Offer accepted -pay deposit to secure deal?

wobblegobble

First time buyers in good position. Our offer was rejected on a property we were very interested in (top of our budget) and house was eventually sold. Sale on the property however fell through again last week (second time) due to their buyer pulling out. Emergency phone calls to save deal etc and they accepted a revised (but still very low) offer from us. This week another development - vendors have been gazumped by cash buyers on their property and now uncertain about our very low offer.

They are very keen to proceed due to our good position (and we love the house) but having had their fingers burnt twice they are scared they have another chain collapse etc and want to keep house on market in case our deal falls through. I am not prepared to do this for obvious reasons but have offered to pay a deposit to try to ease their fears and confirm our intention to proceed.

Anyone ever done this and any potential pitfalls? We will specify that if no exchange takes place within x number of weeks or they find withdraw then the deposit is fully refundable to us.

Opinions?

P.s We have been looking for ages (and are very picky) and this ticks all the boxes hence our desire to try to secure a deal.

G_M

and house was eventually sold. Sale on the property however fell through again last week

Doesn't make sense! Sold or not sold?

offered to pay a deposit to try to ease their fears and confirm our intention to proceed.

So what would be the terms of this deposit? Refundable if they pull out? What if you pull out? What if down the line your solicitor finds some gremlin and advises you not to proceed? You lose the deposit? Or you can still get it back in which case it becomes a meaningless gesture.

That's why, under the English system (for all its faults) either party can withdraw up to Exchange of Contracts, because neither party can be sure they are able to proceed till the legal/physical/financial checks have been completed on the deal... or the related deal(s) up the chain, all of which are inter-related.

wobblegobble

Thanks for reply. Sale was agreed,not sold (Sorry not originally from UK so if offer accepted then normally means house is sold) If we pull out then non-refundable and we lose the deposit. If they pull out then fully refundable to us. Point taken about potential gremlins etc, but house is only 6 years old and standard in most respects.

G_M

If we pull out then non-refundable and we lose the deposit. If they pull out then fully refundable to us.

It's not normal practice. However I'm sure solicitors could, for a fee, draw up an agreement along these lines. How much deposit are you prepared to risk? Needs to be enough to make a difference to their attitude, but then your risk increases. The point still is the deal could fall through as a result of their fault, but you withdraw and lose your deposit. (your seach reveals half the garden is excluded from the sale; The extension at the back is illegal/dangerous; there is a charge on the property they cannot/will not pay off/remove.....)

The English system has faults, but works. Stick with it.

charliee_3

i'd wonder why buyers have pulled out twice, maybe something is coming up in the survey or valuation that is putting people off?
i reckon as long as you show you are committed by getting the survey down quickly and making sure everything is done in a timely manner i don't see why you would need to put a deposit down now. As long as you don't mess about they would be silly to pull out as they have a bird in the hand..

wobblegobble

Buyers pulled out second time. First time something happened higher up in chain. Don't think anything is wrong, but don't know till survey/valuation has been done. Am now having second thoughts about this and will speak to agents on Monday. Mortgage application submitted Friday so hopefully survey will be done sooner rather than later.

kmmr

When I was buying last time the EA asked me if I would do this, as there was a bit of competition on the house - so I would be able to secure it.

My solicitor advised that it would take a long time to sort out, and we would end up spending weeks negotiating the terms of the deposit, when we could be moving closer to exchange. The issues are as G_M says - there are a lot of perfectly reasonable reasons why you may pull out, and you may put your money at risk for no good reason. Things like surveys, mistakes in advertising literature, refusal to seller to be reasonable on completion date etc etc. You in fact give the seller an incentive to be difficult, as, if you pull out, then they get your money!

If you want to go ahead, I would suggest a two way deposit. So if they pull out, or cause problems, then you have some comeback on them too. But it would be almost impossible to draft a document which covers all issues. And the creation of this document may well cause the bad blood you are trying to avoid!