Downsizing/Downpricing - Deposit question

kingstreet

Can you imagine if thousands of people with equity in their homes had to each come up with 10% cash to facilitate exchange?

The whole system would grind to a halt, or bridging loans would suddenly take on greater significance.

moneyistooshorttomention

Smi1er wrote: »

Be warned that sometimes the vendors will use your deposit as the deposit on their new place.

Puzzled as to why you think this is abnormal and/or a problem??

My buyers' 10% deposit on my last house was put towards my vendors' 10% deposit they required on my current house.

Where else would I have got that 10% deposit from if it hadn't been done that way?

That's the norm and there's nothing wrong with it at all. This is what happens in any chain, ie the FTB at the bottom of the chain has their deposit "passed up the chain" through the different links on it.

That deposit doesn't come into play until Exchange of Contracts anyway, so what's the problem?

OP = I had the same concerns as you as to where the deposit my vendor would doubtless require would come from and found out that that was indeed the standard answer to it. The only problem that might arise is where someone is trading-up and will need more than 10% of what they are going to get for their house to put up for the next house.

kingstreet

By nature of the increased prices up the chain, agreement is made that the deposit becomes a smaller percentage each time it changes hands.

Ask solicitor for clarification if in any doubt, as it's their responsibility to resolve between themselves.

redgirlcamden

moneyistooshorttomention wrote: »

Puzzled as to why you think this is abnormal and/or a problem??

My buyers' 10% deposit on my last house was put towards my vendors' 10% deposit they required on my current house.

Where else would I have got that 10% deposit from if it hadn't been done that way?

That's the norm and there's nothing wrong with it at all. This is what happens in any chain, ie the FTB at the bottom of the chain has their deposit "passed up the chain" through the different links on it.

That deposit doesn't come into play until Exchange of Contracts anyway, so what's the problem?

OP = I had the same concerns as you as to where the deposit my vendor would doubtless require would come from and found out that that was indeed the standard answer to it. The only problem that might arise is where someone is trading-up and will need more than 10% of what they are going to get for their house to put up for the next house.

Thanks, I really was having a blonde moment I think .... All your answers have reassured me and I'm slightly embarrassed that I didn't know this !

Meanwhile the first estate agent, who valued the house yesterday has just called saying he has a cash buyer who wants to see the house today before the other agents value it. Luckily I've been reading this forum for a month or two in prep for the sale, so I know all about this manoevre !!!

Dan-Dan

blatant attempt to get you to sign up with them , then as if by magic the cash buyer vanishes into thin air!

redgirlcamden

Dan-Dan wrote: »

blatant attempt to get you to sign up with them , then as if by magic the cash buyer vanishes into thin air!

My thoughts exactly, I wouldn't have known about this before reading it here. I've just told him to wait until after the other two valuations, I don't like to be pressured like this, he's probably just talked his way out of selling my house.

Thanks everyone !

AdrianC

redgirlcamden wrote: »

Be warned that sometimes the vendors will use your deposit as the deposit on their new place.

This is what is confusing me, hopefully we find a chainfree property !

Except you won't be chain-free, so the purchase won't be chain-free. You have no way of knowing if your buyers are chain-free. You will be in a chain. It's just that (hopefully), your purchase will be top of the chain, and hopefully, it's a really short chain of just two transactions.

The person at the bottom of the chain - your buyer, hopefully - will give their deposit money to their solicitor. The next solicitor up will take their solicitor's word for it, and give his word to the next solicitor up. This'll happen up and down the chain.

If a deposit received isn't large enough for the deposit that has to go out, then it'll need to be topped up by that link in the chain.
OTOH, because your deposit received is bigger than the one going out, you'll just get some back, with the difference in value getting back to you on completion.