17 November 2014

Five things that could derail your house purchase - and how to handle them

Once an offer is accepted, there are unfortunately still things that can knock your house purchase off course.

Here are a few of the most common things that can go wrong, and a few tips on how to deal with them.

1. Gazumping

Gazumping is when a seller agrees to your offer but then accepts a higher offer from another buyer. This means you’re either pushed out of the deal, or asked to increase your offer at the last minute; something which is becoming increasingly common as house prices continue on an upward trajectory. They can do this legitimately because (in England and Wales) the sale isn’t legally binding until contracts have been exchanged. Gazumping is much rarer in Scotland, where different property laws mean that agreements become binding when a seller’s solicitor delivers a signed acceptance of a buyer’s offer.

You can minimise the risk of gazumping by trying to ensure the sale goes through as quickly as possible, giving the seller less opportunity to pull out. You could also ask them to take the property off the market as part of the terms of your offer.

Another option is to draw up a pre-contract deposit agreement, where both you and the seller pay a deposit of 1.5% of the total house price. If either of you pull out of the process, the injured party gets to keep both deposits.

2. Your chosen property is down-valued

You’ve found the home that you want to buy, only for the mortgage valuation survey to state that the property isn’t worth the price you offered.

This means your lender won’t loan you the full amount of money you applied for. If this happens, you can re-negotiate with the seller to try to get them to lower the price. Alternatively, you could challenge the valuation report or try to raise the additional cash that your lender won’t provide.

3. Survey defects

A valuation report will show up serious defects with the property, while a more detailed report by a chartered surveyor will give you an in-depth account of its general condition. They’ll also give you estimates on the cost of any repairs. If a lot of work needs to be done, you could try to re-negotiate with the seller on the price of the property, or ask the seller to carry out the work. If the repairs will significantly improve the property you could agree to make a contribution to minimise the chances of the deal falling through.

4. The chain breaks

Moving into a house can depend on a long chain of buyers and sellers. You might not be able to complete your purchase until your own house is sold and, in turn, the buyer of your house can’t complete until their house is sold, and so on. If someone a few links down the chain pulls out, your own purchase may be affected.

It’s possible to avoid a chain altogether if you buy a new build house or if the occupants of the property you’re buying are moving into rental accommodation. If you’re a first-time buyer you may be particularly attractive to sellers as you don’t come with a chain of your own.

To reduce the chances of your own part of the chain breaking, make sure your mortgage is in place before you start making offers. 

5. Mortgage delays

Buyers sometimes see their purchases fall through because of delays processing your mortgage application. This may be due to missing documents e.g: waiting for salary details from your employer, or simply due to the volume of applications your lender is processing.

To avoid this happening, make sure you provide all the necessary documentation to your lender as early as possible.

Check out our buying and owning a property guides for more help or visit our mortgages section for more information.

Mortgages are secured on your home. You could lose your home if you do not keep up payments on your mortgage.

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