Offer made: 'Sale is subject to contract & survey'

Lilio8

Hello.
Last weekend the estate agent called me to let me know that the folks who offered exactly the asking price, they have now found their buyer and the chain has now gone down to 3, or 4, from 6 He advised that since this is the best offer so far and that the property has not attracted too many viewings, it would be advisable to accept this offer. I asked him if the other 3 in the chain look promising, he said that he knows the other estate agents and would not advise to accept an offer if he wasn't confident. So I accepted and received the sale agreement. 
As I understand after doing a bit of research, this 'sale agreement' is more of a 'memorandum of sale' and not legally binding. It reads that the sum of £XYZ,000 is 'subject to contract and survey, as per the conditions detailed in the attached Notification of Sale'.  

Questions (newbie seller style): 1) is the Notification of Sale sent by my solicitors to theirs? 2) Since the buyers will send their RICS surveyor, is it likely/probable/possible that the buyers will demand/ask a reduction in the sale price after the survey?

Hoenir

As I understand after doing a bit of research, this 'sale agreement' is more of a 'memorandum of sale' and not legally binding.

Until contracts are exchanged. This will remain the case. 

gm0

England. Basically - yes - quite likely.

It depends what your selling and how pristine it is and how well priced if a doer upper.  And critically - what the survey finds.

Most buyers will expect to be able to (and will) negotiate based on survey findings.  This is reasonable.

Some will (correctly in my view) prioritise the big important £££ things - roof - missing lintel, a rewire. And get on with it.  (Or react to surprise findings).  Some other buyers don't understand survey reports and work the entire list of paragraphs including all the bottom covering nonsense that is fed in to avoid the surveyor getting any liability for missing anything. Which is bad as it a waste of time for all except lawyers charging by the letter.

And others just view "survey" as a handy tick list to use line item by line item to chisel off money in tiny slices. 
40 things to work on - great.

Arguing this stuff only feeds lawyers.  So it's best to agree to part ways.  Or make one deal adjustment for the material items that you both agree are real, were new facts at survey - not in particulars or visible on viewing. And do or do not proceed the deal.

This is still ALL negotiation in the lead up to exchange.  Only when at exchange is the deal firm.

Most sellers will resist extended haggling on trivia.

And on things visible on particulars and coming to initial price based on asking - i.e. stuff visible to the lay person upon visiting or explicit in particulars.  We asked X. You offered Y. We accepted.  This was already visible and known. No adjustment.  Take it or leave it.  It isn't a survey surprise and you agreed X - already knowing about that.  Sellers may offer a small concession to grease a deal over the line.  Making everyone feel they won - a little bit. Can sometimes be important to get it done.

There is no single or right way to do this process.  It is a haggle.  It involves two. You can only control how you approach it - not them.  But when they show themselves you decide whether to entertain discussion and about what.

Lilio8

gm0 said:

England. Basically - yes - quite likely.

It depends what your selling and how pristine it is and how well priced if a doer upper.  And critically - what the survey finds.

Most buyers will expect to be able to (and will) negotiate based on survey findings.  This is reasonable.
......

There is no single or right way to do this process.  It is a haggle.  It involves two. You can only control how you approach it - not them.  But when they show themselves you decide whether to entertain discussion and about what.

Thank you. I'm digesting all the points you've made.
I'm guessing that the estate agent will do some of the haggling or will suggest what to haggle about.

Bookworm225

Lilio8 said:

Questions (newbie seller style): 1) is the Notification of Sale sent by my solicitors to theirs? 2) Since the buyers will send their RICS surveyor, is it likely/probable/possible that the buyers will demand/ask a reduction in the sale price after the survey?

put yourself in the position of a BUYER...
would you genuinely buy a property for full initial offer price if the survey identified "issues" that would cost you money to rectify once you owned it?
no of course you won't, you'd revise your offer.

So... you are the seller, how "good" is your house since you are the only one who knows at this point. Will a surveyor find "issues" that you yourself lack the knowledge of your own building to know? If you  are genuinely surprised by the surveyor's findings would you also be surprised that someone wants to pay less as a consequence?

housebuyer143

Bookworm225 said:

Lilio8 said:

Questions (newbie seller style): 1) is the Notification of Sale sent by my solicitors to theirs? 2) Since the buyers will send their RICS surveyor, is it likely/probable/possible that the buyers will demand/ask a reduction in the sale price after the survey?

put yourself in the position of a BUYER...
would you genuinely buy a property for full initial offer price if the survey identified "issues" that would cost you money to rectify once you owned it?
no of course you won't, you'd revise your offer.

So... you are the seller, how "good" is your house since you are the only one who knows at this point. Will a surveyor find "issues" that you yourself lack the knowledge of your own building to know? If you  are genuinely surprised by the surveyor's findings would you also be surprised that someone wants to pay less as a consequence?

It really depends on how the house has been priced. You don't pay for a new build and expect repairs because you are paying a premium, however if you house needs some work and it's been priced lower then there is no way I would be accepting a reduction for things that they would be aware of. 

FlorayG

Are you expecting the surveyor to find something that needs fixing? As said earlier, minor stuff is to be expected when buying a house.
Can they demand a price reduction? No they can't. They can ASK for one, and you can say YES or NO to the request.

Albermarle

2) Since the buyers will send their RICS surveyor, is it likely/probable/possible that the buyers will demand/ask a reduction in the sale price after the survey?

This issue is probably the subject of more threads on this forum than any other, and usually the questions are from First time Buyers.
So spending some time scrolling through the forum looking for these threads, and reading all the associated posts, will help you get a better feel for what might happen in your case.

Are you buying a property as well? Same issues apply when you get the results of your survey.

eddddy

Lilio8 said:

As I understand after doing a bit of research, this 'sale agreement' is more of a 'memorandum of sale' and not legally binding. It reads that the sum of £XYZ,000 is 'subject to contract and survey, as per the conditions detailed in the attached Notification of Sale'.  

1) is the Notification of Sale sent by my solicitors to theirs?

The "Notification of Sale" or "Memorandum of Sale" is prepared by the estate agent, and is usually sent to both the seller's and buyer's solicitor.

You could describe it as a "few rough notes" which should help the solicitors to get started.

The solicitors probably won't trust what the estate agent has written, they'll each ask their client to provide written details.

Nothing in the "Notification of Sale" is binding on the seller or buyer.

In England, all offers are assumed to be subject to contract (which also means subject to survey, searches, mortgage valuation, changes of mind, etc.).




Edit to add...

So if the "Notification of Sale" contains errors, you could say it doesn't matter and just ignore them. (For example, if it says white goods are included when they're not.)

But purely from a "good relationship" perspective, it might be best to clarify any errors to avoid disappointment or disputes later - e.g. the buyer thinks you're including white goods, but you're not.

Lilio8

Bookworm225 said:

Lilio8 said:

Questions (newbie seller style): 1) is the Notification of Sale sent by my solicitors to theirs? 2) Since the buyers will send their RICS surveyor, is it likely/probable/possible that the buyers will demand/ask a reduction in the sale price after the survey?

put yourself in the position of a BUYER...
would you genuinely buy a property for full initial offer price if the survey identified "issues" that would cost you money to rectify once you owned it?
no of course you won't, you'd revise your offer....

Thank you for your reply.
This property was built in mid-80s, so not ancient. And since it is a mid-terrace, if there were huge problems the neighbours too would have the same problem since the house shares the walls to the left and to the right.  As far as I know/can see there aren't structural faults. The estate agent didn't spot any. Obviously, I'm not a surveyor nor a builder.  One thing I am sure of, this house will be worth at least £25,000 'more' than the current asking price once the windows and the kitchen will be renovated. 

Lilio8

FlorayG said:

Are you expecting the surveyor to find something that needs fixing? As said earlier, minor stuff is to be expected when buying a house.
Can they demand a price reduction? No they can't. They can ASK for one, and you can say YES or NO to the request.

Thank you for your reply.
No, I'm not expecting major issues since the house was built in mid-80s and is a mid-terrace sharing walls with neighbours. Having said that, I'm not a surveyor and it's my first sale, so I hope that there aren't going to be major issues.