Confused about "10% deposit required on exchange of contracts"

silvercar

People often agree a lower percentage than 10% if money is tied up in the homes being sold.

DpchMd

G_M wrote: »

If your buyer has only 5% of the purchase price available, it is up to you (via an instruction to your solicitor) to decide if you are willing to accept this, or not.

If not, your buyer must find, steal, borrow, beg the missing amount, or withraw from the purchase.

Likewise, you can ask your seller if they are willing to accept less than 10%. They can agree, or not.

Got it, thanks!

bubblegum6000

Last time we sold/bought we didn't put anything down! All our money was tied up in equity! I can only presume that our buyers deposit was passed up but it wouldn't have covered our 10%!

We were never told about this either so I have always assumed only the person at the bottom had to pay! Learn something new every day :rotfl:

Daisymoocow

I think I know what you mean DPCH - Usually when you are in a chain of sales/purchases the deposit is passed up the chain... in order to exchange, your buyers will have to give their solicitor £24k ( 10%).. your deposit required on exchange will be £40k. You will need to find £16k in order to exchange. This is however, unless all parties in the chain have agreed to a smaller deposit - your solicitor should clarify with you what % has been agreed and the balance required before exchange. Sometimes if the money being transferred up the chain is between 5% and 10% then no further money will be requested form you... but this again has to be agreed by all parties. This is how I understand it anyway! Hope this helps

pinkteapot

If cash flow means it will be a problem for you to "top up" the deposit by £16k, make your solicitor aware of this at an early stage. They can check that the person you're buying from is happy to accept a smaller deposit on exchange. They can find out if your buyer is able to pay a 10% deposit on exchange, then ask the seller if they'll take that amount as a deposit.

Some sellers will agree, some won't. Up to your solicitor to do the negotiating.

silvercar

pinkteapot wrote: »

If cash flow means it will be a problem for you to "top up" the deposit by £16k, make your solicitor aware of this at an early stage. They can check that the person you're buying from is happy to accept a smaller deposit on exchange. They can find out if your buyer is able to pay a 10% deposit on exchange, then ask the seller if they'll take that amount as a deposit.

Some sellers will agree, some won't. Up to your solicitor to do the negotiating.

I would take the opposite view.

We found out, just as everyone was ready to exchange, that one party in the chain had no access to further funds and could only pass on what was 4% of their purchase price. At that point everyone just wanted to exchange and so it was agreed. If discussions had taken place at an early stage, that buyer may have been rejected and the whole process taken much longer.

pinkteapot

silvercar makes a very fair point. I personally would be too worried about spending money on the process if my deposit might be a no-goer, so I'd ask early on, but it's true that close to exchange, everyone will want to exchange!