Financial Due Diligence

fortgrange

I’ve only moved once in the last 30 years, so please excuse my naivety.

We thought we were on the verge of exchange and completion several weeks ago. But the date just keeps getting pushed back for one reason or another.

When an EA puts your buyers offer to you, one assumes that they have looked at the financial situation of the buyer and have concluded that they meet the requirements.

And I assume once a solicitor has been instructed they will really have to know every financial detail to make sure it gets over the line.

I know the solicitor will have to have seen the mortgage offer, but when it comes to the deposit are they just relying on the good will of the buyer?

It can be the only thing holding proceedings up as my solicitor had everything sorted several weeks ago. To the point where he has asked me just to deal with the EA until an exchange date is finalised.

I can’t believe anybody would keep everybody in the chain waiting for so long because they were having second thoughts!!

user1977

The buyer's solicitor will check the source of funds when they get to the stage of actually receiving the funds - there's no requirement for them to check at an earlier stage that their client is likely to have the money, that's just a reasonable assumption given that they've gone to the expense of instructing lawyers etc.

fortgrange

Thanks for the reply.

So they might be struggling to raise the funds (it is a sizeable deposit) and could be stalling until the funds are available 

user1977

Or (I think more likely) they may have other reasons for stalling.

eddddy

An EA should do a financial evaluation of a buyer at the time an offer is made/accepted.

If the buyer is a FTB (or is not selling), that usually involves seeing a mortgage arrangement in principle, and seeing bank statements showing that they have the deposit.

If the buyer has a property to sell, the EA would probably still ask to see a mortgage AIP, and ask a few questions about how they'll cover the deposit. 

You can ask your EA what financial evaluation they did of your buyer.

 
Are you just assuming that the problem is that the buyer is struggling to raise funds? There could be many other reasons for the delay.

How much do you know about your buyer? What reasons is the buyer giving for the delay?

fortgrange

I accepted the offer back in December and it’s a very small chain.

l’m struggling to understand why anyone would buy a house and then not want to complete the transaction ASAP 

eddddy

fortgrange said:

I accepted the offer back in December and it’s a very small chain.

l’m struggling to understand why anyone would buy a house and then not want to complete the transaction ASAP 

If there's a chain - everyone has to be able (and willing) to exchange.  Are you sure it's your buyer that's holding up the chain?

user1977

fortgrange said:

I accepted the offer back in December and it’s a very small chain.

l’m struggling to understand why anyone would buy a house and then not want to complete the transaction ASAP 

They might not want to move in until a certain date?

They might have more important stuff going on in their lives?

Or indeed, they might not have enough money - even if they did four months ago, doesn't mean they still do now.

fortgrange

eddddy said:

fortgrange said:

I accepted the offer back in December and it’s a very small chain.

l’m struggling to understand why anyone would buy a house and then not want to complete the transaction ASAP 

If there's a chain - everyone has to be able (and willing) to exchange.  Are you sure it's your buyer that's holding up the chain?

They are FTB and we’re moving into a vacant possession. So it’s definitely them.

MaryNB

When I offered on a house the EA required proof of deposit before my offer was formally accepted. 

My solicitor asked for proof of funds as soon as I instructed her. It took a few weeks until she was satisfied with the paperwork (she wasn't very good a communicating exactly what she required) but she could see the funds were in my account from the second day of the conveyancing process. 

TBG01

fortgrange said:

I accepted the offer back in December and it’s a very small chain.

l’m struggling to understand why anyone would buy a house and then not want to complete the transaction ASAP 

Because completing ASAP might not be in their best interest.

Estate agents are quick to say that it'll be a straightforward transaction and both sides are keen to get things done, but reality is one or both side do what's best for them.

So if that means dragging it out for another months so they can get that fancy new sofa with months wages, so be it.