Buying a house when the vendor is buying a new build

Lyd00

Thanks for reading,

I put an offer in on a house which has been accepted but the vendor is buying a new build house so it all has to go through The New Home Group.

They keep mentioning this "28 day exchange" thing, which baffles me as the vendor told me she visited the plot the other day and it's no where near built yet. There's absolutely no way I'll be able to exchange in 28 days... I want a Level 3 survey done on the property and the company I'm using don't have any appointments for 2 weeks... What happens if I pay for the survey and searches etc and then get told "oh sorry you didn't exchange in time?"

Also do I have to use their solicitors?

And do I have to use their mortgage broker?

I already have a MIP but may even want to look again in Feb if interest rates come down again at the next BOE announcement, but again, I can't do all this if they want me to exchange within 28 days.

It's worrying me. 

Thanks in advance for any advice 

sammyjammy

Just because they have to exchange within 28 days it doesn't mean you have to, if you did then you could be prepared for a long wait/having to apply for a mortgage offer again.  No you don't have to use their solicitors in fact I would suggest you don't and you use whatever mortgage broker you chose.

Lyd00

Ok thank you.

What do you mean by I could have a long wait? 

user1977

Lyd00 said:

What do you mean by I could have a long wait? 

Because you'll need to wait for their new house to be built, and there are no guarantees about how long that might take.

housebuyer143

Do not exchange without a completion date set. Otherwise you tie yourself into the purchase and you could be waiting a year+. Anything can happen in that time. 
My sister's new build was delayed 11 months. The seller is required to exchange to keep the property but you don't need to. 

secla

When buying a new build you usually exchange early with a long stop date. Any date builders give is an estimate and there can be delays etc. As said dont exchange until they can give you a fixed completion date its good for your sellers but has a few draw backs for you.

Hoenir

Your vendor needs to exchange within 28 days to secure the plot. Discuss with your solicitor. 

user1977

housebuyer143 said:

Do not exchange without a completion date set.

There'll only be a completion date set after the new house is actually finished.

It is a bit of a nonsense for newbuild buyers to expect to be able to form a chain with other people similarly bound to completion on notice - bit more realistic for them just to sell first and then buy their shiny newbuild without involving anybody else.

gm0

Don't exchange with an unknown and months long completion

Show willing from memo of sale and agreed price. 
Get ready to act quickly.  Do the searches, surveys, whatever applies that you want or need to do advised by your own picked by you independent - conveyancing solicitor. 
Be the expected buyer.  But not the contractually committed buyer (to an arbitrary timetable).  Their risk not yours.

Trying to leave all the diligence until the trigger event is very unhelpful behaviour - and your seller may look for a more co-operative buyer who will line up with their new build transaction and its 28 day time limit in the developer agreement.

Get ready then you wait - however long - you like - to either exchange with completion now known and <28. 
Or if it drags out a stupidly long time with no clear resolution. You pull out.  Which is then their issue. Not yours. As it should be.  Their developer and their new build which did not get finished as planned. 

On the finance side - just as an example - if you can find out the build is really May/June then the state of your mortgage offer in March is irrelevant.  But the state of your mortgage offer is a shared problem - until you exchange. 

You don't have to be at the same high state of readiness every week between now and when the developer shows up.  It's tough to not have some points where your extensions and reapplications have to follow the processes that they have. The transaction is a bit at risk month to month depending on exactly how long it all stretches out for.  None of the professionals involved are surprised by any of that.

The agreement (and sales understanding being that there is a 28 days timeframe to act once triggered is of itself fine.   That is how new build works. You just don't make a contractual commitment to buy the 2nd hand house too far  ahead for a range of good reasons.

Your seller owns the developer arbitrary timescale risk.  You don't.   .You have agreed to buy it.  You have done diligent checks. You are getting ready.  You are not however contracted to buy it. (england rules). 

Hopefully they come back close to the planned dates and exchange and completion proceed smoothly in a month.  That's everybody's happy place.  Everybody is in their new place.

If the developer throws a curved ball and it all stops for a year plus. Then you can wait.  Or walk.  Losing your survey and searches and solicitor fees and chalk it up to experience.

UnderOffer

Are you buying directly from vendor or have they part exchanged with builder and you are buying the vendors old house from the builder? I’m not sure I understand who the New Home Group is you’ve mentioned. 

RelievedSheff

It sounds like this property has been part exchanged against a new build, so you are not dealing with the current owners but with the developers hence the 28 day exchange.

We had similar with our old property. We part exchanged it and the developers dealt with the sale of the property. It was sold very quickly, went on the market on the Friday and had several offers by the Monday but the actual sale of that house took many months to complete. The property was stood empty for a long time. We were in our new build within 3.5 weeks of reserving it.

You can ask them to extend the exchange deadline but they are often very strict with their criteria and may well remarket the property if they can't see progress being made.