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Hi, just trying to find out what the pitfalls of having an extended exchange to completion period of approx. 6 months are? One of my kids is desperately trying to buy a house in an area where 1st time buyer properties are being sold within 2-3 days of going on market, being outbid (called it gazumping in my day) when he is able to get time off work to view. He's found a place where the owners are buying a new build that won't be finished till autumn and his offer (well over asking price) has been accepted. I'm concerned about mortgage offer expiring, responsibility for property after exchange (I know he would have to take out insurance at exchange).
Anyone else think this isn't a brilliant idea?
Anyone else think this isn't a brilliant idea?
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This is a risk for any period between exchange and completion but the longer it is the more likely something could go wrong. He might become ill or injured and unable to work, or his work might ask him to relocate, or he might want to change jobs but feel locked in as he might not be able to get the mortgage when on probation at a new place.
Just something to think about.
(If the mortgage offer expires and he can't get another, he would be unable to complete and be in breach of contract. In extreme circumstances, he could be sued for tens of thousands.)
I'm also concerned regarding anything happening re the mortgage eg redundancy, accident etc. but
I have to say that my main concern is a deep down suspicion as to why someone would do this in what appears to be a rapidly rising sellers market. The vendors must be aware that their house will sell quickly (went on market Monday my son saw it and made offer on Tuesday and wasn't the first one to do so apparently) so why not wait for a few months and get even more for it (presumably cost of new build has been agreed)?
If my son does exchange and pay 10% could the vendor then do anything untoward with the money or would it be held by solicitor until completion?
Exchanging contracts to buy, before you exchange contracts to sell is risky.... for example,
- Your buyers might back out late in the day, leaving no time to find another buyer
- Property prices might tumble, meaning you can no longer afford the property you are committed to buying.
Deposits are typically held in the solicitor's bank account.
Has he obtained a mortgage yet? Paying over the odds doesn't mean that the valuer appointed by the lender will agree.
Unlikely it is, As one has to find a property then make a full application. Currently only has a Decision in Principle (DIP) which does not constitute a formal offer.
Many thanks to you all for the advice and comments.