The strong sellers’ market of the last few years has resulted in a legacy of vendors thinking they hold all the cards.
There’s an increasing trend towards vendors changing the goalposts at the last moment – either extending the exchange date, or pulling out of the sale altogether. At a stage when the purchaser has paid for surveys and legal work, and when they’re all ready to exchange, this can be a devastating blow emotionally, financially, and in practical terms.
Bill Spreckley of Stacks Property Search says, “We’re encountering numerous situations of this kind. Often it’s because the vendor hasn’t found something to buy, or because they’ve had second thoughts about moving into a rented property while they search. They think there’s an endless supply of buyers. That may have been the case in 2021 and 2022 when vendors were firmly in control, but things have certainly changed. For the purchaser who has invested heavily, both financially and emotionally in a purchase, it’s devastating when a vendor changes their mind at the last minute. The vendor pays very little up front – maybe a few legal costs, but the purchaser has a great deal more to lose.”
So what can purchasers do to limit the risk of a vendor pulling out or extending the exchange date at the last minute? And what are the warning signs that a vendor may not be as good as his word?
Nick Wooldridge of Stacks Property Search says, “Buyers should equip themselves with as much information about the vendor as possible. Press the agents at an early stage and assess the vendor’s situation. If they’ve already found something to buy and their own purchase is progressing, then you should both be on the same page in terms of the deal progressing. But you should be cautious if their next property plan is unclear. That’s not to say it’s necessarily a reason to walk away, but you should consider steps to protect yourself.
Bill Spreckley says, “Keep the lines of communication open, staying in touch with your solicitor and the estate agent as much as possible, and being conscious and aware of any delays that are coming from the vendor or their solicitor. It’s important that you establish whether these are due to a reluctant vendor or an inefficient solicitor.
“The best signs are that both parties are keen and pushing their solicitors. Sometimes setting deadlines for various milestones such as Searches, delivery of contracts, Property Information Forms to be completed, helps. If deadlines keep falling short, investigate what the hurdles are. If all these get done in the first week it’s a good sign that the vendors are keen; if it takes three weeks it’s a warning.
“My advice would be to continue to look at other properties if you have any doubts or misgivings about the likelihood of the sale progressing. If the vendor has said that they won’t move till they find something else, then even more reason to keep looking, and to tell the selling agent that that’s what you’re doing – it may help to focus the vendor’s mind.
“There are an increasing variety of devices that can help a buyer protect themselves such as a ‘reservation guarantee’, a legal agreement between the buyer and the seller that provides both parties with financial protection against either party pulling out. Another option for the buyer is to take out buyers’ insurance that will pay buyer’s costs such as surveys and legal fees if the vendor pulls out.
“Ways of protecting buyer and / or seller are becoming more widespread, for instance Gazeal is a provider of digital reservation agreements that protects buyers from gazumping, and sellers from gazundering. If you think you have reason to be nervous about a sale going through, it is certainly worth looking at the various options open to you that will protect you financially.”
Stacks Property Search, 01594 842880 / www.stacks.co.uk