House sale fallen through and half way through buying

ixalon

Hi all,

Having a bit of a nightmare (though it could be worse!) We had our house on the market for 2 months last year and just before Christmas we accepted an offer on it (for the asking price). The buyer was supposed to complete next Friday but due to financial difficulties had to pull out this week. We were all packed and ready to move out - very frustrating!

Since we accepted their offer, we put in an offer for a house we love, and it too was accepted. We've since put in about £3K-£4K in legal fees, mortgage arrangement fees and various surveys and reports in order to get into a position to exchange contracts and complete quickly. We've not exchanged contracts yet, and the vendor is getting impatient (understandably - as are we!)

However that is now at risk because we won't have the proceeds from the sale when we expected them. We're about £30,000 short of what we need (there's £40,000 equity in the house). Our finances would be able to handle both mortgages with room to spare, but we're at the maximum LTV (80%) offered by our new mortgage provider, so can't lower the deposit.

What options may be available and what would be the best bet? Forgetting about the new house and writing off the £3-4K, a bridging loan, or seeking other finance?

Many thanks!

Money_Bunny

We lost our buyer on the day of exchange about 15 years ago. It was unbelieveably stressful, so I feel for you.

Its not completely unrealistic to think you might find another buyer quickly. We put our house straight back on the market and had a couple round that day who were living in rented and desperate to buy in our development. They bought the survey and search off the original buyer and we completed 16 days later.

So miracles do happen.

ixalon

Thanks Money Bunny. Fingers crossed - our estate agent said that the market was picking up quite a bit, so we're hopeful. Hopefully we don't lose out on the new house in the mean time.

lessonlearned

What a blow for you.

What is your vendor's position, have they offered on another property on the strength of selling to you. Is there a long chain.

I think the best thing is to lay your cards on the table and tell the vendor exactly what has happened. How they react and what they decide to do will depend on what they had planned. If they were planning to rent for while it may not be too much of an issue.

Re the finance side. Taking on two houses is a risk, depends on how strong your nerves are.;)

I'm not sure how many bank/lenders do bridging loans these days. This issue came up with someone I know the other day. They were told that their bank (HSBC) doesn't do bridging loans now.

I can imagine this must be very stressful.

I've just sold my house and your story is one of the reasons why I decided to go into rented accommodation for a few months - to avoid the very scenario you are currently having to go through.

Best of luck.

Money_Bunny

Just to add to my previous post. When we lost our buyer we went into panic mode and started to think through creative finance solutions, bridging loans etc. We concluded that that was just going to prolong the stress. If we couldn't then sell we would have a huge problem.

I think trying to find another buyer is your best bet. After all, the seller of the house you are buying isn't going to want to lose a buyer who is clearly serious. And any new buyer they find isn't necessarily going to be able to complete quicker than you.

Explore whether you can speed up any new sale by your buyer purchasing the survey and search off the previous one (this is doable as our experience showed - though seem to remember there may be an issue in terms of rights of redress if you're not the person who commissioned the work).

And in the (unlikely) event that you do lose the house you want to buy another one will come along!

withabix

Had your buyer Exchanged?

If so, you can sue him for all of your costs, as once they have Exchanged, they are obliged to Complete.

sharpe106

As has been put before getting two mortgages could be stretching it a bit, what happens if you don't get an other offer close to the value of the house you might have to sell it relatively cheap just to get rid of it and save you paying the two mortages, that could work out as being costly in the long run, even a few months could add thousands to the cost.

I would explain to the people you are buying a house of and hope that they don't sell in the mean time, you can only stall them so long and eventually they will twig that you cna no longer buy it until your house has sold and they might be unwilling to deal with you again if you have already messed them around once as they might lose out on the house they wanted.

On the positive side if you got an offer for the asking price then the chances are you can probably get another buyer pretty quick as it sounds like the house is well priced

Racky_Roo

Don't worry too much, I was in the same position last year but I was the seller of the house at the top of the chain. I hung on for my buyers to find another buyer - which happened really quickly thankfully, as my logic was that we had all spent lots of money and I wouldn't find another buyer any quicker if I put my house back on the market. Just be honest and show you are committed to selling and I'm sure they will be fine

MaxTheCat

ixalon wrote: »

Hi all,

Having a bit of a nightmare (though it could be worse!) We had our house on the market for 2 months last year and just before Christmas we accepted an offer on it (for the asking price). The buyer was supposed to complete next Friday but due to financial difficulties had to pull out this week. We were all packed and ready to move out - very frustrating!

Since we accepted their offer, we put in an offer for a house we love, and it too was accepted. We've since put in about £3K-£4K in legal fees, mortgage arrangement fees and various surveys and reports in order to get into a position to exchange contracts and complete quickly. We've not exchanged contracts yet, and the vendor is getting impatient (understandably - as are we!)

However that is now at risk because we won't have the proceeds from the sale when we expected them. We're about £30,000 short of what we need (there's £40,000 equity in the house). Our finances would be able to handle both mortgages with room to spare, but we're at the maximum LTV (80%) offered by our new mortgage provider, so can't lower the deposit.

What options may be available and what would be the best bet? Forgetting about the new house and writing off the £3-4K, a bridging loan, or seeking other finance?

Many thanks!

I have had much the same experience myself this week. We got to exchange a week last Friday all monies lodged and contracts signed. My vendor however had forgotten to organize his insurance for the house he was buying so exchange was delayed to Monday. On Monday morning I got a call from my EA stating that my buyers had pulled out of the purchase. My problem is that this leaves me 320k short therefor it's a chain collapse. All you can do is unpack make the house look nice and put it back on the market which is what I'm doing.

Ivana_Tinkle

Same thing happened to us last summer. It seemed like the end of the world, so you have my sympathy!

When you think about it, you have to just put your house back on the market. The only reason to get a bridging loan would be if you think it's not going to sell quickly, in which case you're going to be stuck paying two mortgages and an eye-wateringly expensive loan for ages.

Tancred

ixalon wrote: »

Hi all,

Having a bit of a nightmare (though it could be worse!) We had our house on the market for 2 months last year and just before Christmas we accepted an offer on it (for the asking price). The buyer was supposed to complete next Friday but due to financial difficulties had to pull out this week. We were all packed and ready to move out - very frustrating!

Since we accepted their offer, we put in an offer for a house we love, and it too was accepted. We've since put in about £3K-£4K in legal fees, mortgage arrangement fees and various surveys and reports in order to get into a position to exchange contracts and complete quickly. We've not exchanged contracts yet, and the vendor is getting impatient (understandably - as are we!)

However that is now at risk because we won't have the proceeds from the sale when we expected them. We're about £30,000 short of what we need (there's £40,000 equity in the house). Our finances would be able to handle both mortgages with room to spare, but we're at the maximum LTV (80%) offered by our new mortgage provider, so can't lower the deposit.

What options may be available and what would be the best bet? Forgetting about the new house and writing off the £3-4K, a bridging loan, or seeking other finance?

Many thanks!

Surely you can sue the person concerned if you exchanged contracts, can you not? If you haven't then you are in a tight spot.

My advice is that you should never make any offers on another house until contracts are exchanged. You've gone too far, too quickly.