PLEASE READ BEFORE POSTING

Hello Forumites! In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non-MoneySaving matters are not permitted per the Forum rules. While we understand that mentioning house prices may sometimes be relevant to a user's specific MoneySaving situation, we ask that you please avoid veering into broad, general debates about the market, the economy and politics, as these can unfortunately lead to abusive or hateful behaviour. Threads that are found to have derailed into wider discussions may be removed. Users who repeatedly disregard this may have their Forum account banned. Please also avoid posting personally identifiable information, including links to your own online property listing which may reveal your address. Thank you for your understanding.

BetterMove wants £1,000 from my son to buy a house!

13»

Comments

  • user1977
    user1977 Posts: 13,949 Forumite
    First Anniversary First Post Name Dropper Combo Breaker
    eddddy said:

    I suspect their argument would be that it stops timewasters. i.e. People who make offers, then walk away (for no good reason). That kind of timewaster would lose their £2k reservation fee.
    But presumably somebody who walks away for a good reason would also lose it, and they wouldn't have a similar remedy against a timewasting vendor...
  • eddddy
    eddddy Posts: 16,390 Forumite
    First Anniversary First Post Name Dropper
    edited 2 February at 11:40AM
    user1977 said:
    eddddy said:

    I suspect their argument would be that it stops timewasters. i.e. People who make offers, then walk away (for no good reason). That kind of timewaster would lose their £2k reservation fee.
    But presumably somebody who walks away for a good reason would also lose it, and they wouldn't have a similar remedy against a timewasting vendor...

    Yep - exactly. That's why I say "But it's much more complicated than that..."



    Talking generally about this approach (and specifically not referring to any company mentioned in this thread)...

    Depending on who the recipient of the £2k is - the seller or the EA - they potentially have an incentive to make the sale fall through.

    As a hypothetical example...
    • "I'll accept an offer, get a £2k reservation fee, then be obstructive until the buyer walks away."
    • "If I do that 5 times over, I'll make £10k"
    • Maybe the seller has no intention of selling the property - it's just a method of accumulating multiple £2k reservation fees


    But to be clear, doing the above would be illegal, and I am absolutely not suggesting that any company mentioned in this thread would do anything illegal or underhand.

    This is a general comment about risks to look out for, when you come across "reservation fees" and "pre-contract deposits".


  • RHemmings
    RHemmings Posts: 3,467 Forumite
    Name Dropper Combo Breaker First Post First Anniversary
    eddddy said:

    BobT36 said:
    Crazy, that. Surely they should be taking that 2k from the seller?? 

    The thread is getting confusing, because different companies with different business models are being mentioned.

    RHemmings said:
    Pure Investments, Denton want a £2000 non-refundable reservation fee for people who want to buy this flat. 

    https://www.rightmove.co.uk/properties/144250289


    This company appear to charge sellers 1.25% + vat for selling their property.

    But they also charge buyers a £2k reservation fee.

    I suspect their argument would be that it stops timewasters. i.e. People who make offers, then walk away (for no good reason). That kind of timewaster would lose their £2k reservation fee.

    But it's much more complicated than that...


    That's exactly the argument I've seen elsewhere. But, it stops sensible buyers too. With all the costs involved, and me going for the most reputable solicitors I could find (based on reviews) not the cheapest, I was probably out £2k in total costs by the time of completion. But, that built up over time. My solicitor told me the working day before exchange that it wasn't too late to walk away if I wanted to, but I could see it was the best option to continue. And, losing £2k was part of that. However, I would never want to be out £2k immediately after offering and before survey. 
  • eddddy
    eddddy Posts: 16,390 Forumite
    First Anniversary First Post Name Dropper
    RHemmings said:

    That's exactly the argument I've seen elsewhere. But, it stops sensible buyers too. With all the costs involved, and me going for the most reputable solicitors I could find (based on reviews) not the cheapest, I was probably out £2k in total costs by the time of completion. But, that built up over time. My solicitor told me the working day before exchange that it wasn't too late to walk away if I wanted to, but I could see it was the best option to continue. And, losing £2k was part of that. However, I would never want to be out £2k immediately after offering and before survey. 

    There's a huge list of arguments for and against pre-contract deposits (or reservation fees).

    They've been debated on this site many times.

    (There's a slight added challenge with this thread that perhaps some people don't know what 'pre contract deposits' are, so it's hard to discuss their pros and cons.)


    A couple of arguments to add to the very long list, based on the situation you describe above...
    • On the day before you exchange, the seller decides to sell to somebody else for more money, would you have wanted the seller to pay your wasted £2k fees?
    • If you pull out the day before exchange (due to buyer's remorse), is it reasonable for you to pay the sellers £2k legal costs?
    • i.e.  Is that an argument for both buyers and sellers to pay a £2k deposit?

    My view is that pre-contract deposits are too messy and introduce as many problems as they solve. So I would avoid them.


  • RHemmings
    RHemmings Posts: 3,467 Forumite
    Name Dropper Combo Breaker First Post First Anniversary
    eddddy said:
    RHemmings said:

    That's exactly the argument I've seen elsewhere. But, it stops sensible buyers too. With all the costs involved, and me going for the most reputable solicitors I could find (based on reviews) not the cheapest, I was probably out £2k in total costs by the time of completion. But, that built up over time. My solicitor told me the working day before exchange that it wasn't too late to walk away if I wanted to, but I could see it was the best option to continue. And, losing £2k was part of that. However, I would never want to be out £2k immediately after offering and before survey. 

    There's a huge list of arguments for and against pre-contract deposits (or reservation fees).

    They've been debated on this site many times.

    (There's a slight added challenge with this thread that perhaps some people don't know what 'pre contract deposits' are, so it's hard to discuss their pros and cons.)


    A couple of arguments to add to the very long list, based on the situation you describe above...
    • On the day before you exchange, the seller decides to sell to somebody else for more money, would you have wanted the seller to pay your wasted £2k fees?
    • If you pull out the day before exchange (due to buyer's remorse), is it reasonable for you to pay the sellers £2k legal costs?
    • i.e.  Is that an argument for both buyers and sellers to pay a £2k deposit?

    My view is that pre-contract deposits are too messy and introduce as many problems as they solve. So I would avoid them.


    Yes, that's why I avoided them, even though I wanted a house that in theory had one attached.

    If my sellers had walked away on the day before exchange, I would have wanted them to cover my wasted costs. However, I'm 99% sure that wouldn't have happened and I would have had no way of making them do it. 

    We also have to remember that some of these fees are fees, not deposits. In the OP, I think the £2k does come off the sale price if the sale completes. But, as you said upthread a bit, that can perhaps give the estate agents a motivation to have a sale fall through. Even if the EAs aren't deliberately making a sale fall through, they have less motivation to push for completion than otherwise. 
Meet your Ambassadors

Categories

  • All Categories
  • 343K Banking & Borrowing
  • 250K Reduce Debt & Boost Income
  • 449.6K Spending & Discounts
  • 235.1K Work, Benefits & Business
  • 607.8K Mortgages, Homes & Bills
  • 173K Life & Family
  • 247.8K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards