Have reserved our dream new build house but buyer of our house has had to pull out

Benmango

Hi all, after a bit of advice for our situation. This is the scenario:

- Sold my house four weeks ago
- Two weeks ago we reserved a new build house by a developer and had it accepted. This house is expected to be ready in October
- Our new house is made up of a big chunk of deposit, a chunk from the sale of our house, plus mortgage, plus 10% help to buy. The reservation was £500 Help To Buy reservation.
- Today we found out our buyers have had to pull out, as the surveyor on our house has valued down our house and they are unable to meet the shortfall. The shortfall is too much for us to absorb or even meet in the middle with.

Our priority is not losing our future house, and trusting that our house will re-sell (our estate agent seem very sure of this as it in a desirable condition) and exchange pre-October. Our house was re-listed tonight.

The estate agent I am selling with have advised us not to worry as October is a fair while away and to keep schtum for now to the developer.

Has this happened to anyone else? What would you advise? The developer's mortgage broker is constantly in touch, and this week indicated they need to exchange within 28 days, which seems crazy to me, as even with the original buyers we had 1st August as a completion date anyway (past the 28 days mark).

I'm not too au fait with things as this is the first house I've sold, so any advice would be much appreciated! As I state, the priority for us is to not lose our future house, but want to know what the ground is in this situation.

Thanks,
James

Bossypants

The concern would lie in their reason for pulling out. Their mortgage valuation might be an anomaly, but generally the valuers tend to use similar standards. In other words, you might find that the same problem of down valuation occurs with future buyers. If you can't afford to even meet in the middle, you may either need to find buyers who are able to cover the shortfall entirely and want your specific house enough to do so, or possibly reevaluate whether you can actually afford the house you have lined up to buy.

That's something to have in the back of your mind, but for now all you can do is relist and hope for the best.

Thrugelmir

Benmango wrote: »

The developer's mortgage broker is constantly in touch, and this week indicated they need to exchange within 28 days, which seems crazy to me, as even with the original buyers we had 1st August as a completion date anyway (past the 28 days mark).

Providing matters are moving forward. Then the 28 days is extended. The fact that you are not in a position to proceed will soon become apparent.

diggingdude

? How big was the shortfall in the valuation? That may be your biggest issue

dwsjarcmcd

For me, the key thing would be not to exchange until you are certain you are in a position to proceed. As has been pointed out above, there is a strong chance the down valuation may happen again and therefore I think you should review you priority from buying your new house to ensuring you sell your current one.

What was the reason for the down value? Was it just the price the surveyor disagreed with, or were there some defects noted that you need to fix?

AnotherJoe

Benmango wrote: »

I'm not too au fait with things as this is the first house I've sold, so any advice would be much appreciated! As I state, the priority for us is to not lose our future house, but want to know what the ground is in this situation.

Thanks,
James

I suggest your priority should be not to end up in no mans land, exchanging on the new build with nothing guaranteed on your sale.
The key issue would seem to be the down valuation. I'm concerned it must have been drastic if your buyer didn't even attempt to renegotiate on the price. Are you sure that's the reason or coudl it have been an excuse ?
What is your affordability like for the new house? How much are you dependent on getting asking price and how much below that could you sell at?
In your position I'd hope I could get a new buyer very quickly, if not you may have to pull out.
One other question, is this move promoted by desirability of the new house or looking to move anyway ?

Benmango

Thanks all for the responses.

The downgrade on my current house was due to a lack of nearby properties to compare to. My estate agent spoke at length to both surveyors, and he stated they were really genuine guys but that they couldn't value it at any more because of a lack of comparison. My EA was flaggerghasted (his exact word) as the sale price is more than fair, and the buyers are happy to pay it, but the surveyors indicated their hands were tied. Unfortunately the gap was too big as the buyers were at their max & I cannot come down to that level. If I could financially I would.

We do have to move as my current house is co-owned with an ex partner.
I agree that we cannot exchange contracts - it'd essentially be a 30k gamble.

I think it's looking more likely I'll have to tell the developer what has happened.
One question I have - we have paid £500 reservation & our reservation date is up until 20th June. If we tell them our sale has fallen through, will they still have to give us up until that date?

AnotherJoe

Dont see why not unless the contract you signed says different.
But you wont exchange by then obviously.

happy35

Is part exchanging with the builder an option? Not sure though with you owning with an ex, but potentially they could receive their proceeds of sale after you complete