House / Flat market at the moment - anyone know whats going on?

[Pabs]

This EXACT problem cost us our last house, and lost us around £1000.

 

Buyer with 100% deposit puts £0 on the line. He has to wait 12 weeks before he can have his flat from us.

 

In that time, he could easily walk down our road by about 200 yards, and pick any of the other 8 flats that are on the market, at the same price, and end of chain, and pull out of our chain.

 

Virtually the exact same thing happened to us no less than 3 months ago. We can't afford to keep putting £500 surveys and £250 searches etc down, to go and lose it because our buyer couldn't be bothered to wait.

 

If the buyer had 80% mortgage, he would give us £10k deposit. For him to THEN pull out means he is -10k. A sensible person wouldn't do that.

[Pabs]

Or am I missing something here??????

[JohnA]

...If the buyer had 80% mortgage, he would give us £10k deposit. ...

But the 20% that remains from the 80% is paid by him to his lender. That is part of the deal he has with his bank.

 

How will your solicitors get their hands on that money?

Is it a separate contract where it is being set aside on a separate account and can be seized by your solicitors if certain conditions have been met?

[tbourner]

No but the point is someone who has put down that much deposit is a lot less likely to pull out of the deal than someone who has only spent search/survey fees. Doesn't matter who gets the money.

[JohnA]

No but the point is someone who has put down that much deposit is a lot less likely to pull out of the deal than someone who has only spent search/survey fees. Doesn't matter who gets the money.

But at the stage of pullout they haven't yet put down any deposit, have they?

100% or 60% or whatever, they still stand to lose just the search/survey fees.

The rest of the money hasn't yet changed hands, and never will (due to their pullout)

 

...or am I missing something here?

[Pabs]

...or am I missing something here?

 

 

Yes. As stated before, the people we are buying from need us to EXCHANGE within 5 weeks, but we won't actually COMPLETE / Move-in for an additional 7-8 weeks.

 

The period we are worried about is the 7-8 weeks between exchange/completion, when the deposits have been paid. (or not, in the case of our buyer)

[DaveK]

I thought that when I bought this house I was told that if I was to pull out after exchange, I would lose my deposit - but also that I could be sued for any losses the other party had.

 

I would expect that even if he puts down no deposit, you could still sue for your losses. However - since he probably has no assets, it would obviously take you a very long time before you actually got the money back.

[Pabs]

if he puts down no deposit, you could still sue for your losses. However - since he probably has no assets, it would obviously take you a very long time before you actually got the money back.

 

 

Nail on Head mate. Not something we want to go through.

 

I've spoken to our Mortgage lender, and will speak to our solicitors in a bit. But apparently, some lenders will give the burrower a 5% deposit as an unsecured loan before completion - this would mean he could give us 5-6k deposit, which would at least be something. But not sure if his lenders would do that, so we might need to investigate.

[juanchan]

Ok, help me out here. I'm in the throws of buying myself a flat. So far I've not completed or exchanged. My money is ready to go as soon as it's needed so I'm not holding things up. So far my understanding is that I go to the solicitors, eventually, to sign my life away and complete the legal stuff, and only then do you exchange everything (money/keys/rising damp issues). You guys are all talking about exchanging and then completing. My FA and solicitor have always been mentioning "after you've completed, exchange shouldn't take too long". Or do I have some wires seriously crossed here?!

[Pabs]

Ok, help me out here. I'm in the throws of buying myself a flat. So far I've not completed or exchanged. My money is ready to go as soon as it's needed so I'm not holding things up. So far my understanding is that I go to the solicitors, eventually, to sign my life away and complete the legal stuff, and only then do you exchange everything (money/keys/rising damp issues). You guys are all talking about exchanging and then completing. My FA and solicitor have always been mentioning "after you've completed, exchange shouldn't take too long". Or do I have some wires seriously crossed here?!

 

 

I always understood that you "exchange contracts" first - legally tying you in to the purchase (although still ways to get out of it)

 

When you "complete" is when the funds change hands, and you move in.

 

Some people exchange & complete on the same day - avoiding any need for deposits but obviously no legally binding tie-in until then. Others (like mine grrrrr) have a long gap between exchange and completion. I think the norm is about 2 weeks between the two.

[DaveK]

Ok, help me out here. I'm in the throws of buying myself a flat. So far I've not completed or exchanged. My money is ready to go as soon as it's needed so I'm not holding things up. So far my understanding is that I go to the solicitors, eventually, to sign my life away and complete the legal stuff, and only then do you exchange everything (money/keys/rising damp issues). You guys are all talking about exchanging and then completing. My FA and solicitor have always been mentioning "after you've completed, exchange shouldn't take too long". Or do I have some wires seriously crossed here?!

 

Your solicitor sounds a bit clueless.

 

You get surveys and searches etc. done. Then, when that's all done you exchange - at which point you enter into a contract to buy / sell. Some time after that (usually a week or two) you complete (rest of the money changes hands and you get the keys and move in). The completion date is agreed when the exchange takes place.

[JohnA]

Yes. As stated before, the people we are buying from need us to EXCHANGE within 5 weeks, but we won't actually COMPLETE / Move-in for an additional 7-8 weeks.

 

So when does money change hands then?

 

 

 

His deposit will be paid to your account after his solicitor releases the funds as part of the transaction - right?

 

If the transaction never happens, how will you force them to release this money to your account?

[Pabs]

So when does money change hands then?

 

His deposit will be paid to your account after his solicitor releases the funds as part of the transaction - right?

 

If the transaction never happens, how will you force them to release this money to your account?

 

 

The DEPOSIT changes hands at exchange. Everyone pays their solicitors the deposit. The FULL AMOUNT changes hands on completion.

 

If he pays £0 deposit, he can simply pull out of the chain before completion, whereas we will have paid 5-10% (10-20k) deposit on our new house, and we will lose this if the chain falls through.

[mkirby]

I'm pretty sure that with a 100% mortgage your actually borrowing the 95% as normal but also borrowing the 5% deposit but just at the same rate as the mortgage so technically from your point of view they will be putting 5% down as a deposit which is normally paid to their solicitors before the exchange can be done, his solicitor then holds onto that money. Approx 5 days before the completion the solicitor requests the remaining monies from the lender and they are BAC'd over on the day of completion and then BAC'd over again to your solicitor on the same day so you have your money for your flat and you can hand the keys over to the estate agents and go on your merry way.

 

If they back out after they have exchanged they you will get the 5% that their solicitor is holding from their lender, i presume they will then be liable to pay their lender this back via a loan etc also if a completion date is set you can ask/sue for costs but i;m pretty sure its only upto about £150 in costs you can sue for as you already have his deposit money.

 

Ive just gone through all this and the only reason i know it all is my solicitor was that crap i ended up having to do most of the work LOL i even had to order my own money from my lender as my solicitor forgot!!! and this was the day before completion LOL

 

To say i was stressed was an understatement

 

Good luck

Mike

[Charlotte]

The DEPOSIT changes hands at exchange. Everyone pays their solicitors the deposit. The FULL AMOUNT changes hands on completion.

 

If he pays £0 deposit, he can simply pull out of the chain before completion, whereas we will have paid 5-10% (10-20k) deposit on our new house, and we will lose this if the chain falls through.

 

So have your solicitors told you that the seller's solicitors won't accept a nil deposit?

[juanchan]

I always understood that you "exchange contracts" first - legally tying you in to the purchase (although still ways to get out of it)

 

When you "complete" is when the funds change hands, and you move in.

 

Some people exchange & complete on the same day - avoiding any need for deposits but obviously no legally binding tie-in until then. Others (like mine grrrrr) have a long gap between exchange and completion. I think the norm is about 2 weeks between the two.

 

Your solicitor sounds a bit clueless.

 

You get surveys and searches etc. done. Then, when that's all done you exchange - at which point you enter into a contract to buy / sell. Some time after that (usually a week or two) you complete (rest of the money changes hands and you get the keys and move in). The completion date is agreed when the exchange takes place.

 

A week or two between them?! So far people I've spoken to about this (mates who've recently bought, solicitors etc) have said that generally the gap between the two is hours, possibly days, not weeks! I'm having to crash at a mates as of Friday cos of solicitors holding up my purchase and my tenancy ending. I can't be doing that for weeks while still going to work!

 

So exchanging is simply the signing of contracts then. I've been lead to believe that that occurs pretty much right before getting keys. I'll soon find out I guess!

[Charlotte]

A week or two between them?! So far people I've spoken to about this (mates who've recently bought, solicitors etc) have said that generally the gap between the two is hours, possibly days, not weeks! I'm having to crash at a mates as of Friday cos of solicitors holding up my purchase and my tenancy ending. I can't be doing that for weeks while still going to work!

 

You're getting confused between exchange and completion.

 

Exchange means the place is definitely yours, it's legally binding. This is just a phone call between the solicitors and generally only takes minutes. This is at the point that you set a completion date which is inserted into your contract (to stop you from pulling out without incurring costs).

 

Completion is normally about 5-10 days after exchange. During this time the solicitors will do things like requesting your mortgage monies.

 

You need to establish with your solicitors if you are nearing an exchange. Have you signed your contract? Do you have a mortgage offer? You need to check - then you can probably get a rough idea of timescales from them.

 

*work mode off*

[DaveK]

You're getting confused between exchange and completion.

 

Exchange means the place is definitely yours, it's legally binding. This is just a phone call between the solicitors and generally only takes minutes. This is at the point that you set a completion date which is inserted into your contract (to stop you from pulling out without incurring costs).

 

Completion is normally about 5-10 days after exchange. During this time the solicitors will do things like requesting your mortgage monies.

 

You need to establish with your solicitors if you are nearing an exchange. Have you signed your contract? Do you have a mortgage offer? You need to check - then you can probably get a rough idea of timescales from them.

 

*work mode off*

 

 

So I was right, but just with less words. Oh - and I think they are "conveyancers" not "solicitors".

[Charlotte]

So I was right, but just with less words. Oh - and I think they are "conveyancers" not "solicitors".

 

I was explaining that perhaps his friends thought he was exchanging not completing and the difference in timescales.

 

I don't believe you mentioned that.

[juanchan]

You're getting confused between exchange and completion.

 

Exchange means the place is definitely yours, it's legally binding. This is just a phone call between the solicitors and generally only takes minutes. This is at the point that you set a completion date which is inserted into your contract (to stop you from pulling out without incurring costs).

 

Completion is normally about 5-10 days after exchange. During this time the solicitors will do things like requesting your mortgage monies.

 

You need to establish with your solicitors if you are nearing an exchange. Have you signed your contract? Do you have a mortgage offer? You need to check - then you can probably get a rough idea of timescales from them.

 

*work mode off*

 

Got my mortgage offer through about 5 days after my bid was accepted for the house My FA said he was surprised how fast they were willing to throw money at me.

 

My solicitor is still waiting on some info from the sellers solicitors before she's willing to let me sign anything. Which should hopefully be this week. It was going to be two weeks ago, then last week, now this week

 

As soon as I've signed, there's nothing to stop things moving - solicitor has already put the balls in motion to get the mortgage monies although I've not signed owt yet. I'm all confused! Too much stress over being homeless as of Friday! Anyone got a cardboard box I can borrow?

[Pabs]

Well I'm still worried about our buyer - but I think if we make it to exchange there is no real good reason for him to then pull out - he will know the exact date he can move in, and that's that.

 

But, IF he does pull out after exchange, we will just HAVE to sue him for every penny we can to claim back all lost monies. I can't see any other way around it.

[Charlotte]

Well I'm still worried about our buyer - but I think if we make it to exchange there is no real good reason for him to then pull out - he will know the exact date he can move in, and that's that.

 

But, IF he does pull out after exchange, we will just HAVE to sue him for every penny we can to claim back all lost monies. I can't see any other way around it.

 

Why would he pull out after exchange? I've never heard of anyone doing that in the 6 years I've done the job.

[tbourner]

Isn't it gazundering when they stop the deal after the offer's made but before exchange? I suppose they could still change their offer or basically decide they don't fancy it anymore after exchanging? But it's true that it's pretty unlikely - if you've decided to buy a house and exchanged it's not like you haven't thought it through!!!

[Charlotte]

Isn't it gazundering when they stop the deal after the offer's made but before exchange? I suppose they could still change their offer or basically decide they don't fancy it anymore after exchanging? But it's true that it's pretty unlikely - if you've decided to buy a house and exchanged it's not like you haven't thought it through!!!

 

It's rare but it does happen, if someone dies or something.

 

It's why solicitors used to insist on a 10% deposit on exchange because you lose that if you pull out.

 

You can still be sued for lots of money (interest accumulates every day after when completion would have been), there would have to be a pretty good reason why you'd put yourself through that instead of just moving in and then selling.

[MONKEYmark]

im just looking to buying 1st place.its a bit scary,house prices are crazy.should have bought years ago but you make your own mistakes.up north i seen a smart looking house with 23meter x 12.5 meter rear garden 3 bed semi for £119,995. its in ponty area near country side.leeds is too expensive to live.dont fancy paying £100k+ for a terrace house with no garden.

this is one i have seen has a big concrete drive with new fencing all around,will be buying on my own wage.