As a buyer, can I offer a lock-out contract to my seller?

Jasper2011

When "selling" the idea to your seller, what would you say is the benefit to them?

Why is it better for them to go with your lock out agreement, instead of just finding another buyer who can go faster than you?

(If there's no benefit to them, why would they agree to it?)

Personally, I dont think they would be able to get their home back on the market, find another buyer, and get to the stage where we are at with them already in the time it takes us to recoup the lost time we have had with our own buyers.

And surely a cash incentive is enough of a "benefit"?

I have learned the hard way that when it comes to buying and selling talk is really cheap. I appreciate honesty and good will, but evidence seems to speak much louder. And a cash incentive is more evidence than our 'promise' (I would've thought).

It may not come to this. It may be that we can speak to the vendor, let them know our position, explain that our own sale has fallen through due to no fault of our own, that we are still actively trying to sell our property and that we truly believe we will be able to sell our home in a reasonable period of time.

Part of the problem is that our purchase is in a different part of the country where it is not unusual for properties to be on the market for many many months, whereas we live in an area where a lot of houses sell before the agents have even had time to put the For Sale sign up. Trying to convince our sellers that we can move swiftly is tricky. Of course, nothing is guaranteed. Which is why a deposit might convince them more than words. I just dont know.

saajan_12

In theory, you could agree to pay a x% deposit to the seller's solicitors, with the agreement that the sellers will sell the property to you for the agreed price, within X weeks if you are ready to exchange and complete by that time for that price. If you are not ready to exchange, you lose the deposit. If the sellers pull out and fail to exchange with you, they return the deposit.

However few issues:
1) These agreements don't have a standard form, and so the solicitors are likely to take a lot of time (and fees) to agree and draft the terms.

2) You would have to broach this with the sellers informally first, without spooking them that you think you may be VERY delayed in exchanging/completing.

3) Sellers have no downside, so could keep marketing the property and if another buyer came along with a better offer/timeline to suit, the sellers could happily break the agreement, return your deposit and go ahead with the new buyer. They need to have a downside to entering and breaking the agreement, else you don't have any more security than you do now.
-> Instead you could suggest if the sellers fail to exchange / complete with you within a certain time frame and you are ready, they pay you a x+something.


Effectively, you are trying to exchange with a long / non fixed completion date and predetermined damages if either side fails to complete.

Jasper2011

What do you intend to be the disincentive for your vendor to pull out?

I guess this is how I see things.

Our sellers currently have a sale, and its a decent price that they are happy with. They agreed to take their property off the market if we could demonstrate that we were serious - by this they wanted to see that we were selling our home, that we had a sale in place, that we had our mortgage agreed, and various other bits and pieces. We were able to provide all that.

If our own sale falls through, we would need to put our property back on the market. Our sellers would see that, and be concerned. They wont appreciate that it is likely we will be able to find another buyer in a matter of weeks if not sooner. They would likely put their property back on the market, thinking that our chain had collapsed and that it would be months (if ever) before we were in a position again to buy their home.

I think that they would be better off waiting for us to resell, rather than try and find new buyers themselves. But of course I would say that. Like I said before, talk is cheap. I am trying to find a way to convince our sellers of how serious we are, and i'm prepared to put my money where my mouth is.

So its not about trying to provide a disincentive for them to pull out. Its about trying to convince them that we are serious and its in their best interest not to re-market their home. But clearly thats their call, they may feel otherwise. If they did agree, they would agree not to put their home back on the market whilst they wait for us to find another buyer. Yes you are right there is probably nothing to stop them pulling out and selling to someone else in the meantime, but this is less likely to happen if they are not actively marketing? (genuine question)

Car1980

What you are really asking is "my sale is about to fall through, how can I keep my own sale going?"

There's no real solution - chains fail all the time.

You and your solicitor need to give your buyer a kick up the backside and an ultimatum.

Jasper2011

You are proposing a payment of £30k

Well, I didn't say that. I was asking the question to people here what they thought a reasonable payment would be. £30k seems quite high to me.

Also, is your seller also buying a property? If, for example, you want a 3 month lock out, will your seller's seller also wait 3 months?

No, this isn't an issue here.

eddddy

Jasper2011 wrote: »

And surely a cash incentive is enough of a "benefit"?

But you're not offering a cash incentive.

Presumably, you will be offering the asking price of £350k plus the likelihood of a slow sale.

That's potentially a worse deal than somebody else who offers the asking price of £350k plus the likelihood of a fast sale.


If you were to say I'll offer you an extra £25k, i.e. £375k, if you're prepared to wait a bit longer and take the extra risk - then there would be a cash incentive.

Jasper2011

Presumably, you will be offering the asking price of £350k plus the likelihood of a slow risky sale.

That's potentially a worse deal than somebody else who offers the asking price of £350k plus the likelihood of a fast sale.

Thats a fair point, but the key word is "potentially". I am trying to prevent that potential becoming a reality. Your statement only holds true if they also have someone else offering the asking price of £350k plus the likelihood of a fast sale. In which case yes, absolutely, why would they go with us.

But they dont have that. They might get that, but then again they might not. We offered them a good deal. The market isn't as much of a sellers market in the part of the world where we are buying. Things move much more slowly.

I'm trying to put myself in the mind of our seller.

They have two options:

1. Rescind their acceptance of our offer, put their house back on the market, and hope that they do get another buyer quickly, who could offer the asking price and provide a fast sale

2. Stick with us, wait a bit longer (or potentially not), and get the deal they are currently happy to accept.

I'm trying to find a way to convince them that option 2 is their best option, without having access to any actual evidence (other than a crystal ball!).

Guest101

You know what I would do if I was your vendor. As soon as you propose this, I increase the price by 10-15%. You're clearly over eager and desperate to buy the house.


Worth considering what the implications are.

saajan_12

Jasper2011 wrote: »

So its not about trying to provide a disincentive for them to pull out. Its about trying to convince them that we are serious and its in their best interest not to re-market their home. But clearly thats their call, they may feel otherwise. If they did agree, they would agree not to put their home back on the market whilst they wait for us to find another buyer. Yes you are right there is probably nothing to stop them pulling out and selling to someone else in the meantime, but this is less likely to happen if they are not actively marketing? (genuine question)

Jasper2011 wrote: »

Thats a fair point, but the key word is "potentially". I am trying to prevent that potential becoming a reality. Your statement only holds true if they also have someone else offering the asking price of £350k plus the likelihood of a fast sale. In which case yes, absolutely, why would they go with us.

But they dont have that. They might get that, but then again they might not. We offered them a good deal. The market isn't as much of a sellers market in the part of the world where we are buying. Things move much more slowly.

I'm trying to put myself in the mind of our seller.

They have two options:

1. Rescind their acceptance of our offer, put their house back on the market, and hope that they do get another buyer quickly, who could offer the asking price and provide a fast sale

2. Stick with us, wait a bit longer (or potentially not), and get the deal they are currently happy to accept.

I'm trying to find a way to convince them that option 2 is their best option, without having access to any actual evidence (other than a crystal ball!).

Of course it is about providing a disincentive. Yes you're serious, but you're still slow. The seller could accept the deposit, then remarket, if they find a new buyer with a better offer, then go with them. If not, they can 'reaccept' your offer, believing you will be willing to proceed as otherwise you lose your deposit. A smart seller would make that potential into a reality, you're giving them a free option.

Jasper2011

The seller could accept the deposit, then remarket

The seller wouldn't be able to market their property if they were accepting some kind of financial incentive to stick with us though, isn't that the whole point? They would take it off the market. And if they dont (or they put it back on) then we take our money back.

I'm struggling to see the issue here.

If I were a seller (and I am) if a potential buyer showed that level of interest and commitment I would be chuffed to bits. An offer of a sizeable financial incentive (call it a deposit or down-payment or whatever you like) just to wait a few months, unless I was absolutely desperate to sell - and I dont believe our sellers are in that position.

It's essentially a cast-iron guarantee that you have a sale - you know that your buyer is going to do everything they can possibly do to progress and complete the sale, else they lose their money. This forum, and others, are chock full of tales of woe from both buyers and sellers whose chains have collapsed or otherwise lost their dream homes/wasted time/money/etc and yet several people on here are still suggesting that there is no incentive for the seller to agree to this. Sorry, I just dont get it.