Early Exchange Concerns

sb82

Hello 
I hope some of you will have been in this situation before and can offer some advice

We are FTB and have had an offer accepted on a house. We were told when viewing that they were buying a new build and wanted to stay in the house until their new house was ready (Feb/march 21) so when we made the offer we said we were happy to wait. The estate agent neglected to tell us that this would mean exchanging contracts and paying 10% deposit asap . This shocked us as we only found out 6 weeks in and we had delayed applying for our mortgage so that our offer didn't run out before we anticipated completing. We have since applied and received a mortgage offer that is valid until end of March . 
However we are really concerned about exchanging and paying 20k in November with no definite moving in date and also if the new build is delayed then our mortgage offer will expire and it may be more difficult to get another or it extended . Also I've read that we need to insure the building from exchange
Our conveyancer hasn't given us a definite yes or no you should or shouldn't do that 
I don't know if covid is just making me worry more! 

rik111

Anything could happen between now and next spring...... No way I would be exchanging now, just not worth the risk.

RTC87

Don't exchange, with the uncertainty at the moment you can't guarantee there won't be another full lockdown which will push the build back week or even months.

They will be under pressure to from the developers so you may lose out if they feel the can find another purchaser in the interim. 

davidmcn

They can complete their sale first, and find somewhere else to stay while they wait for their shiny new house to be built. Not really reasonable for them to expect you to be dragged along by the vague timescales of their developers.

mcgrimes

Arrange for a long stop date

Thrugelmir

Talk to your solicitor about setting a long stop date for completion. The developer should be able to provide an update on the build completion date. Give the EA a call and enquire to speed matters up. 

md258

Have you catered for their property not being ready by the end of March and the stamp duty holiday ending in your calculations?

If it were me, I would either
1) exchange with a fixed date. If the new build is not ready then it's the sellers problem
2) let them know that all the paperwork is ready and I will exchange when their new build is ready
3) wait until December to see whether another lockdown happens and their new build stops work. Then start the conveyancing process
With options 2 and 3, make it clear to the Estate Agent that you will continue looking until the seller can commit to a more certain date. There is also risk to you as someone else could put in a higher offer or most mortgages may not be available (as was the case in April).

If you are happy to wait until the end of March and your solicitor/mortgage offer is all fine to wait too, I'd consider exchanging with completion "31st March or earlier by mutual agreement".

hazyjo

@md258 Trouble is with that is the OP loses their get-out clause too. There's no way in hell I'd exchange with a fixed date (not without a long-stop date). There are far too many things that could change or go wrong in this current climate! No mortgage will be guaranteed that long. If the banks change the deposit amount again which the OP can't afford, or they lose their job, they're left up the creek without a paddle!

And even if I did risk it, it certainly wouldn't be up to the last day of the stamp duty holiday. It's gonna be busier than Christmas completions!

Anyway, as FTBs, presuming under £500k or whatever the threshold is, they prob won't be paying stamp duty anyway.

The seller needs to sell and complete as normal to guarantee their sale in order to buy a new build. Their problem about where they live after completion. They'll have a source a rental or something.

sb82

RTC87 said:

Don't exchange, with the uncertainty at the moment you can't guarantee there won't be another full lockdown which will push the build back week or even months.

They will be under pressure to from the developers so you may lose out if they feel the can find another purchaser in the interim. 

That's what I'm thinking, it could be delayed then our mortgage offer will expire. 
I don't know what to do, do we just relay this back to them via our solicitor? 
I wonder if the house builders ever let people exchange closer to completion I'd feel awful if the sellers missed out on their new home because of us 

**dancingbutterfly**

sb82 said:

RTC87 said:

Don't exchange, with the uncertainty at the moment you can't guarantee there won't be another full lockdown which will push the build back week or even months.

They will be under pressure to from the developers so you may lose out if they feel the can find another purchaser in the interim. 

That's what I'm thinking, it could be delayed then our mortgage offer will expire. 
I don't know what to do, do we just relay this back to them via our solicitor? 
I wonder if the house builders ever let people exchange closer to completion I'd feel awful if the sellers missed out on their new home because of us 

Do not feel bad, this is a business transaction. Do not do anything which is not in your best interests purely to not upset the sellers.

sb82

davidmcn said:

They can complete their sale first, and find somewhere else to stay while they wait for their shiny new house to be built. Not really reasonable for them to expect you to be dragged along by the vague timescales of their developers.

The sellers have said they will not move out before their new house is ready they have a young child. I also worry as I'd hate for them to miss out on their new house because we are dragging our heals on exchanging. 
I do feel we have been really fair by waiting anyway and we made an over asking price offer. I thought buying our first home would be exciting instead it's awful