Buying from a builder - 28 day echange

roofoxy14

I've searched the forum to see if anyone has asked this before but can't seem to find anything.

We've seen a house we love where the current occupiers have part-exd onto a new build so essentially we would be buying from the developer.
They have been given a provisional date of August. The developer are asking for a 28 day exchange.
Our house is SSTC with a 1st time buyer, her survey has just been carried out today.

If we were to offer asking price for the house and have this accepted, what are the chances of this going ahead within 28 days?  How does the 28 day exchange work? When does it start etc?

We are remaining with our current mortgage provider (due to a fixed deal) and just borrowing additional, would this speed up the process?

Apologies for all the questions, I'm just struggling to see if this would realistically work.

david29dpo

It could but there are risks in this time span.  What are penalties if you dont?

roofoxy14

It's my understanding that if we don't complete within that time the developer can withdraw and we would lose, I presume, any survey/search fees. 

david29dpo

I would not agree to those terms. Only auctions have terms like that. Not necessary with a sale like this.

eddddy

The 28 days to exchange is usually more of a "wish" than a fixed condition.

If the builder can see that you're trying to move as quickly as possible, and you're making good progress, they're unlikely to drop you.

For example, if it gets to day 28 and you're still 7 or 8 days away from being ready, it will still be quicker to stick with you, than find another buyer and start the 28 day clock again.

Plus your first time buyer has to be ready to exchange at the same time.

So maybe keep the builder informed of progress, and any issues that arise, so that they know you are doing your best.



BUT... what completion terms does the builder want you to agree to?

If the current owners are buying a newbuild, they'll probably have to agree to 'Completion on Notice' (i.e. they'll only be be told 10 days in advance that their new house is ready. So they'll have to to pack-up and move in 10 days.)

Are you being asked to agree to 'Completion on Notice'?

If so, will your first time buyer also agree to 'Completion on Notice'?

david29dpo

As above. been there done that but dont sign to the terms. the seller wont drop a good buyer.

saajan_12

roofoxy14 said:

It's my understanding that if we don't complete within that time the developer can withdraw and we would lose, I presume, any survey/search fees. 

Well the seller of any house you buy can withdraw and you would lose any survey/search fees. The developer is  stating their expected timeframe, but in practice if you were ready in 29 days, they're not going to refuse. 

Sometimes they'll have a reservation fee which you'd lose after the 28 days, but if you're not paying those then its fairly meaningless. 

ciderboy2009

If you do go ahead with this then make sure that your solicitor adds a "long stop" clause to the contract.

Basically, this gives a date whereby you can withdraw from the contract without any penalty despite having exchanged if the developer hasn't completed by then 

Albermarle

Remember you are dealing with a company and they will have internal rules. Probably asking for a 28 day exchange is on their internal procedures , but more than likely it is just an opening gambit to pressurise you to get moving quickly with the conveyancer.
As mentioned above, I would be more worried about a completion date. In this case developers like to leave them as open as possible due to potential delays in the new house build .