Tricky situation..now not sure whether to pull out and buy off plan?

redhead123

I was supposed to sign on Weds - I did but the vendors didnt! Because....apparenty the builder at the top of the chain only purchsed the property that my vendors are buing, in Feb and undervalue - he's now done it up and is looking to sell for lots more cash. The vendors solicitors had to inform the lender that the property was only bought 6 months ago - apparently normally you'd get an indemnity policy and the vendor would swear a declaration of solvenyc and it would be accepted by the lender but cos the builders are a limited comapny an insuarnce company will not issue an indemnity policy so the solitors are trying to find a way round it.

So do I just sit around and wait? Getting a bit fed up now, after all iwas told they were ready to sign!

I have looked at flats around the corner - well they are off-plan, 2 beds brand new..is that risky?

m1ntie

Buying any property is risky at the moment. The market is just starting what is very likely to be a 2 year decline that could see a 30% drop.
New build are even more risky as they tend to be more overpriced

If you are happy to risk losing £60,000 on a £200,000 flat then its up to you.

PasturesNew

redhead123 wrote: »

I have looked at flats around the corner - well they are off-plan, 2 beds brand new..is that risky?

Anything off plan is risky at any time.

If you want a home to live in, why run all the risks buying off plan involves:
- what if you've lost your job/leg between now or then?
- what if the flats are "worth" half when built to what you promised to pay today?
- what if the area turns out to be a ghetto in the meantime?

What are you looking for in a property? If it's a home, you need to be able to see it now; look at how the area's developed; how are neighbours keeping their property; how's parking; any signs of neglect. You can't tell that from a picture of what something MIGHT look like IF it's ever finished.

Richard_Webster

I agree with Pastures New - at the moment buying off plan is crazy! Even more crazy buying a flat off plan. Don't! (Personally, I would not buy any brand new property, but that is probably a personal view that is a bit extreme.)

Don't understand why an indemnity policy is needed. Builder bought, did place up and is selling at a profit. The only possible undervalue might have been the sale to the builder - but presumably the place was not in a good state so what he paid reflected that. If there was an undervalue it would be an indemnity policy against the possibility of the person the builder bought from becoming insolvent, not the builder.

The reason lenders want to know about properties being sold within 6 months of purchase is to enable them to check that they are not being overvalued with the present transaction being at too high a level. This might mean that they would ask their valuer to look again at his valuation, but if the builder's price on sale fairly reflected the present selling prices of similar properties in the area then I can't see what the problem is.

I think the other solicitor is getting confused and approaching the matter from the wrong direction entirely. All he needed to do was tell the lender the facts - where's the undervalue - why is a policy needed? It sounds rubbish to me - the only thing I can think of is that the lender has misunderstood the position.

redhead123

Flats are 125k for 2 beds but obv not built yet

I wondered whether or not to demand a deadline (to the other solicitors) or do I really have no choice but to sit and wait....I don't know how long these things take to sort out?

Richard_Webster

Get your solicitor to make the points I 've made in my previous post to your seller's solicitors and ask them why they are faffing around with under value issues when they are surely irrelevant. They may wake up and realise that they have started a hare running for nothing and things may then fall readily into place...

SquatNow

Have you sold you current place? Where are you living now?

redhead123

I'm renting at the mo, but contract on rent comes to an end in July - all was going to go ahead til that happened..I've since seen a 1 bed flat that seems reasonably priced on the market..hmmm... I am thinking of putting a deadline on this - maybe if I ring the solicitors and say that I have to move out of my current property in July and unless this is sorted this week then the deal is off?