alone, it can cause bad feeling. As always, the best solution is to talk, understand the other party’s situation, and come to the best compromise possible.
Occasionally completion does not take place on the date planned, for some unforeseen or technical reason. In such cases the solicitors on both sides will advise both parties to stay in their current properties, and not to hand over any keys. Usually such glitches are resolved within 24 hours.
Should either party fail to complete on the due date they will be in breach of contract and liable to pay penalty interest. If you find yourself affected by such a delay inform your solicitor immediately.
If a Buyer refuses to complete the your solicitor will issue a Notice to Complete. If they fail to complete within 10 working days of this being issued, the contract can be rescinded and the Buyer will forfeit the 10% deposit. See 7 Things You Need To Know About Excange And Completion.
Find out more about the ways to sell a house:
1 Using an Estate Agent
• Types of Estate Agent
• How Estate Agents Market Property
• How Much is it Worth?
• How Much are Estate Agent’s Fees?
• Once the Property is Listed
• Once a Sale has been Agreed
• Estate Agent Tricks
• Selling Without an Estate Agent
By Richard Watters