Buying a property is the most expensive purchase many of us will make in our lives, so it is important that you choose the right property.
However, you’ve been at it for a very long time, and someone else may have gotten there before you.
It’s a dilemma that can leave buyers making offers in a hurry, which they may regret later, so what happens if your offer is accepted but you later change your mind?
The answer will depend largely on where you are in the purchasing process.
Countdown to interruption: contract exchange
Pulling out of an estate sale can be motivated by a sudden change in circumstances, such as a job loss, a financing falter, illness, or a simple change of heart.
Either party can withdraw without legal penalties until contracts are exchanged – a pivotal point in the sales process where the purchase becomes legally binding.
If you have second thoughts, it is important to contact your carrier before exchanging contracts.
While you can avoid legal ramifications before this stage, it is important to note that you may still be liable for costs such as estate agent fees, legal fees for work already carried out, and the cost of any surveys carried out.
However, if you try to leave after exchanging contracts, the penalties will be much higher.
Buyers usually pay a deposit on the property when they exchange contracts, and will usually lose some or all of this money if they then walk out because this constitutes a breach of contract. You may also have to pay compensation to the seller.
A completion date will usually be agreed at this stage, and if you fail to meet this deadline, the seller reserves the right to issue a ‘notice of completion’ – a legal document giving the buyer a specified period of time, usually 10 to 14 days, to wrap things up or face further action.
It’s not ideal for the seller to withdraw from a sale at this stage either, as they may also face penalties for breach of contract from you, which will usually include returning your deposit and reimbursing you for any legal and survey costs.
Staring and staring: hidden dangers
Staring and contemplating may sound like something out of a children’s book, but such intense practices are legal in the UK, provided they are done before contracts are exchanged.
Once the seller accepts your offer, they may inform you that they have been offered a higher price by another potential buyer. This is known as “gazumping”.
This can sometimes be a tactic on the seller’s part to get a higher selling price, but there’s no guarantee that a buyer who was impressed once won’t be surprised again. Although homebuyer protection insurance won’t protect you from break-ins, it may help you recover some of the costs in a worst-case scenario.
On the buyer’s side, stare down occurs when a buyer withdraws their offer on a property, often at the last minute, in an attempt to get the seller to accept a lower offer or agree to other requests. It is technically legal if it occurs before contracts are exchanged.
It is a risky tactic, as if your attempt at meditation is rejected, you may lose the property and any money you have spent so far.
Purchasing power: Having a healthy budget
It’s important to understand your budget and purchasing power when you start looking for a home to ensure you don’t overwhelm yourself and will be able to keep up with your mortgage payments.
Finding the perfect property can take some time, so remember to keep an eye on your mortgage offer to make sure it doesn’t expire.
It is also recommended that you have extra funds at your disposal to cover any potential issues that may arise, such as additional surveying costs or the need to cover rental or storage costs throughout the process.
It is best to choose a conveyancer who is organized and experienced in handling the type of property you intend to purchase.
CLC Regulated Practices Our badge will be prominently displayed on their website which, when clicked, will take you to our website and confirm that the company is truly regulated by us.
You can find a list of conveyancing companies regulated by the CLC, as well as further guidance on buying and selling property,here.
Stephen Ward is Director of Strategy and External Relations at Board of Licensed Carriers
