Pulling out of a house sale, or having your buyer pull out, can leave you in limbo.
It happens for various reasons.
Some within your control, others not.
Either way, there are practical steps for moving forward.
Or even getting the sale back on track.
At what stage can a buyer pull out of a house sale?
In England and Wales, the property buying follows three main stages.
These determine obligations around withdrawing from an agreed house sale.
1. Pulling out after making a verbal offer
This informal initial stage means either party withdraw without consequences. It is often referred to as the ‘subject to contract’ stage.
Buyers may proceed with surveys before confirming intentions. Once surveys are complete, buyers can still pull out.
And sellers can keep marketing the home before and during this stage.
2. Pulling out after exchanging contracts
Exchanging contracts obliges both parties to complete the sale. It can take between 4 and 6 weeks to complete.
Buyers pay a non-refundable deposit of around 10% of the sale price. Withdrawal by either party here might allow the other to pursue financial damages.
But there are still a few circumstances in which one side can withdraw without penalty.
3. Pulling out after completing the sale
This final legal stage makes the transfer binding. The property deeds change hands.
And outstanding funds get paid on the pre-agreed completion date.
Failure to complete by the buyer or seller is a contract breach. Compensation claims or legal action may follow against the party responsible for non-completion.
Buyers can sometimes get cold feet and withdraw their interest even after exchanging.
But once contracts are signed, backing out has consequences. The sale becomes legally watertight at the completion stage, barring extreme circumstances.
What to do when buyer pulls out of house sale
If a buyer pulls out of a house sale, most sellers put their house back on the open market.
This often causes their property chain to fall through.
Some may look for an alternative channel to sell their property through. This is likely done if they need to sell fast.
Financial implications of a collapsed sale
Losing the sale
Having no proceeds from the sale impacts plans that rely on these.
It may mean you cannot buy your desired home or pay off existing debts as intended.
Conveyancing fees
You still owe conveyancing solicitor fees for work undertaken on the failed sale.
Further charges will apply when finding another buyer and progressing the sale anew.
Legal fees for selling are around £850 but rise significantly if issues arise.
Solicitor’s fees
When house sales fail, buyers lose deposits paid to sellers’ solicitors. (These deposits are for exchanging contracts.)
And you, as the vendor, remain liable for the fees you accrued even for a failed sale.
Unfortunately, conveyancing fees already incurred are not refunded.
These include fees for:
- Work on searches
- Administration of paperwork related to a sale
- Money transfers
- Liaising with lenders up to the point of withdrawing.
Solicitors charge for time expended on these failed completions.
No one can refund buyers’ sunk costs.
But you may recoup losses from relisting and legal expenses under some conditions. In particular, if they withdrew without valid grounds at an advanced stage.
Mortgage early repayment charges
If you’re remortgaging, early repayment charges from your current lender may apply.
This can amount to thousands based on your outstanding loan term and deal type.
Double move logistics
Cancelling and re-organising removals can result in extra fees, depending on suppliers’ terms.
Keep thorough accounts of this. It is evidence of the financial impact of any potential claim against a backing-out buyer.
Key reasons people pull out of house sales
1. Mortgage problems
The number one cause of sales falling through is homebuyers failing to secure a mortgage.
Banks might decline mortgage applications or the timing of offers might not work out.
Stricter affordability checks for mortgages often make securing finance tricky today.
2. Issues in the property chain
If other links in the buyer’s property chain fall apart, your sale collapses, too.
For example, if they cannot sell their home in time to buy yours. This is the peril of longer chains.
3. Delays from legal proceedings
Lengthy conveyancing delays or unexpected legal troubles can prevent timely transactions.
In this case, they may exercise the right to end the contract.
4. Down valuations of the property
Getting a house valued by an estate agent is usually reliable.
The buyer’s mortgage lender values a home lower than the agreed price. So, they may only offer finance based on this lower amount.
This leads to many buyers walking away.
5. Change in circumstances
Sudden changes to finances can force buyers to pull out after exchanging contracts. These could be due to health or employment.
While frustrating, personal emergencies may leave them little choice. You have limited options to oppose this.
When buyers withdraw their home offer, they don’t need to give definitive reasons.
But understanding what scuppers transactions can help renegotiate terms or take preventative steps.
These steps can because of to finance, timescales, etc.
6. Gazumping and Gazundering
Gazumping is when sellers accept offers after (verbally) agreeing to sell to others. These offers are almost always higher offers.
By accepting a gazumping offer, buyers face the risk of gazundering. This is when the second buyer lowers their offer at the last moment.
Turning to cash house buyers as a fallback option
If an agreed sale falls apart, there are way for sellers to sell faster.
The fastest of these is using a sell house fast company, like We Buy Any Home. We have our own cash funds immediately accessible, and we’ll buy any property in any condition.
So, we can buy homes without requiring mortgages or external financing. Once we inspect your property and make an offer, we can complete deals within 7 days.
