Offer vendors money to move into rented to reduce exchange-completion gap

htcclub

I am scared of losing my deposit if something terrible happens, like mortgage offer withdrawn or job is lost.
Chance is tiny, but impact huge.
What can I do to mitigate my risk? Any ideas?

Vendors want a gap of 3 weeks to secure a rental, need to pay deposit etc.

My main idea is to offer 1k cash to the vendor solicitor to hold, pre-exchange.
If I fail to exchange and complete in 40 days, they get to keep to money
If they fail to exchange and complete in 40 days, I get the money back
else it is used towards the exchange deposit

Another idea, ask them to accept a lower deposit 3% instead of 10%, amending the standard conditions so that it is contractual.

Another idea is conditional exchange accounting for mortgage/job loss.
Another idea is normal exchange with mortgage/job loss clauses.
I don't think people on here like the last two.

Any more ideas?

propertyrental

I believe there is insurance you can take out.

edit: ah!
https://www.thefirsttimebuyer.co.uk/abortive-insurance-property-transaction-failure/

user1977

Maybe I just haven't had enough coffee yet, but I don't see how you offering the vendor an extra £1k is going to reduce the risk of you being unable to proceed? Reducing the amount of the deposit is more sensible.

htcclub

propertyrental said:

I believe there is insurance you can take out.

edit: ah!
https://www.thefirsttimebuyer.co.uk/abortive-insurance-property-transaction-failure/

I have heard of this, but not found one which will cover the deposit. Losing money on survey's etc doesn't bother me to be honest, its the deposit really, that's the big ticket

TheJP

Is there any reason that these risks could even happen within 40 days? Seems a lot of faff for unnecessary worrying. Are you a FTB by any chance? 

diystarter7

propertyrental said:

I believe there is insurance you can take out.

edit: ah!
https://www.thefirsttimebuyer.co.uk/abortive-insurance-property-transaction-failure/

Hi

Never heard of it before, very usefuly, many thanks

OP. We were eager to buy a property to rent out near where we live and we even offered a rent-free max of 6 months as long as they exchanged and completed within 3/4 weeks from the point of our second viewing. They declined, This was 2009. Prices were volatile. We were luck they did not accept as we got a similar property same rod for about 30ok less about 3/4 months later.

You can always offer and they can always accpet or refuse but IMO, 1k won't do it

Either way good luck

Btw, you sound like me, worried and wanting to get it done

Consider what the others have said and decide and I hope it works out for you

Thanks

housebuyer143

The 1k thing is odd. It's in the sellers interest then to move slow as they will be getting £1k extra if the 40 days isn't met.

ciderboy2009

Personally, I would walk away if a purchaser came to me wanting conditions like that added.

£1k is a tiny amount when you're talking about a house purchase - it would probably cost at least that to get the wording agreed to add to the contract (ie: how do you identify who is "at fault" for the failure to exchange & complete?  What if both sides think it's the other's fault?)

3 weeks between exchange and completion is not particularly unusual. Pre-COVID the average time was 14 days - I've known it to be up to 6 weeks.  A decent gap allows you the time to get the million or so things you need to do pre-completion sorted.

Unless you are particularly at risk of losing your job then just relax and forget about the minute possibility of problems.

If you are at risk of losing your job then you should stop and consider if now is the right time to buy a property.

RedFraggle

I requested 2 weeks when I sold my house and went into rented. I needed to avoid having nowhere to live and would not sign a tenancy committing me to 12 months rent without exchanging so that the buyers were legally committed to purchasing. £1000 wouldn't have changed that with a £24k rental committment. 

htcclub

user1977 said:

Maybe I just haven't had enough coffee yet, but I don't see how you offering the vendor an extra £1k is going to reduce the risk of you being unable to proceed? Reducing the amount of the deposit is more sensible.

They don't want to put a deposit down on a rental and move out in case I pull out of buying their house. If I effectively pay their rental deposit, then will move sooner, with at least a month of compensation and we can exchange complete with a smaller gap.

I might ask if they would go for a lower deposit in that case, thanks

htcclub

TheJP said:

Is there any reason that these risks could even happen within 40 days? Seems a lot of faff for unnecessary worrying. Are you a FTB by any chance? 

The risk of anything happening is low, but I just don't want anything happening and loosing 40k savings

ciderboy2009 said:

£1k is a tiny amount when you're talking about a house purchase - it would probably cost at least that to get the wording agreed to add to the contract (ie: how do you identify who is "at fault" for the failure to exchange & complete?  What if both sides think it's the other's fault?)

3 weeks between exchange and completion is not particularly unusual. Pre-COVID the average time was 14 days - I've known it to be up to 6 weeks.  A decent gap allows you the time to get the million or so things you need to do pre-completion sorted.

I can see it being hard to get these things in a contract. I was hoping it would be somewhat informal and on faith, I think I would prefer to lose 1-2k than 40k - The risk is small but I think with risk its also about the severity of the outcome, not just the risk of something happening, so I am scared!