Unfortunately, it is common for house sales to fall through due to a buyer pulling. In fact, the average of properties that fall through is 32%. Aside from the emotional toil this takes, fall throughs are also a costly business, with a recent Homeowners Alliance report calculating the cost of a failed property transaction at £2,700.
Unless you are selling to a first-time buyer, the buyer of your home is likely selling their property too. This is called a property chain and if one part of the chain breaks down, the whole chain is jeopardized. Pulling out of a house purchase before exchange is the cause of sleepless nights for many sellers.
Proffered’s guide will explain what happens when a house sale falls through so you can prepare for the worst should your buyer pull out before exchange.
Can you pull out of a house sale?
A buyer may decide to pull out before contracts are exchanged; most common reasons cited for this are a buyer changing their mind or not having their finances in order.
Before pulling out of a house sale, the party in question must notify their conveyancing solicitor. The solicitor will then inform the other parties involved and provide advice for the successful termination of the transaction.
Pulling out of a house sale in the early stages can be simple, but withdrawing after the exchange of contracts comes with additional repercussions. It becomes more and more difficult to withdraw the further the sale has progressed, not to mention costlier.
What happens if a buyer pulls out of a house sale?
Broken property chains are frustrating, but knowing the potential consequences can help you prepare for this common occurrence.
If you have recently accepted the offer and the buyer pulls out, you may not be faced with as much of a headache, as long as contracts have not been exchanged. You can relist your house and look for another buyer.
However, anyone pulling out of a house purchase after exchange should consider the financial implications. Firstly, the buyer may lose their deposit, and non-refundable costs such as conveyancing cannot be recovered by either side. As a result of their withdrawal from the transaction, the party responsible could also be taken to court to cover losses.
If the buyer pulls out of the sale because the mortgage valuation is less than their offer, the buyer can remarket your property with the estate agent. Alternatively, consider renegotiating the price in line with the reduced mortgage valuation.
This may affect any onward purchase, so many find it a less desirable option.
What to do if a house buyer pulls out?
Buyers are within their right to withdraw an offer on a home before contracts are exchanged, so there isn’t much sellers can do when a buyer pulls out at the last minute.
In England, there is no legal obligation for the buyer to purchase the home until the contracts are exchanged and nor are they obliged to pay costs incurred.
Still, it can be useful to find out why the house buyer pulled out. They are not obliged to provide a reason, but if it is related to the results of the survey, you can be prepared for this when you receive another offer, and even negotiate with the current buyer.
The next course of action should be to speak to your estate agent about getting your property back on the market. Any previously interested parties can be notified that it is available. Furthermore, if you are purchasing a property as part of the chain, you should contact the relevant estate agent to inform them about what has happened.
Unfortunately, there are often fees to pay after a buyer pulls out of a house purchase. The Home Owners Alliance found that 51% of sellers incurred average costs of £2,727. These costs include legal and/or conveyancing fees, legal searches, and surveys.
When can you pull out of a house sale?
Still, it is possible to withdraw or reject an offer on a property up until the exchange of contracts.
However, there is a legally binding contract after the exchange of contracts of which both parties will be subject to the terms. A purchase can fail due to personal circumstances or because problems arise in the survey among other reasons, but not after this point.
Withdrawing before the exchange of contracts is less of a headache, but you can still be faced with charges to pay.
As a seller, you may have to pay an estate agent’s fee if they have found a buyer who can complete, but you as the seller decide to withdraw. Check the terms of your agreement with the estate agent to be sure.
Can you withdraw an offer on a house?
Yes, any buyer can withdraw their offer up until the exchange of contracts. Most of the time, this can be done without any financial penalty. To act in good faith, it is always better to let the seller know as soon as possible.
If you are at an early stage in the process, buyers are less likely to be faced with further financial loss. When closer to the exchange of contract, non-refundable costs such as surveys could be lost when work has already been carried out.
Even if the survey is the reason behind the buyer backing out, the cost is unlikely to be reimbursed. The same applies to the estate agent fees and legal work completed.
Do solicitors charge if house sales fall through?
Most solicitors charge for their services if the sale falls through, especially when close to completion. At this stage, your solicitor will have already paid for surveys as well as certain legal fees.
You are obliged to pay these fees, and should contact your conveyancing solicitor to find out how much they are. The amount can vary, depending upon what stage you are in the sale process.
Some solicitors only ask for a deposit before starting their work, whilst others will take their costs out of the money made from the sale and transfer the remaining balance to you.
Sell your house quickly in the UK
When selling a property in the UK, the average time taken to final completion is 6-9 months. It is a complex and stressful process, and one full of risks. At Proffered, we offer a range of services that protect your sale to ensure a smooth, efficient and stress-free transaction.
