Exclusivity agreement or other safeguards

panic-prone

Hi all

I'm a FTB who has had fingers burnt (more like an entire arm!) and would like to avoid/minimise risk of another failed transaction.

Not going to bore you with details but I had a purchase going through and the vendor decides to up the price 2 days before exchange! :mad: I think I did all I could on my part (offer accepted end Oct 2010 and due to exchange mid Jan 2011 so pretty 'smooth' process in all and I was actively chasing mortgage, survey, solicitors to keep things moving). I can't stand people not keeping their word so I walked away from the deal and I think I was paying top price for it was worth already. I lost about £1,500 in the process (fees for structural survey, searches and mortgage booking fee) and was left completely traumatised by the whole thing, being my first time....:(

I've now finally gathered the motivation to look again but afraid same may happen. My questions:

1) Any thoughts on it being 'less risk' if I buy in a chain (i.e. vendor definitely needs the money and there is sort of a timetable due to the other deals up the chain)?

In previous deal there was no chain. The vendor was a developer - he bought it cheap, did it up and sold. I naively thought it would be quite straight-forward but I guess he could afford to wait a bit for a better offer so decided to 'gazump' me. Not sure if this is technically gazumping as he did not have another buyer at hand when I called it off... but I digress, it doesn't matter what it's called, I lost money.

2) Exclusivity agreements - do they really work in practice and how much hassle are they?

I have read up a bit in the MSE forums and it seems not many people use it/like it. I'm just looking for some protection and don't mind putting up some money upfront as I am a serious buyer when I do commit. I think it's fair enough that I lose the money if I pull out or drag my feet unreasonably.


I know it's all down to who you deal with, specific circumstances etc etc but I'd like to see what people (with more experience than me!) think generally. All comments welcomed.

Thanks!

DVardysShadow

Put it down to experience and move on. It happens, and you have to regard £1500 as being at risk every time you have an offer accepted. You could try protecting yourself with an exclusivity agreement, but generally these are probably too much hassle - you would probably spend £500 more on legals to do it as there is no agreed or recognised format, so it would have to be individually negotiated - which is where the hassle will develop. These agreements, bind the seller and not the buyer, which leaves the seller unhappy at the imbalance of rights, and potentially leave the seller with their property held off the market for a long time, with no freedom to go back on, even though the buyer is obviously dead in the water. As buyer, you would not want the rights to be evened up either, because there is a period pre exchange of contracts where you need to be free to drop the deal if something is not to your satisfaction.

In short, if you try too hard to protect yourself, you will come across as an awkward buyer - "If he is that fussy over £1500 fees, he will be a right pain over the property", which in turn could scupper a lot of deals

Obviously you have not majored on your deal went sour. So I don't know exactly what happened, but it seemed that you walked away. I would suggest that the way to deal with the scenario is to stick to your guns and give the seller 7 days to exchange at the agreed price. Make the seller be the one who walks away.

Richard_Webster

If exclusivity agreements really worked then there would be lots of them all over the place. There aren't, so that says something doesn't it?

Problem is that the seller will usually want paying something - say £1,000 for taking the place off the market and agreeing not to exchange contracts with anyone else during say a 28 day period.

That sounds easy but the rub is that the seller wants to be able to keep the money if the buyer doesn't go ahead and the buyer says that he wants it back if he has a bad survey or the searches show something detrimental etc.

So the issue has always been trying the define terms that are clear, and not going to be the subject of loads of legal arguments, that hold a good balance between the interest of the seller in encouraging the buyer to be serious about proceeding and protecting the buyer against going ahead when there is some genuine problem with the property.

Most solicitors will say that these agreements are counter productive because they involve spending hundreds of pounds of legal time arguing about the wording of the initial agreement instead of getting on with the business of buyer's solicitor asking questions/carrying out searches and the seller's solicitor providing information/documents/answers.