Buyer trading down - what about a deposit?

Penelope_Penguin

Hello! We are selling our house, but not buying another at this time. We have a buyer who tell us that they own their current home outright, and our house will cost them less than they will receive for theirs. They are, therefore, not taking out a mortgage, and will end up with money in the bank once all is settled.

My question - what do they do regarding a deposit? My understanding is that at exchange, they will become liable for a 10% of the asking price. If they don't have that in ready cash, what do they do instead?

For several reasons, we'd like to have a week between exchange and completion, so exchange and completion is not an option for us.

Thanks for reading

Mallotum_X

You agree an amount between zero and 10%

If they dont have the cash available then you either agree to what they do have (or zero) or walk away.

dragonsoup

We traded "down" in price but up in size ( goodbye SE, hello SW!) and just used our own buyer's deposit to pay forward. Seems to be a common solution as it was agreed by all the solicitors and others in the chain without a murmur

ReadingTim

This is frankly the buyer's problem not yours, but if you're insisting on a deposit then they'll either have to sell their place (and have received the cash) before exchanging contracts on yours, or take out a bridging loan for a couple of weeks.

Alternatively, you negotiate a lower amount as a a deposit, but if it's a token amount, your buyer could exchange contracts yet fail to complete with relatively little loss, which kind of negates any protection you might feel you have by wanting a week between exchange and completion.

Suggest you get comfortable with this being the buyer's problem, or find another buyer.

ThePants999

Here's how it usually works these days:
- Buyer at beginning of chain provides their deposit to their solicitor
- Their solicitor confirms with the next solicitor up the chain that they hold the deposit, and they agree that's good enough
- That solicitor confirms further up the chain that they've had satisfactory proof of deposit, and they agree that's good enough - etc
- Beyond the initial lodging of deposit with solicitor, no money actually exchanges hands until completion
- But this is all supposed to be "as good as" actual payment, so if completion doesn't happen, the deposit remains payable and will be paid.

So from your perspective:
- this is not your problem, sorting out a deposit is their responsibility - but FWIW, it generally won't be a problem for them either as it'll come from the sale of their house as long as they exchange on the sale on the same day as (or before) exchanging on their purchase
- but you shouldn't expect to actually receive money on exchange - your solicitor will likely settle for an assurance from the chain that it's in hand, and you'll get all the money on completion instead.

moneyistooshorttomention

dragonsoup wrote: »

We traded "down" in price but up in size ( goodbye SE, hello SW!) and just used our own buyer's deposit to pay forward. Seems to be a common solution as it was agreed by all the solicitors and others in the chain without a murmur

That's what I did too.

moneyistooshorttomention

dragonsoup wrote: »

We traded "down" in price but up in size ( goodbye SE, hello SW!) and just used our own buyer's deposit to pay forward. Seems to be a common solution as it was agreed by all the solicitors and others in the chain without a murmur

That's what I did too. It was goodbye SW and hello West Wales in my case.....so that was how it went...

Penelope_Penguin

Thank you everybody. Of course, it's dawned on me now that our buyer's buyer will provide more than enough for our buyer to have a 10% deposit to purchase our house