What to do if your house buyer pulls out before exchange
When a house buyer pulls out before exchange, it can be costly and incredibly stressful. It’s more common than you may think with twenty-five to thirty percent of all house sales falling through before completion in England and Wales. That equates to around 300,000 property sales each year.
This guide will help to explain why property sales fail and what to do if your buyer pulls out of your house sale.
In this guide
- What can you do if your house buyer pulls out before exchange?
- When can a buyer pull out of a house sale?
- Can buyers pull out after exchange?
- Why has my buyer pulled out of the sale?
- My house buyer has pulled out – how much will it cost me?
- How to reduce the risk of buyers pulling out of a house sale
- Save your property sale by using a cash home buying company
What can you do if your house buyer pulls out before exchange?
Unfortunately, if you haven’t yet exchanged contracts, there isn’t a huge amount you can do from a legal perspective.
In England and Wales, neither the buyer nor the seller has any obligation to complete the sale until contracts have been exchanged.
Having said that, it is worth contacting your estate agent or solicitor to find out why the buyer pulled out. They aren’t under any legal obligation to give you a reason, but out of courtesy they will usually try to explain their decision. If your buyer is pulling out of the sale as a result of something that was brought up in the property survey, you may be able to get the sale back on track by agreeing to carry out necessary work to the property before the sale completes, or negotiating a price reduction.
If your buyer is adamant that their decision is final, your best bet is to get your property back on the market as soon as possible and try to secure another buyer. Although having a buyer pulling out of a house sale is frustrating, it is unfortunately not unusual.
It is worth noting that things work a little differently in Scotland. Generally, significantly fewer property sales fall through in Scotland. This is due to several factors:
- Sellers must pay to have a home report done before marketing their property, which means the process only tends to attract serious sellers who are committed to the process.
- The home report means potential buyers are well-informed before making an offer on the property, which means there are likely to be fewer surprises during the house buying process.
- Properties are usually fully withdrawn from the market once an offer has been accepted, to discourage gazumping. If the seller does pull out of the process to accept another offer, they cannot use the same solicitor for the new sale. This tends to discourage sellers from pulling out of property sales.
When can a buyer pull out of a house sale?
A buyer can pull out of a house sale without any legal or financial recourse right up to the point of exchanging contracts.
Can buyers pull out after exchange?
A buyer can pull out of a house sale after contracts have been exchanged, but there are legal and financial consequences to this. If a buyer pulls out of a house sale after contracts have been exchanged, they will forfeit their deposit and may be liable for other costs incurred by the seller.
Why has my buyer pulled out of the sale?
A buyer might pull out of a property sale for a variety of reasons.
Unable to secure a mortgage
Even if they have successfully secured an agreement in principle before making an offer on the property, there will be circumstances in which a buyer is unable to secure a mortgage offer. During times of market uncertainty, mortgage lenders may be more cautious about property values. If a mortgage lender values your property at less than the agreed purchase price, your buyer may find that there is a financial shortfall they simply cannot make up. Or they may, unfortunately, have a change in personal circumstances that mean they are no longer able to secure the mortgage they require to purchase the property
Unhappy with survey findings
A property survey can highlight a number of issues that could make a buyer cautious about proceeding with a property purchase.
- Some issues commonly identified as part of a property survey include:
- Damp in the property
- Structural movement
- Roof problems
- Property changes that have been made without the relevant building regulations or planning permission
- Concerns about the property’s electrical safety
Failed attempt to renegotiate price
If the property survey identifies any areas for concern, or if the buyer decides that the property is worth less than the price initially offered for any other reason, they may attempt to renegotiate the price. If you are not happy to lower the price to a level they deem appropriate, the buyer may pull out of the sale.
Slow progress in property chain
Most home sales will be part of a property chain. The more links in the chain, the more complicated the property transaction will be, and the more vulnerable it will be to chain collapse.
A property chain can also cause significant delays in the house purchasing process, which can, in itself, jeopardise the success of the sale.
Buyer simply changed their mind
From time to time, a buyer will simply get cold feet and change their minds about a property after having an offer accepted.
How many buyers pull out after survey?
Last year, 11 percent of failed sales were attributed to the buyer pulling out after the property survey.
My house buyer has pulled out – how much will it cost me?
Research from the HomeOwners Alliance suggests that 51 percent of sellers lost an average of £2,700 when a sale fell through before completion. A further 12% of sellers lost more than £5,000, as a result of a failed sale.
Quick Move Now bought our house after buyer pulled out at the last minute
After a long search, Mr and Mrs Simmonds found their dream home. Unfortunately, their buyer pulled out at the last minute leaving them devastated.
They decided selling directly to a professional home buying company would be the best solution to avoid any further heartache. They contacted Quick Move Now and we were able to offer them a guaranteed price to buy their house in a timescale to fit their onward move.
How to reduce the risk of buyers pulling out of a house sale
When a buyer pulls out of a house sale it costs you time and money, and can cause a great deal of stress.
Unfortunately, a buyer pulling out of a sale is not unusual, but there are some steps you can take to help minimise your risk of a failed sale.
Research your potential buyers before accepting an offer
When presenting you with an offer, your estate agent should give you a summary of the potential buyer’s circumstances. Are they a first-time buyer? Are they part of a property chain? Do they have a strong need to move, eg. work, to be close to family, relationship breakdown etc. If you receive multiple offers, this information will help you choose between them. If you only receive the one offer, it will help you to go into the sale process aware of any potential risk factors, eg. part of a property chain, so you know what to watch out for.
Try to minimise the number of links in the chain
Property chains make the house selling process slower and more fragile. The more links within a property chain, the more vulnerable the chain will be to collapse. For this reason, a chain-free buyer may be a better prospect than a buyer in a chain, even if they make a slightly lower offer.
Be proactive in progressing the sale
When selling a property, it is important that you do everything you can to be proactive in progressing the sale. Ensure you have collated any paperwork relating to the property prior to the sale, have a solicitor lined up and, if you’re buying another property, ensure you have your mortgage in principle in place.
Once an offer has been accepted, stay in regular contact with your estate agent and solicitor to ensure the sale is progressing well and respond to any queries in a timely manner.
If the survey highlights any areas of concern, be prepared to negotiate
Having to find a new buyer will cost you time and money, and could see you missing out on your next home. If the property survey raises a concern, keep the lines of communication with the buyer open and see whether the situation can be resolved. You may be able to keep your buyer by agreeing to get certain work carried out before exchange of contracts, or offering a slight price reduction to compensate for the buyer getting the work done after the sale completes.
Similarly, if your buyer’s mortgage lender downvalues your property, seek a solution
If your buyer’s mortgage lender values your property at less than the agreed purchase price, and your buyer has no way of making up the financial shortfall, they may have to pull out of the sale. If you find yourself in this situation, you may want to consider agreeing to lower the purchase price in order to keep your buyer.
If one mortgage lender downvalues your property, other may too. If you stick to your guns and refuse to the lower the price, you may find yourself in a similar position with a new buyer several months down the line. The time delay caused by having to find a new buyer may also jeopardise your onward move.
Save your property sale by using a cash home buying company
If your buyer has pulled out and you’re concerned about losing out on your next home, you could consider using a home buying company. A home buying company will pay less than market value for your property, but is able to offer a speed and certainty that cannot be matched when selling on the open market. For more information about how a home buying company could help make your move quick, easy and completely hassle-free, read our ‘how it works’ guide here.
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