When a house sale falls through: Five reasons why it happens
Brought to you by permanent tsb
Think of “Sale Agreed” as a verbal contract for your house sale.
So you’ve gone sale agreed on your new home and you’re already choosing paint colours, mentally redecorating rooms and planning extensions… but don’t go popping that champagne cork just yet.
Sale agreed doesn’t always mean you’re home and dry, so try to rein in your excitement for now (we know, easier said than done). It’s important to remember that this is just one more step in the process, and there’s often a long wait involved.
You may have paid your booking deposit, but the agreement is not legally binding until the contract is signed. Your booking deposit is fully refundable at this point if either party pulls out of the sale.
There are many reasons house sales can fall through:
1. Valuation issues
If the Property Valuer doesn’t agree that the house is worth what the buyer is asking, there can be difficulties. This can be frustrating, but it’s for your own financial protection, and your bank will help you as much as possible.
Hopefully the seller is open to negotiation on price, and the sale can go ahead.
2. The survey identifies some problems
The survey – which is done on your behalf and looks at the condition of the likes of the roof, walls, windows, attic and potential issues such as access to drains – may throw up some unexpected work that needs to be done and you have not budgeted for.
You may need to ask the seller to do the work before the sale, or reduce the price so you can afford to do it yourself. In some cases, such as the discovery of major structural problems, you may need to pull out of the sale altogether.
3. The bank does not grant a mortgage
In order to avoid any disappointments, make sure you have full mortgage approval before you go house hunting.
The bank will only give it in Principle before you put in an offer. Full approval is subject to meeting certain criteria, like valuation and survey and if there are issues with either the bank may have to turn either you or the seller down. In this case the sale won't be able to go ahead.
4. A weak link in the chain
If your seller is in a buyer chain (buying a new home as well as selling to you) and there is a hold-up further on up the chain they may no longer be able to sell to you. This is why it’s always a good idea early on to check what position your seller is in and find out their reasons for selling if you can.
Gazumping is one of the toughest things that can happen to a buyer. You’ve gone “sale agreed” but after accepting your offer the seller got a higher offer from someone else and accepted it.
Having a house sale fall through for any reason is tough but having it happen this way is really disappointing, and unfortunately there’s not much a buyer can do about it as there’s no legal obligations on the seller’s side until the contracts are signed.
You will be refunded your booking deposit, but may still lose out on payments for surveys, valuations and solicitors’ fees.
6. Cold feet
The buyer or seller may simply change their minds. Again, before the contracts are signed this is legally OK.
Every cloud has a silver lining
While it’s devastating when a house sale falls through, bear in mind that this can actually work in your favour if you’re a buyer. If you’ve lost out in a bidding war, there’s always a chance that the sale will fall through.
It’s always a good idea to keep checking in to make sure the house is off the market, if it reappears for sale you may be in with another shot.
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