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  • FIRST POST
    • Geek1337
    • By Geek1337 19th Apr 17, 6:09 PM
    • 15Posts
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    Geek1337
    Buying House with Tenants
    • #1
    • 19th Apr 17, 6:09 PM
    Buying House with Tenants 19th Apr 17 at 6:09 PM
    Hey,

    I've recently had an offer accepted on a property which I hope will soon become my first home.

    The property was listed as 'ideal for an investor' as there is a tenant currently living in the property who has been there for the past 5 years and was hoping to stay living there. Despite this the Landlord was happy to accept my offer as a first time buyer hoping to live in the property.

    When I viewed the property, the tenant seemed unhappy that a first time buyer was being shown around the property as this means they will need to move out. I have been told that they will be given 2 months notice and following this the property will be ours.

    I am just wondering if anyone has any advice for this situation? Is there anything we can do to ensure the tenant moves out at the end of the notice period? Or anything I need to do to cover myself in case of this scenario?

    I'm also wondering what will happen to the deposit the tenant has paid and what will happen about any damage caused to the property. Is there any assurance I need to get from the EA when signing the documents?

    Thanks.
Page 2
    • Geek1337
    • By Geek1337 19th Apr 17, 10:33 PM
    • 15 Posts
    • 2 Thanks
    Geek1337
    My first thought was as a FTB are you having a mortgage? if so does your lender know that the property is tenanted?

    If i were you I would still be looking around at other properties and i def wouldn't be spending any money on the purchase until the property is vacant

    If the tenants are forced out who knows what damage, etc they are going to cause

    Good luck with whatever you decide to do
    Originally posted by 3card

    I hadn't considered that the lender may be hesitant to lend to us with the property currently having tenants. I will follow this up.

    Having met the tenants, I really don't think it's likely they'd cause damage but people are unpredictable.
    • G_M
    • By G_M 19th Apr 17, 10:35 PM
    • 41,900 Posts
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    G_M
    There is another aspect of this that has not been mentioned (I think):

    * tenants were told owner was looking for an investor, so they could stay
    * you turn up and tenants realise owner may sell to a FTB, meaning they have to leave
    * tenants get p*ssed off and decide to be awkward so they can stay
    * tenants change the locks and refuse access
    * your surveyor cannot get in to do a survey
    * your mortgage lender's surveyor cannot get in to Value the property
    * you cannot get in for a 2nd viewing
    * Your purchase collapses.
    * property remains unsold.
    * tenants get to stay - result!
    • AnotherJoe
    • By AnotherJoe 19th Apr 17, 10:41 PM
    • 7,566 Posts
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    AnotherJoe
    I definitely understand that there are risks associated, which is why I'm trying to get as much information as I can before jumping into making this decision.

    The area the house is is perfect for me, it's a location where houses are very rarely put on the market at a price I can afford. Probably the reason why they've accepted an offer lower than the asking price is because lots of buyers have been put off by the current situation. Yes, this is a risky situation but luckily as a FTB I'm in a situation where I have very little pressure on me to rush into a sale.

    Waiting 6 months to move into a property would be fine, my major fear is paying for surveys and solicitors and then having the seller take the property off the market or accepting a higher offer - which is the risk if I delay exchanging contracts.
    Originally posted by Geek1337
    You haven't got it. You wont be allowed to exchange contracts until its empty (unless you have a negligent solicitor).

    That time period is out of your control (and to a large extent the sellers as well)

    Its quite likely, as eloquently outlined by cakeguts, that the seller will take the property off the market or accept a higher offer, simply because of that long time period giving more opportunity for that to happen. All it needs is another BTL buyer who wants sitting tenants, you will be dumped faster than the posters here can write "told you so".

    You cannot speed the process up. You are not the bottleneck

    You can risk money by starting the process now, eg instructing solicitors, applying for a mortgage and paying a non refundable fee. But that doesn't commit the seller to sell or speed the process up and is your major fear !

    I hadn't considered that the lender may be hesitant to lend to us with the property currently having tenants. I will follow this up.
    Originally posted by Geek1337
    LOL they wont be "hesitant" they wont do it. Neither will your solicitor allow it.
    • Cakeguts
    • By Cakeguts 20th Apr 17, 12:07 AM
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    Cakeguts
    You still don't know what sort of tenancy agreement the tenants have.

    There is also something else which you haven't thought about and that is this. If the property is cheap for the location that it is in which is why you say you can afford it then there is something wrong with it. The fact that they have accepted a lower offer from you means that there is something more wrong with it than the fact that there are tenants living there.

    As a guess I would say that what is causing all the problems is that the landlord won't give the tenants notice to move until you have completed all your surveys and all your legal work because if the landlord had wanted to sell this property to someone as a house to live in he would have got rid of the tenants before he put it on the market.

    As has already been pointed out the landlord wants to keep the tenants there as long as possible so that he can get his rent money. This means that he won't want to have the house vacant if he can avoid it. So if while you are waiting for the tenants to be evicted from the property someone offers to buy it with the tenants still living there the owner will go with that sale because it will save him a lot of money.

    You are extremely unlikely to ever get to completion on this property. The chances are that you will wait and wait and wait for the tenants to leave and while you are waiting someone will make an offer to buy it with the tenants still there. Once the tenants have left this property the landlord has a house that he can sell much more easily so why should he sell it to you cheaply when he can get more money? You have to remember that he doesn't stick by what he says. He has probably told the tenants that they can stay because he is going to sell to another landlord and then he accepts an offer from you. He has told you that he has accepted your offer but accepting an offer isn't legally binding on either of you. He doesn't have to sell the house to you he can change his mind at any time. He could even have accepted the offer from you to give him leverage to get a higher offer from someone else. The problem is that you are a first time buyer and the owner knows that you don't know anything about buying property.

    What you have to consider is that you might wait for several months for the tenants to vacate the property and then not get to buy the house because the owner has changed his mind and has put the house back on the market at the same price as all the other houses in this area that you can't afford.

    While you are waiting to try to buy this house you are missing out on a lot of others that you would get to buy where people won't change their minds and where there isn't the added complication of evicting tenants.

    The buyers who have been put off by the situation have been put off because they know that the chances are that they will spend a lot of money for nothing. They have realised this but because you don't know anything about the process of buying a house you can't see how big the problems you face are.

    This business about delaying the exchange of contracts. You have no choice you cannot exchange contracts until the house is vacant.

    Basically no one knows how long it will take for the tenants to leave. That will depend on how happy they are to be kicked out of their home.

    Read very carefully what GM has written.

    People are trying to help you realise that your chances of ever owning this property are very slim and they are very slim because of what can go wrong. You don't have enough experience of buying property or property law to realise what can go wrong so you don't realise that the likely outcome of this is that you will waste a lot of time and money on a property that you will never get to own. You would be better to spend that time and money on a realistic chance of buying a house rather than this one.

    Did you know this? Estate agent puts house on market. Viewer puts in an offer. Offer is turned down but next offer has to be higher than the first one to even be considered. The estate agent who is working for the seller not the buyer can lever up the offers based on what has been offered so far. What this means for you is that if anyone else decides to offer on the property you have put an offer on they will be expected to offer more than you or offer a quicker sale than you. In the time that it takes the tenants to leave there could be lots of offers and yours will used as the basis to try to get the others to be higher.
    • illusionek
    • By illusionek 20th Apr 17, 8:30 AM
    • 118 Posts
    • 23 Thanks
    illusionek
    I am following this thread with interest as I am also FTB buying tenanted property where I want to live in. Initially I was told that the landlord will be moving current tenants to another property as apparently they are really good tenants and he would like to keep them. My solicitor got a copy of Notice to Quite that was served few days after accepting the offer, so all looked like happy days. Unfortunately no one advised me (solicitor or broker), and I did not think about it since I am just FTB with no experience, not to spend any money. I went ahead and did valuation survey and structural survey on the property whilst tenants were still there. Water under the bridge at this point.

    After two months tenants were still in the property and the vendor could not commit to vacant possession date as apparently they had some delays with the other house tenants meant to move in. I said I will not exchange until vacant possession and vendor committed to date in 6 weeks time. However now I got a copy of email from tenants to vendor confirming they will move out in 2 weeks time and reading this email it looks like they are not staying with the vendor in his other property.

    So my question is what can I do to ensure I have no issue with tenants moving back? I already said I want to inspect property before exchange to confirm vacant possession but really anything can happen before exchange and completion. If worse case scenario happen and I open the door on the day of completion and tenants are there is it going to be my problem or the vendors since they were selling with vacant possession? Is there anything else I could to to minimize likelihood of this situation or reduce impact on me?

    I cant get anything out of my solicitor so far apart from the fact we will not be exchanging before vacant possession is gained.
    • AnotherJoe
    • By AnotherJoe 20th Apr 17, 9:29 AM
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    AnotherJoe
    You cant do anything to 100% ensure that, but thats no different to buying a house and then the sellers refusing to move.

    If you visit beforehand and its empty that would give you about as much assurance as you could expect, you could always pay for new locks to be fitted if the vendor is agreeable, so at least you'd be assured the previous tenants didn't have a key.

    As to what happens if "I open the door on the day of completion and tenants are there is it going to be my problem or the vendors since they were selling with vacant possession?" thats an interesting question, it could be argued its not the vendor problem since they got them out and thus they are now squatting and its not vendors responsibility , but OTOH as you say they have promised vacant possession. Could be a big legal mess.

    So its in both your interests that the keys are changed so point this out to vendor if they are reluctant.
    • Mojisola
    • By Mojisola 20th Apr 17, 9:33 AM
    • 28,515 Posts
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    Mojisola
    If the property is cheap for the location that it is in which is why you say you can afford it then there is something wrong with it.

    The fact that they have accepted a lower offer from you means that there is something more wrong with it than the fact that there are tenants living there.
    Originally posted by Cakeguts
    This would worry me, too.

    If the property has good tenants and is up for sale cheaper than everything in the area, why hasn't an investor snapped it up?

    If the savvy, experienced landlords haven't wanted to buy it, there's likely to be problems that you haven't realised.
    • davidmcn
    • By davidmcn 20th Apr 17, 9:37 AM
    • 6,076 Posts
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    davidmcn
    I hadn't considered that the lender may be hesitant to lend to us with the property currently having tenants.
    Originally posted by Geek1337
    Your lender won't care who is currently in the property, only that it is vacant by the time of completion of your purchase.
    • AnotherJoe
    • By AnotherJoe 20th Apr 17, 9:44 AM
    • 7,566 Posts
    • 8,168 Thanks
    AnotherJoe
    Your lender won't care who is currently in the property, only that it is vacant by the time of completion of your purchase.
    Originally posted by davidmcn
    From what I've read, if its tenanted, they will want it vacant at exchange?
    • Cakeguts
    • By Cakeguts 20th Apr 17, 10:00 AM
    • 3,041 Posts
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    Cakeguts
    I am following this thread with interest as I am also FTB buying tenanted property where I want to live in. Initially I was told that the landlord will be moving current tenants to another property as apparently they are really good tenants and he would like to keep them. My solicitor got a copy of Notice to Quite that was served few days after accepting the offer, so all looked like happy days. Unfortunately no one advised me (solicitor or broker), and I did not think about it since I am just FTB with no experience, not to spend any money. I went ahead and did valuation survey and structural survey on the property whilst tenants were still there. Water under the bridge at this point.

    After two months tenants were still in the property and the vendor could not commit to vacant possession date as apparently they had some delays with the other house tenants meant to move in. I said I will not exchange until vacant possession and vendor committed to date in 6 weeks time. However now I got a copy of email from tenants to vendor confirming they will move out in 2 weeks time and reading this email it looks like they are not staying with the vendor in his other property.

    So my question is what can I do to ensure I have no issue with tenants moving back? I already said I want to inspect property before exchange to confirm vacant possession but really anything can happen before exchange and completion. If worse case scenario happen and I open the door on the day of completion and tenants are there is it going to be my problem or the vendors since they were selling with vacant possession? Is there anything else I could to to minimize likelihood of this situation or reduce impact on me?

    I cant get anything out of my solicitor so far apart from the fact we will not be exchanging before vacant possession is gained.
    Originally posted by illusionek
    You also need to inspect the property before exchange to check that it is still in the condition that it was when you first viewed it. Landlords have a checking out system where they check for damage left by tenants at properties. Tenants have to pay deposits but if the tenants wreck the house the deposit won't cover all of the amount of damage. You may find yourself looking at a house that needs all new floor coverings, a new kitchen and a new bathroom. If the landlord does the repairs they will put in the cheapest fittings that they can find because they are selling the house and you will not be buying what you first viewed.
    • Newlifer17
    • By Newlifer17 20th Apr 17, 10:09 AM
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    Newlifer17
    I have been viewing houses and a few had sitting tenants and after a bit of research decided not to go ahead with any of them because I just find the whole buying a house stressful enough as it is without the potential hassle of a tenant causing problems. Ive now offered on a house that is empty but was tenanted but they were given notice before it was put on the market, The house is still a bit of a mess but at least I know what I need to do to it before I move in. Problem solved.
    Unless you are really wanting this house then move on and find one empty or not tenanted!
    Last edited by Newlifer17; 20-04-2017 at 10:12 AM.
    • davidmcn
    • By davidmcn 20th Apr 17, 10:14 AM
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    davidmcn
    From what I've read, if its tenanted, they will want it vacant at exchange?
    Originally posted by AnotherJoe
    The lender is only interested in what the position is at completion. They have no involvement or risk at exchange and are not a party to the contract.
    • macman
    • By macman 20th Apr 17, 10:16 AM
    • 41,344 Posts
    • 16,998 Thanks
    macman
    I hadn't considered that the lender may be hesitant to lend to us with the property currently having tenants. I will follow this up.

    Having met the tenants, I really don't think it's likely they'd cause damage but people are unpredictable.
    Originally posted by Geek1337
    It's not about them being 'hesitant'. You are applying for a residential mortgage, so if the property is still tenanted after exchange, then you would be in breach of the mortgage terms, because you do not have a buy to let mortgage.
    No free lunch, and no free laptop
    • martindow
    • By martindow 20th Apr 17, 10:36 AM
    • 7,255 Posts
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    martindow
    Is this a flat? If so another reason it is so cheap could be that the lease is very short. This reduces its value as mortgage companies will not loan if the lease remaining is below a certain number of years.
    • Geek1337
    • By Geek1337 20th Apr 17, 12:42 PM
    • 15 Posts
    • 2 Thanks
    Geek1337
    Is this a flat? If so another reason it is so cheap could be that the lease is very short. This reduces its value as mortgage companies will not loan if the lease remaining is below a certain number of years.
    Originally posted by martindow
    The house isn't really cheap. We're buying in Harrogate which is crazy expensive. They accepted ~7% less than the asking price so nothing which would suggest there's something 'wrong' with the property. It's just very rare to find a property without our budget within this area.
    • Penitent
    • By Penitent 20th Apr 17, 12:52 PM
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    Penitent
    The house isn't really cheap. We're buying in Harrogate which is crazy expensive. They accepted ~7% less than the asking price so nothing which would suggest there's something 'wrong' with the property. It's just very rare to find a property without our budget within this area.
    Originally posted by Geek1337
    I don't understand. It's very rare to find one in your budget in this area and you got it for 7% below asking, but you don't think it's cheap for the area?
    • Cakeguts
    • By Cakeguts 20th Apr 17, 2:02 PM
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    Cakeguts
    You really don't have any experience of buying property do you? What you are saying doesn't make sense. If a property is rarely in your budget and this one is then that means that this house is cheap for the area that it is in. It is cheaper than usual.

    People do not sell houses for less than they can get for them. So if someone can get £100k for a house they won't sell it for £90k. They will only sell it for £90k if that is all they can get for it.

    In any area there will be houses that sell for less however the houses that sell for less are the ones that fewer people would be prepared to buy and the reason why they are less popular to buy is because there is something about them that puts most people off. If this house was a good buy for the price that you are prepared to pay a professional property investor would have bought it by now with the tenants. A property investor doesn't mind about buying properties that have tenants. If a professional property investor hasn't bought it that means that there is either something wrong with the property that you don't know about (subsidence?) or it is too expensive for where it is and what it is. If it is too expensive that means that you have made an offer for more than anyone else is prepared to pay for it and when you come to sell you will make a loss.

    This house is cheap for the area. That means that there is something wrong with it. There is something that puts people off buying it for the advertised price and that isn't anything to do with the tenants because at the right price a property investor would buy it.

    The agent and the seller must have thought how wonderful it was when you came along and made an offer for more than they can get from anyone else. They will now be hoping that as first time buyers you miss something out like a full survey and so don't find out what is wrong with this house.
    Last edited by Cakeguts; 20-04-2017 at 9:32 PM.
    • VintageHistorian
    • By VintageHistorian 21st Apr 17, 10:27 AM
    • 255 Posts
    • 1,623 Thanks
    VintageHistorian
    We bought our first home that was a student let. It had been up for sale for months and was originally being sold as "Buy to let investors only" because they wanted to sell it with the students as sitting tenants. After a few months the price was reduced by £10k and it was marketed as "Buy to let investors and first time buyers", which was when we went and had a look.

    Obviously I haven't seen the house you're viewing, but in our case it was pretty obvious why it wasn't selling. The vendors had owned it for 8 years and done very little with the place, and more importantly the bathroom was in such a state (aging bathroom suite with black mould growing on the ceiling and grouting etc) that it would clearly need to be completely ripped out and redone before it could be let back out again.

    We were originally pipped to the post by another buyer, I've got no idea if they were FTB or investor, but they pulled out a week after the referendum result. We then made an offer £3k below the new asking price and then had to wait a few weeks while the vendors mulled it over (aka waited for someone else to come by with a better offer) before finally agreeing.

    The main hiccup we had was that the students originally refused to move out when they said they would. I'm pretty sure the estate agents (who were also the lettings agents) were trying to get us to become reluctant landlords as they didn't seem to think it was much of a problem and they were shocked when I yelled at them and said we were pulling out of the sale. 3 days later and the students were moved on to other accommodation, I went to check the house, and we progressed from there (the agents incompetence was a running theme through the whole thing).

    I think we got quite lucky in that our full building survey didn't show any major defects, barring the RCD needing to be upgraded. The house was fine structurally, it was just neglected after 8 years of frequently changing tenants and owners who lived over an hour away, who were clearly just trying to bleed it dry before flogging it and moving on to the next big buy. Any investor that wanted to buy it would have offered below asking price due to the bathroom refurb and the general decoration that would have been needed, new carpets through the whole place, fresh paint, probably replacing or regassing some of the double glazed windows as they're starting to fail. We also chatted with the neighbours and realised that the area was mainly young families, and some of the students who had lived there before had been very noisy and not particularly understanding of the words "please don't play loud music at 1am on a Tuesday, I have work tomorrow", so that had led to a few tensions around the place.

    Sorry this is so long but I wanted to give you a thorough idea of the situation. I'm now sitting in the house, with a long list of plans for all the things we'll do to it to make it lovely again. All it needed was people who would care about it and invest the time, energy and money in to bringing it up to scratch. As long as you get a full survey (and I'd recommend an electrical check too) and go in with your eye wide open, then I don't think it will be quite as bad as you think.

    Also don't exchange contracts until vacant possession is confirmed and check the house yourself once you're told the tenants are gone. In our case it was quite obvious they'd left as the entire place was clear of everything bar furniture, and they'd cleaned the place pretty thoroughly since they wanted their deposit back.

    Good luck!
    "You won't bloom until you're planted" - Graffiti spotted in Newcastle.

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    • Cakeguts
    • By Cakeguts 21st Apr 17, 1:04 PM
    • 3,041 Posts
    • 4,202 Thanks
    Cakeguts
    We bought our first home that was a student let. It had been up for sale for months and was originally being sold as "Buy to let investors only" because they wanted to sell it with the students as sitting tenants. After a few months the price was reduced by £10k and it was marketed as "Buy to let investors and first time buyers", which was when we went and had a look.

    Obviously I haven't seen the house you're viewing, but in our case it was pretty obvious why it wasn't selling. The vendors had owned it for 8 years and done very little with the place, and more importantly the bathroom was in such a state (aging bathroom suite with black mould growing on the ceiling and grouting etc) that it would clearly need to be completely ripped out and redone before it could be let back out again.

    We were originally pipped to the post by another buyer, I've got no idea if they were FTB or investor, but they pulled out a week after the referendum result. We then made an offer £3k below the new asking price and then had to wait a few weeks while the vendors mulled it over (aka waited for someone else to come by with a better offer) before finally agreeing.

    The main hiccup we had was that the students originally refused to move out when they said they would. I'm pretty sure the estate agents (who were also the lettings agents) were trying to get us to become reluctant landlords as they didn't seem to think it was much of a problem and they were shocked when I yelled at them and said we were pulling out of the sale. 3 days later and the students were moved on to other accommodation, I went to check the house, and we progressed from there (the agents incompetence was a running theme through the whole thing).

    I think we got quite lucky in that our full building survey didn't show any major defects, barring the RCD needing to be upgraded. The house was fine structurally, it was just neglected after 8 years of frequently changing tenants and owners who lived over an hour away, who were clearly just trying to bleed it dry before flogging it and moving on to the next big buy. Any investor that wanted to buy it would have offered below asking price due to the bathroom refurb and the general decoration that would have been needed, new carpets through the whole place, fresh paint, probably replacing or regassing some of the double glazed windows as they're starting to fail. We also chatted with the neighbours and realised that the area was mainly young families, and some of the students who had lived there before had been very noisy and not particularly understanding of the words "please don't play loud music at 1am on a Tuesday, I have work tomorrow", so that had led to a few tensions around the place.

    Sorry this is so long but I wanted to give you a thorough idea of the situation. I'm now sitting in the house, with a long list of plans for all the things we'll do to it to make it lovely again. All it needed was people who would care about it and invest the time, energy and money in to bringing it up to scratch. As long as you get a full survey (and I'd recommend an electrical check too) and go in with your eye wide open, then I don't think it will be quite as bad as you think.

    Also don't exchange contracts until vacant possession is confirmed and check the house yourself once you're told the tenants are gone. In our case it was quite obvious they'd left as the entire place was clear of everything bar furniture, and they'd cleaned the place pretty thoroughly since they wanted their deposit back.

    Good luck!
    Originally posted by VintageHistorian
    Now what the OP needs to know about your purchase is, was the house you bought very cheap for an expensive area? This is what the OP is looking at. They are looking at a house in and area that they wouldn't normally be able to afford. If you could have afforded to buy one in the area that you bought in without it being in a terrible state that is a different case to the one the OP has because no one knows why this house is so cheap for the area that it is in.
    • Phantom tollbooth
    • By Phantom tollbooth 21st Apr 17, 3:17 PM
    • 3 Posts
    • 1 Thanks
    Phantom tollbooth
    Adding another viewpoint...

    When we bought our current house it had been let. Viewing to completion happened in just over 3 months. No problems.

    Of course we didn't exchange until they had moved out and we had looked round again, although we decided to carry on with our searches, surveys etc during the notice period. We wouldn't have minded if it had taken a couple of months longer, but worked on the basis that most people are decent people who don't want the hassle of court proceedings and so forth just to drag out the inevitable. In the end I think the tenants moved out a little earlier than they had to and their landlord (our vendor) refunded them pro rata. He seemed decent.

    (I certainly am not criticising people who end up staying until the bailiffs come and cannot move elsewhere for financial reasons or because they need local authority assistance, btw. It doesn't sound like this is applicable in the OP's case, and it wasn't in ours).

    Anyway, my point is just that this not necessarily the end of the world. Be patient. It could still all work out.
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