Buyer only has 2% deposit

Yazmina

I am in the middle of a chain. I agreed to sell my flat back in April and expected to exchange this month. The buyer's deposit should have been £30k but the EA told me he only has £16k. I told my solicitor who had not been informed of the low deposit by the buyer's solicitor.

My solicitor later forwarded an email from the buyer's solicitor saying the buyer would only have £7k to exchange with on 28th July. This was later increased to £10k.

We (me and hubby) have had an offer accepted on a house and the vendor has indicated (via EA) that she will not be happy with a low deposit.

With no-one able to tell me why the buyer's deposit was not confirmed at the outset (by the bank or the solicitor), our options are:

1. Walk away.
(We really like the house, 😔 It's convenient for hubby's early starts and nothing that I like has come on the market in our price range since we stopped actively searching in May).

2. Ask buyer to get a bridging loan.
Solicitor's suggestion. Buyer could refuse. Not sure lenders like deposits boosted by loans.

3. Use the last of my savings to boost deposit on my purchase.
I'll have no savings left. I'll be hopefully saving my purchase, but helping the buyer to get a flat he apparently can't afford.

Thanks.

PersianCatLady

Yazmina wrote: »

We (me and hubby) have had an offer accepted on a house and the vendor has indicated (via EA) that she will not be happy with a low deposit.

Just to clarify, you asked the seller of the house that you want to buy if they would accept a lower deposit because your buyer hasn't got the full deposit to buy your house??

Is this correct??

Yazmina

PersianCatLady wrote: »

Just to clarify, you asked the seller of the house that you want to buy if they would accept a lower deposit because your buyer hasn't got the full deposit to buy your house??

Is this correct??

Er...yeah.

00ec25

Yazmina wrote: »

Er...yeah.

patently a 10% deposit from your purchaser will not be a 10% deposit by the time you pass it on to your vendor if the place you are buying is costing more than the one you are selling

such situations are common (the norm?) and the usual is for you to negotiate with your vendor to get them to accept a smaller deposit from you

however, it appears you have already done that and they are refusing.

your options are therefore those you have outlined. Pick one and run with it. Many people would pick your option 3 ....

it is down to you and your solicitor to agree terms of the contract with your purchaser as to the size of deposit. Once you exchange then your purchaser has to pay that sum. I agree it s a risk if you think he won't but that is what you pay your solicitor to manage for you - the repercussions of him defaulting on the deposit.

PersianCatLady

Yazmina wrote: »

With no-one able to tell me why the buyer's deposit was not confirmed at the outset (by the bank or the solicitor), our options are:

1. Walk away.
(We really like the house, 😔 It's convenient for hubby's early starts and nothing that I like has come on the market in our price range since we stopped actively searching in May).

2. Ask buyer to get a bridging loan.
Solicitor's suggestion. Buyer could refuse. Not sure lenders like deposits boosted by loans.

3. Use the last of my savings to boost deposit on my purchase.
I'll have no savings left. I'll be hopefully saving my purchase, but helping the buyer to get a flat he apparently can't afford.

Here are my opinions on your options:

1. Absolute last option.

2. It either sounds as if your buyer doesn't have the ability to raise the necessary funds or that he has decided to try and pull a fast one on you and get £20,000 off of the price. Was there much interest in your house from other potential buyers? Could you try and find another buyer??

3. I couldn't bring myself to basically give away £20,000 of my money to enable someone else to buy my house. I definitely wouldn't do this.

Yazmina

PersianCatLady wrote: »

Here are my opinions on your options:

1. Absolute last option.

2. It either sounds as if your buyer doesn't have the ability to raise the necessary funds or that he has decided to try and pull a fast one on you and get £20,000 off of the price. Was there much interest in your house from other potential buyers? Could you try and find another buyer??

3. I couldn't bring myself to basically give away £20,000 of my money to enable someone else to buy my house. I definitely wouldn't do this.

It took two months to find a buyer for a good condition, one bed flat, near loads of transport in London. There was an initial flurry of viewings then nothing for six weeks. EA has a lot of sold boards on our street and surrounding streets, but I can't find evidence that anything's really moving. I fear that our vendor won't wait for us to find another buyer. This is the second time she's tried to sell. The first sale fell through because the buyer couldn't get the mortgage.

00ec25

PersianCatLady wrote: »

3. I couldn't bring myself to basically give away £20,000 of my money to enable someone else to buy my house. I definitely wouldn't do this.

eh?

the OP will not exchange on his purchase until such time as his buyer exchanges with him, so the Op is not "giving away" 20k of his own money.

it does not enable someone else to buy his house. It enables OP to buy the house he wants.

Granted that having exchanged with his purchaser there is a risk the purchaser will fail to complete, but again, that is why there are solicitors involved in the chain, and they should be kept up to date on what is happening and increased (or deceased) risks arising from the actions of the purchaser.

G_M

Option 2

Yes, where people are 'upsizing' they sometimes ask their seller to accept a lower deposit at Exchange but
a) not that low, and
b) the seller sometimes refuses, and
c) your buyer has left this negotiation to the last minute

Tell them to find the money (from family, bridging loan, whereever)

Yazmina

00ec25 wrote: »

Granted that having exchanged with his purchaser there is a risk the purchaser will fail to complete

The buyer has said that he is relying on his monthly salary in order to complete. The sale was agreed in April he wants to exchange on 28th July and complete on 28th August. Buyers rarely fail to complete after exchange, but I don't know if there is a greater risk with this guy.

glasgowdan

Isn't this a common issue when someone's selling to buy another place and doesn't have a deposit of their own to use?

If I were you I'd be using savings. Surely once you sell you can take back the savings from the proceeds.

silvercar

Another option is to exchange and complete on the same day, then there is no need for anyone to find a deposit.

Once you have exchanged there is no going back, so would be very rare for your buyer to exchange without knowing he can complete; more likely he will start renegotiating on the day of exchange.

Play the same game that your buyer is doing, tell your seller that you have a smaller deposit. Why should you be the one caught in the middle?