A woman who posted on Mumsnet that she was planning on either pulling out of a house purchase or gazundering with a week to go, has been slated by fellow users.
On the popular forum, she said she and her husband were 30-year-old first-time buyers.
They had had their £440,000 offer accepted on the property in Croydon at the end of January.
But with just days to go before exchange, she said “terrible news” about the economy and housing market convinced them their offer was too high.
She added that she was “not going to over pay for a house just to be nice or honourable, unfortunately”.
She asked if she should “walk or offer lower”.
But her post has met with a storm of criticism.
One Mumsnet user wrote: “Honestly, I think either of your suggestions are disgusting. You offered what you were happy to pay for the house and have gone with that for four months.”
Another said: “Now with just a few days before exchange you decide to jeopardise the entire chain and waste who knows how much of other people’s money. Beyond selfish.
“You could have withdrawn at a much earlier stage or reduced your offer. But you didn’t. Your preferred option is blackmail – reduce the price or we walk.”
Another warned: “You’re the one that loses money. You’ve paid out for all the surveys, they’ll find another buyer. Your name will be mud with all the estate agents in the area. They do all tip each other off.”
Another said in no uncertain manner: “Absolutely vile thing to do which should be illegal. We had our buyers pull out two weeks before. I was heartbroken. It cost us a fortune, we lost our new home and the deposit we’d paid. All our stuff was packed. The whole chain collapsed.”
Undeterred, the original poster returned to say she was “very impressed at the morals of all of you who would risk taking a big hit and ending up in negative equity”.
The buying and selling system needs fixing, with non refundable deposits from both parties.
I think a full legal pack should be done on all properties before they are marketed. Similar to an auction sale setup.
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And this is why the Government are looking at Improving the Home Buying and Selling Process. High on their list of possible ‘improvements’ are Reservation Agreements. If a Reservation Agreement had been entered into, could be that this buyer would loose a holding deposit by waking away like this. Lots of issues to consider, not least, would loosing a modest holding deposit be a concern If the potential ‘on paper’ loss could be many times that amount?
Far better to get to exchange much sooner than in 3.5 months. Bring back HIPs! Did I really say that? Ok, not HIPs but lets consider introducing some kind of worthwhile sellers pack. Its not rocket science, doesn’t have to be expensive, and would be relatively easy to do.
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Rob you are so right. If they had had the information upfront at the point of marketing then they could have exchanged contracts within weeks instead of months.
So why do conveyancers and estate agents continue to say that it is ‘not in the best interests of the seller’ to spend the money gathering the information upfront or entering into a Reservation Agreement. Stories like this just confirm that it is very much in the best interests of the client to lock in a deal rather than losing thousands on either a renegotiated price or the fall through in the chain.
We also hear of buyer’s conveyancers not ordering searches until they receive the mortgage offer because ‘it is not in the best interests of the client’ until they know the mortgage will be approved!
It is in the interest of both the buyer and the seller to spend the money on searches at the earliest possible stage. At worst they’d lose hundred’s on a search pack – not thousands on a failed transaction because someone pulls out with the delay caused. People do not pull out because of a survey – only 20% of people order a survey and even where their mortgage valuation shows somethign bad they would prefer to carry on than start again. Peole pull out because they have not been properly vetted and can’t get the mortgage or because the delays are so great they just want to escape the stress and uncertainty of the conveyancing process and get on with their lives.
Reservation Agreements have to be a good thing, locking in both sides, compensating where people do pull out, avoiding the waste caused by the 30% of sellers and buyers who are not really committed and pull out and virtually guaranteeing the estate agent’s commission. How much is enough to stop someone pulling out? Well it’s not really just about that it’s how much would it take to compensate someone who loses out as a result. £1,000 or 1% of the sale price maybe.
Do we even need these agreements if all the information is there and we can exchange contracts within 3 weeks instead of 14?
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We don’t bother with reservation fees because buyers and sellers sometimes have to withdraw through no fault of their own. What if a buyer pulls out because a new extension is found to be unsafe, or if someone in the chain pulls out and your client cannot afford to wait another 3-4 months.
Should a reservation fee be taken from a vendor to deter them from withdrawing too? What if they are not cash rich?
I would much rather see the conveyancing process sped up.
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But those cases are few and far between so we ar putting the rest of the home moving public through this hell to panda to a small percentage of people. In any event you can make the reservaiton agreements conditional upon a variety of circumstances, possibly even a change in circumstance such as job loss or significant illness. It gets a bit subjective but companies like precontractdeposit.com already do this.
Of course the seller should put skin in the game too, they are a major part of the problem. If the seller and buyer are not cash rich then there are bound to be insurance products out there – Gazeal do somethign similar.
All of these problems are solvable. we know this because itoperates well in other countries….but only where title etc is provided upfront.
As you say though, far better to speed up the process so why are we not seeing sellers being encouraged to complete the information forms during marketing or even compliance with Consumer Protection Regulaitons taking the form of the Law Society TA6 form so that it is ready at the point of marketing. How much time would that save? Research shows about 11 days off the current process plus another 4 weeks if you include leasehold information.
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Three words: The Scottish System
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Eight words, Doesn’t work as well as it used to, ask any Scottish Property Lawyer or Estate Agent.
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Reservation fee only works if it is substantial and relatively binding. When you “reserve” a new build, quite often the reservation fee is £1000 is this enough to prevent someone pulling out? Also and reservation fee is likely to be bogged down in Ts & Cs, able to withdraw with adverse survey, searches etc. “I didnt know the house was located within 5 miles on a landfill site”
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That’s only because of affordability checks meaning that finances are now uncertain since MMR came in. The provision of information etc is all there.
Why don’t we start property log books here like the Home Report in Scotland?
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eduardo
I had a viewing yesterday afternoon, who have recently sold their home in Stirling. They tell me that they were less than a week away from their agreed move date when their (English) buyer pulled out without notice.
I was not as surprised as I would have been three years, ago as I have seen, during many many hours of portalwatching, a great deal of Scottish properties being #relisted by online estate agents and when checking why, note that their status had previously been “SSTC”. But I’ve never had a way of questioning it.
So – I asked them how that was possible under the ‘Scottish System”.
They told me that their buyer had never signed Missives – and that this only ever-so slightly significant factoid had never been related to them by their Agent or Solicitor.
Luckily, a new buyer was just round the corner and they have now completed on their sale. And, all being well, following negotiations that extended until 7.30 last night and resumed at 7am this morning, they will be starting on their journey of buying a home in England by the end of today.
The point being, of course – as confirmed by Mr Hailstone – that NO system is 100% bulletproof. Sales collapse.
Our job is to either prevent these occurrences if possible – or quickly recover from them when they do and get the job done.
I would say that the subject ‘buyer’ of this article is clearly looking for angles to escape by – then unlike my esteemed colleague in industry Mr Bradbury below, I sincerely doubt that the ‘sale’ will amount to anything other than a statistic for some shiny new widget-seller to quote in future when trying to hawk us all a ‘fix’.
Best she pulls out and let someone that genuinely wants the property have it.
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Its the dreaded survey that normally gives the buyer an opportunity (excuse) to chip the price which because of its cost normally doesn’t appear until late in the day in proceedings often suggesting further specialist advice and more costs
Are you suggesting that these reports should be made available at vendor’.s cost in advance of marketing?
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What an encouraging reaction from the other posters on Mumsnet.
That deal looks saveable to me – particularly as the buyers self stated aim is “… to have a bit of security before children…”. This objective would presumably be achieved if the sale were to complete. I assume that they may stay in this property for 5 – 10 years. By then who knows what will happen to house prices and mortgage rates for that matter. Ironically, it could be a very expensive mistake for the buyers themselves to pull out of this sale.
I wonder what her reaction would have been if the seller had increased the selling price on the basis that the economy was improving and house prices were increasing.
That said, whilst the moral issue here is a subjective question – rightly or wrongly , she is well within her rights.
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I’d like to be a fly on the wall if the Agent called to tell her the price had gone up as the economy was improving!
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Always raises a sardonic smile that estate agents get branded as lacking in morals and untrustable (26% of the public in a recent survey saying they trust agents to tell them the truth) when the reality is that the public’s “every man for himself” moral compass when it comes to buying/selling property is arguably the root of many house move horror stories. Here’s hoping in this case that Karma does its job.
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“Terrible news about the housing market”? Must have missed that! Nationwide House Price Index shows stable sale prices for 18 months. Estate agents over value. Zoopla shows £25k difference between asking and sale prices. But sale prices are stable. Only problem is agents over valuing.
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Prices have come down a bit in Greater London, but it’s unlikely her chain has been progressing for two years. One would assume a valuer has also been round and given it the green light.
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The real story here is that this person has played the game very, very badly.
If she’d have just dragged exchange down to completion day, or the day before she could have just ‘chipped’ at the last minute.
2 case studies, happening right now, TODAY;
1) Lady one of our crews is on the way to as I type. Told for weeks unless completion 18th buyer pulling out. From @10days ago buyer has delayed exchange for various reasons (all false). Yesterday at 15:00 turns out no deposit lodged (or at least that’s the story). At 1700 (ish) it’s decided to exchange and complete same day. At 17:10 last night I’m on the phone with lady’s daughter (she’s stressed and crying). She asks me about gazundering and ‘is this what’s happening?’.
This customer has arranged her whole new life in a new part of the country and is emotionally fully invested. She’s not moved for forty years. She’s thousands of pounds into this.Her solicitor, not once has told her of any risks, nor offered any opinion.
By 9am she’ll be physically moving out. Without knowing if she is about to be ripped offor even if she’ll actually move.
—-
2) A chap in Solihull who we lost as a customer as we refused his booking without paymentin advance as it was clear what is happening. His buyer (of a nearly £1m house) told him last Friday that he no longer wants exchange in advance and wants to do it on same day. Reason given ‘struggling for the last fifty thousand’. They too are due to complete today.
Who wants to guess what’s about to happen.
The gent has had to book ‘the only moving company available who will have me without a deposit, and I know they’ll be terrible’. His move is huge, and expensive. The quotations are from the conversations I had with him face to face.
EVERYONE invested in this process reading this and especially estate agents need, right now to stop issuing completion dates cheaply, and stop throwing them around like confetti.
Exchange of contracts should be the focus point. Then, a MINIMUM of 2 weeks inbetween exchange and completion. If everyone knew this timeframe and focus at point of sale the angst would vanish, and gazundering would be elminated.
This blog talks further on this http://moversandstorers.co.uk/2014/07/09/gazumping-gazundering-exchange-of-contracts/
The scandal here is that this game playing doesn’t ever get logged for what it is. Just ‘buyer pulled out’ which is very, very different to ‘buyer tried gazundering because they could – because the system allows it’.
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30 year old FTB paying £440,000 worried about a 1 or 2% fall in house prices? Wake up. A house is a home not a vehicle to make money. If youre that unhappy about your kids living in a private rented house, get on and exchange contracts because in a year or two your home will be worth more than the current asking price. Get over it. Rant over.
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Blockchain will change this…. surveys and searches should be transferable and digitally stored with land registry. As soon as “block chain” contract is nailed down should be fixed?
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No it won’t.
Only legislating / mandating change that prevents psychological manipulation of the type that permits gazundering will change it.
No matter if the current (circa) 4 month process is reduced to weeks, if a buyer wants to play this game, they can.
Many buyers that gazunder know at the outset they will do it.
Actual change to exchange/completion timeperiods along with changing the focus of agents, clients and conveyancers from talking about completion dates to talking about exchange dates (with a known period inbetween the two) is the only thing that’ll outright stop gazundering.
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While I don’t condone this ladies intended action I can understand her concerns.
There seems to be a doom and gloom outlook and outright attack on estate agents these days, because of it every little bit of news hits the headlines. She obviously doesn’t want to overpay for a property but as the previous poster says, unless you are investing with the intention to sell, a house is a home and long-term it should look after itself value wise.
However, what if interest rates rise and she comes to the end of her fixed term period, it all has an affect on her financially. But yes, she should have acted earlier, or not at all.
The worrying thing is that agent valuations can no longer be taken as accurate. A large well known agent in my town must over value every property because they’re winning instructions but reducing almost every listing within weeks.
Do your homework, know what you should be paying and stick to your offer, unless the survey reveals new information which could be costly.
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Scottish system? Forget it! It is a completely different legal system north of the border with no relation to English Law. Just amend the current system as Rob and the Government is suggesting or as most of the other English Law practising countries have done and these cover around a quarter of the World’s population (the Commonwealth plus the US).
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In my opinion any decent agent (one that wants/needs to earn his/her commission…No names!) will sit this lady down and put a positive spin on it. There are 1000’s of youngsters that would love to be in her financial position, explain that a house is a long term investment, but it shouldn’t just be about money, what’s more important is this could be ‘her and her future children’s home’. What are her alternatives, continue paying £1000’s a year rent, ie paying off her landlords mortgage, sitting, waiting, gambling on the future market, what if she pulls out and there is a sudden surge and she is back to square one? Is she is paying a repayment mortgage? Will at the end of the 1st year will she not have chipped away several thousand £’s off the mortgage, will this come close to covering the 1% – 2% drop in the house value she is expecting? (and one less year she has to pay her mortgage). Also, so what if house prices drop, if hers drops the next house she buys (if she stays in that area) will also have dropped, so she will be no worse off, if prices increase, the house she buys will have increased, so she will probably be no better off.
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A quick list of some of the issues that are currently being discussed/looked at. As they say, in no particular order:
Reservation Agreements
Property Logbooks
Getting properties sale ready
Better ‘in principle’ lending decisions
New How to Buy and How to Sell guides
More quality/kite marks
Simultaneous completion on completion day (the whole chain completes at the same time)
More e-conveyancing
Better, quicker and cheaper service from some Managing Agents and Freeholders
Search times no longer than 10 working days
More transparency with referral fees
Move from leasehold to commonhold
Regulating agents and introducing estate agency qualifications
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Reservation agreements – anyone got a link to one which I assume allows clients to pull out if the searches are adverse (who decides that) or the survey (who decides that) or the title (who decides that).
So will the Government dictate the wording, and make it a requirement before a residential sale offer can be accepted?
Needs thinking about, as I don’t want to be wasting conveyancing time by first negotiating one of these wretched agreements.
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I’m fairly certain the public are being thought of before conveyancers.
A conveyancers 60minutes pales into insignificance compared to an elderly lady sobbing because after having already had 2 buyers pull out, now, 18months later the third just ripped her off for five grand.
But no, you’re right. Wouldn’t want you to have gone to the trouble of doing searches that the client will already have paid you to do.
God forbid conveyancers should be put out by changes intended to protect the actual paymasters who really suffer
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whose post are you commenting on?!
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