Why do sales fall through?
Buying and selling a home is a not an easy process and is understandably quite stressful. A moment that no one wants to have to deal with is a when a sale falls through. Head of property, Mark Laird goes through the main reasons why a sale falls through and what to watch out for.
A common complaint
In the Auckland, over five thousand agreed sales of homes fall through and do not proceed every week. It is a common complaint about the process of buying a home in Auckland that buyers and sellers can both change their minds and decide not to proceed with a sale. Our Head of Property Mark Laird explains common reasons sales do not proceed and what sellers can do to avoid this fate.
Bad survey
A buyer should always instruct a surveyor to inspect the property and ensure there are no physical defects. The surveyor will confirm whether the property is appropriately priced and highlight any works likely to be required both now and in the future.
Where a survey report does highlight problems, a buyer may seek to renegotiate the price or ask the seller to undertake the necessary repairs. If the seller refuses to do so the buyer may decide not to proceed.
To avoid losing the sale, a seller should seek honest advice from their estate agents. Does the agent think a new buyer can be found and would any new buyer match or better the current sale price? Does the estate agent believe a new buyer can be found quickly or is it likely the property will be on the market for months? Obtaining answers to these questions will help a seller to make an informed decision as to how they should respond to any attempted renegotiation.
Down valuation
If the buyer is purchasing with the aid of a mortgage, the lender will obtain their own valuation of the property. If the lender’s surveyor does not agree that the sale price matches the valuation of the property they may decide not to proceed with the mortgage. They may also decide to lend the buyer less money than anticipated meaning the buyer may no longer be able to meet the agree price.
To avoid the disappointment of a down valuation, when placing the property on the market a seller should obtain multiple valuations for the property and listen to the consensus. If one estate agent is suggesting as higher valuation than other agents who view the property, then it may be the case that agent is over promising to secure the seller’s business.
Change of circumstances
Neither the buyer nor seller is obliged to proceed with the sale until contracts are formally exchanged. This step takes place relatively late in the process of selling a house and on average twelve weeks from when a sale is agreed. A lot can change in 12 weeks. Buyers can lose jobs; people can receive unwelcome medical news, and relationship can be break down.
Whilst changes of personal circumstances cannot be avoided, ensuring your sale progresses quickly will reduce the time where other parties can change their mind. Instruct a solicitor who will progress your sale quickly and keep you informed of developments. Speak to your estate agent and make sure they are in touch with the buyer and checking mortgage arrangements and surveys are in hand as quickly as possible.
Property chains
Often a house sale will be in a chain of transactions. If the sale of a property further down the chain does not proceed, your buyer may be unable to proceed with your sale. Whilst you are unlikely to be able to control or influence what happens elsewhere in the chain, you can ask your estate agent to maintain contact with other estate agents in the chain to ensure that all parties are progressing and there are no anticipated problems which could derail your sale.
Legal issues
It is very rare for a sale to fall through because of issues with the legal paperwork. Issues can arise such as a lack of right over a shared access or shared drains and cables. The seller may be unable to supply necessary consents for alterations to the property. Leases may contain unfavourable clauses which are not acceptable to mortgage lenders. In most cases these issues can be overcome by a proactive and experienced legal advisor.
Residential property & conveyancing team
At Morrish Solicitors each of our specialist property lawyers has decades of experience in assisting with sales and purchases of residential property and are ready to assist you.
To enquire about our residential property and conveyancing services please call us on 033 3344 9600 or simply email [email protected] with your request.
Author: Mark Laird, property.
