Daughter being pushed to exchange - 1st time buyer in long chain

andrewneiljane

Our daughter and partner are at the bottom of a long chain as 1st time buyers.  Exchange could not take place due to lockdown and despite being pushed, on the advice of their solicitors, they would not agree to an exchange and completion on the same day as government directives would be flouted on moving into the property.  The estate agent has come back to them saying No. 3 in the chain's mortgage expires at the end of April and if they don't agree to proceed by then, they will be responsible for the chain collapsing.  It is obviously a house they love, being their first home and are anxious about losing it and also feel obligated to the chain.  We feel that there is going to be a negative impact in house prices to what extent is unknown, but it is going to be them who are shouldering all the risk and they could end up in a negative equity scenario in terms of the valuation of the property post covid or get much more for their money post covid so to pull out.  Any thoughts/advice would be most welcome

Cscott139

House prices like any other investment can go up and down but this shouldn't be looked at as an investment. If they want the house and see themselves living there for a good few years then short term house price fluctuations shouldn't affect them. If they think house prices will fall they will need to wait and see what happens but that may involve losing this house and reapplying for a new mortgage etc

Marvel1

andrewneiljane said:

The estate agent has come back to them saying No. 3 in the chain's mortgage expires at the end of April and if they don't agree to proceed by then, they will be responsible for the chain collapsing. 

feel obligated to the chain.  

Just taking this alone, don't feel guilty, they haven't exchanged and can drop anytime, they will only lose their costs.

chris.heighton

I'm no expert.

But, I'd say if they love the house to go for it. There is still a house shortage, so I doubt there will be any major impact on house values (but it doesn't happen till it happens!)

Not sure if the below helps;
https://www.theguardian.com/business/2020/apr/06/house-prices-will-not-fall-far-despite-lockdown-says-study?CMP=Share_AndroidApp_WhatsApp

xylophone

This is a home rather than an investment? And if house prices drop it will be across the board?
You say that they love the house.
Why should they not proceed to exchange?

dunstonh

I think the estate agents are pulling a fast one.  
Lenders have extended the time on offer letters.   It is possible that deal specific terms may expire and revised terms offered but the offer letter itself is not going to be a problem.   
There is no housing market at that moment effectively. No-one is going to be moving and there is no need to exchange at this time.

 We feel that there is going to be a negative impact in house prices to what extent is unknown,

There are also suggestions that when the housing market restarts, house prices will rise in some areas.

1 - lack of supply of houses on the market

2 - people stuck indoors in the same house for months may want a change and may look to properties with land. Increasing demand for those types of property.  This could stimulate the availability of housing at the bottom end of the market (first time buyers).

You cannot assume that the prices will drop because of this event.   Some may but others may rise.  People may start thinking about future lockdowns and whether it is the type of house they could cope with being in lockdown and that could influence pricing.  

Even the pessimistic projections seem to only suggest a short term 3% loss for 2020 with 7% increase in 2021.

Thrugelmir

Tell them not to be bullied. Over 3 weeks yet to the end of the month. See how events unfold. 

andrewneiljane

Thank you for your comments, links and views - all very welcome and useful.  I know Lenders have been told to extend offer timescales which is why I am questioning this being cited as the reasoning behind the drive to exchange. If they do move to exchange and complete, this is against the advice from their solicitors which we would urge them to follow as opposed to the estate agents here who have their own interests in getting the property sold. 

[Deleted User]

Bear in mind the "lenders have been told to extend offer timescales" isn't strictly true - lenders are extending offers, but on a case by case basis. If there is a material change in the application data or quality - e.g. any credit issues since the first offer was issued (probably 3 to 6 months ago now), the borrower is furloughed etc... that would all mean a review - getting 3 months isn't as easy as the Government/news are making it sound.

I do agree with other posts though, don't feel an obligation to the chain. If they've not exchanged, it's not really their problem. They need to look out for their interests.

If this is the ideal house, is simultaneous exchange & completion really not possible? If it fails, they've not exchanged... if it doesn't, they're in!

Appreciate there is a 'lockdown' going on, but many many people are moving around and completion. Haven't Government said 'try' not to complete as opposed to don't... leaving scope for key workers etc. but also people who would be negatively impacted financially by not completing (wasted valuation & legal fees etc.). Health is certainly more important than finance, but I'd think the risk of moving into an empty home (which they'll then clean anyway??) must be lower than people wandering round Tesco!?

By all means try to extend it, but if the whole chain are going for offer extensions over the next few weeks/months, it may well collapse anyway!!

dunstonh

The estate agent represents the vendor not the buyer.  Estate agents are well known for playing on the naivete of young first time buyers.

You cannot complete as the people in the chain cannot move house during lockdown.  So, whatever happens, the offer letters are going to expire.

amnblog

Keep out of it.
If you lead them toward any decision that they later regret - guess who will be getting the blame.
Let the Solicitors provide the advice they are paid for.