Advice - exchange contract on purchase before sale?

PrincessSalmon

Hi everyone,

Would appreciate some advice please.... we found a property that we want to buy ahead of listing our property for sale - I know that is not ideal! But we were upfront with the seller about this and he understood the position when he accepted our offer in early March.

We quickly listed our property for sale and accepted an offer on the 9th May.

Our purchase was obviously more advanced than our sale and our conveyancing is essentially complete. Conveyancing on our sale is also progressing well.

Our seller has recently changed his tune and is pressuring us to exchange asap. Last week he threatened to withdraw unless we exchanged by 14th June and now has given us an ultimatum of 28th June. It turns out he has had a private cash offer for the property for £15k more than our accepted offer! So we are trying to work out how to appease him and ensure we don't lose the property.

Our sale is not ready to exchange currently, as our buyers are selling some investment properties in Scotland to fund their purchase and won't be in a position to exchange until mid July and complete soon after. It has been suggested to us by the sellers agent that we exchange on our purchase in line with the vendors request next week, ahead of exchanging on our sale. We have the 10% deposit on our purchase in savings and are reliant on our sale to pay our stamp duty and cover our move costs.

Is this a feasible way forward? We don't want to own two properties and have the stamp duty penalty and a condition of our mortgage on the new property is that we repay our mortgage on our existing property within 3 months.

Has anyone exchanged on their purchase ahead of their sale in this way?

What is the risk if our sale gets delayed?

Any advice would be much appreciated!!

babyblade41

Absolutely not... if you can't fund the new property without selling yours then what will you do if your sale falls through.. or am I reading this totally wrong ??

I can't believe your solicitor would recommend this either

davidmcn

PrincessSalmon wrote: »

What is the risk if our sale gets delayed?

If you need the funds from it to complete your purchase (and you've just told us you do) then you risk being in default in your purchase contract and losing your deposit (and possibly being liable for costs beyond that). So no, you shouldn't do it.

Have you discussed it with your solicitor? I'm not sure why you're even talking about it directly with the seller's agents.

ethank

You've said above that you don't have the funds to complete the sale without selling your home.
At exchange you are entering into a legal commitment to complete on the sale otherwise your forfeit your desposit and if you fail to complete you could end up with more costs.

You are a dependent buyer. You should not exchange until you've exchanged on your purchase.

You could lose a lot......

hazyjo

Understand saying you were up front, but the usual thing in those circumstances is to say you're waiting for a buyer and the vendor would either 1. Keep marketing, 2. Accept your offer and take it off the market, or 3. Give you X number of weeks' grace to get a buyer.

There should not have been an option 4 whereby you started the buying process. Not sure who advised you that would be a good idea!

G_M

Ypur sale might fall through. How would you then plan topay for your purchase?


Or would you simply swallow the considerable costs of having exchanged but failed to complete?

Tom99

PrincessSalmon wrote: »

Hi everyone,

Would appreciate some advice please.... we found a property that we want to buy ahead of listing our property for sale - I know that is not ideal! But we were upfront with the seller about this and he understood the position when he accepted our offer in early March.

We quickly listed our property for sale and accepted an offer on the 9th May.

Our purchase was obviously more advanced than our sale and our conveyancing is essentially complete. Conveyancing on our sale is also progressing well.

Our seller has recently changed his tune and is pressuring us to exchange asap. Last week he threatened to withdraw unless we exchanged by 14th June and now has given us an ultimatum of 28th June. It turns out he has had a private cash offer for the property for £15k more than our accepted offer! So we are trying to work out how to appease him and ensure we don't lose the property.

Our sale is not ready to exchange currently, as our buyers are selling some investment properties in Scotland to fund their purchase and won't be in a position to exchange until mid July and complete soon after. It has been suggested to us by the sellers agent that we exchange on our purchase in line with the vendors request next week, ahead of exchanging on our sale. We have the 10% deposit on our purchase in savings and are reliant on our sale to pay our stamp duty and cover our move costs.

Is this a feasible way forward? We don't want to own two properties and have the stamp duty penalty and a condition of our mortgage on the new property is that we repay our mortgage on our existing property within 3 months.

Has anyone exchanged on their purchase ahead of their sale in this way?

What is the risk if our sale gets delayed?

Any advice would be much appreciated!!

Unless you can fund the new purchase without selling the old property don't do it.

getmore4less

You could pass the demand down the chain.

How likely is this £15k.they extended the deadline once.

With a real cash buyer they could just exchange in days and just tell you it is sold.

If you believe it offer another £0-£15k

paddy's_mum

ethank wrote: »

You could lose a lot......

You could lose the lot, especially if a breakdown in the process dragged on and your seller wanted to play hard ball.

Another one saying don't do it!

PasturesNew

Do not do it.
Your solicitor will advise you to not do it.

The minute you exchange you are legally bound to buy that house - and if your buyers pull out then you could be forced to sell your house at a discount to pay 10% to the owners of the house you didn't end up buying.

If it went wrong, what's the worst that can happen? You will be forced to sell your house quickly (lose £15-20k) to hand over 10% of the value of the house you'll not be able to buy (lose another £20-30k) - and you'll be on the streets, £35k-50k worse off and unable to buy much with what you've got left.

PrincessSalmon

Hi all

Thanks so much for the replies - I understand we should not do this! Our seller has now said he needs 20% of the purchase price to make an investment and this needs to be done by 15th July. Our sale is not ready to exchange until end July.

We have the funds he is seeking and can do this, but obviously don’t want to put our funds at risk in case anything goes wrong and he doesn’t follow through to completion. Is there any way we can include a clause in our purchase contract to protect our funds? E.g. if for whatever reason we do not complete, could we own 20% of the property or need the seller to return our funds on sale of the property (if he pursued with someone other than us)?

Many thanks