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What To Do When a Buyer Pulls Out of a House Sale

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What To Do When a Buyer Pulls Out of a House Sale
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Having a house sale fall through can leave you in limbo. 

It can happen for various reasons — some within your control, others unavoidable.

Either way, there are some practical steps to help you move forward or even get the sale back on track

Let’s explore these further.

Can a seller legally withdraw from a house sale?

Once a seller has agreed and signed a deal with a buyer, they have entered into a legal contract. 

This contract outlines obligations for both parties, including completion dates and other terms. 

If the seller considers withdrawing from the sale, they should thoroughly review this contract. 

Conditions may allow them to pull out, such as if the buyer cannot secure a mortgage.

However, they cannot simply change their mind and walk away. Withdrawing for no valid, documented reason likely constitutes a breach of contract.

What happens if the buyer pulls out of a sale?

While sellers cannot easily walk away, pulling out of a house sale is more straightforward for buyers – despite the signed contract. 

Their lender declining the mortgage or personal circumstances changing can lead to this. But if a buyer rescinds without grounds, they break the purchase contract.

In this case, there are charges associated with pulling out of a property sale

When a buyer does back out, the sale immediately falls through, even at an advanced stage.

Key reasons house sales fall apart

Many issues can scupper what seemed like a sure house sale, even at the eleventh hour. 

Here are some of the most common reasons transactions unravel.

1. Mortgage problems

The number one cause of sales falling through is homebuyers failing to secure a mortgage in time or the lender declining at the last minute.

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 purchase yours. This is the peril of longer chains.

Lengthy conveyancing delays or unexpected legal troubles can prevent buyers or sellers from completing timely transactions.

In this case, they may exercise the right to terminate the contract.

4. Down valuations of the property

Getting a house valued by an estate agent is typically reliable. 

However, if the buyer’s mortgage lender values a home lower than the agreed price, they may only offer finance based on this lower amount. 

This leads to many buyers walking away.

5. Change in circumstances

Sudden changes impacting finances or situations like health or employment can force buyers to pull out, even after exchanging contracts. 

While frustrating, personal emergencies may leave them little choice. You have limited options to oppose this.

When buyers withdraw their home offer, no definitive reasons must be given. 

But understanding what scuppers transactions can help renegotiate terms or take preventative steps. 

These steps can be related to finance, timescales, etc. when relisting your property after a fall-through.

Financial implications of a collapsed sale

As highlighted, the ramifications of an agreed house sale falling apart can be costly. 

Until actual completion, uncertainty remains, and failed transactions directly hit your pocket in various ways:

Losing the sale itself

Having no proceeds from the sale impacts plans to rely on these. 

It may mean you cannot buy your desired home or pay off existing debts as intended. 

Remaining in a property you wish to leave creates indirect stress costs, too.

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.

Minimum legal fees for selling are around £850 but rise significantly if issues arise.

Mortgage early repayment charges

If simultaneously remortgaging to a new property, 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

If removals or redirections of posts are arranged, cancelling and reorganising these can be frustrating. 

And it can result in extra fees, depending on suppliers’ terms.

Adding up these numerous expenses highlights why a failed sale potentially costs thousands of pounds, in addition to the headaches generated. 

Keep thorough accounts of the financial impact of any potential claim against a backing-out buyer.

At what stage can a buyer withdraw their offer?

In England and Wales, the property buying process follows three main stages

These determine obligations around withdrawing from an agreed house purchase.

1. Making/accepting an offer

This informal initial stage means either party can back out without legal consequences. 

Buyers may proceed with surveys before confirming intentions, and sellers can keep marketing the home. 

Once positive surveys are received, though, buyers should sign intent to formalise the transaction.

2. Exchanging contracts

Signing a legally binding contract obliges both parties to complete the sale. 

Buyers pay a non-refundable deposit of around 10% of the purchase price. Withdrawal at this advanced stage allows the other party to pursue financial damages. 

However, there are still a few circumstances in which one side can withdraw without penalty.

3. Completing the sale

This final legal stage makes the transfer binding. The property deeds change hands, and outstanding monies get paid on the pre-agreed completion date. 

Failure to complete by the buyer or seller constitutes a contract breach. Compensation claims or legal action may follow against the party responsible for non-completion.

While rare, buyers can get cold feet and withdraw their interest even after exchanging. 

However, once contracts are signed, no backing is out without consequences. 

The sale becomes legally watertight at the completion stage, barring extreme circumstances.

Withdrawing an offer after making it

What if you are a prospective buyer and wish to retract your original offer?

Legally, you can withdraw your initial offer on a property at any point before the exchange of contracts. 

However, this risks annoying sellers and agents you were negotiating with. If the seller verbally accepted your offer or turned down another bidder relying on your proposal, they could argue for compensation costs.

To withdraw gracefully, communicate promptly and clearly to the estate agent and vendor. You must rescind the offer with apologies and reasons why. 

Expect frustration or appeals from the seller to reconsider. 

Politely stand firm in your retraction, but leave the door open should your situation change and you want to approach them again later.

Are buyer’s solicitor fees refundable following a collapse?

If a house sale fails, the buyer loses the deposit monies paid to the seller’s solicitors when exchanging contracts. 

And you, as the vendor, remain liable for the legal fees you accrued, irrespective of the outcome. 

But can buyers reclaim solicitor costs spent pursuing the defunct purchase?

Unfortunately, conveyancing fees already incurred cannot be refunded when transactions unravel. 

Work is completed on searches, paperwork, transfers, and 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. However, you may recoup losses from relisting and legal expenses if they breached the contract by withdrawing without valid grounds at an advanced stage.

Turning to cash house buyers as a fallback option

If an agreed sale falls apart, there are ways to make a house sell faster

These include improving property’s desireability when relisting on the open market. And it includes alternative selling channels.

Selling a house fast for cash is typically done by professional house purchaser firms and individual investors.

We Buy Any Home is a cash house buyer. Our funds are immediately accessible, so we can purchase homes without requiring mortgages or external financing. 

This avoids the risk of lender rejections that often derail mainstream sales. As cash buyers, we have pre-approved funding pools and act quickly, avoiding long chains. 

Once we inspect your property and make an offer, we can complete deals within 7 days.

Free cash offer within minutes, any condition, any location.

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