House purchasers not paying deposit

S

streamer

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We went sale agreed on our house about 5 weeks ago and are due to exchange contracts in the next week. The people buying the house are first time buyers and are getting a 100% mortgage. Because of this they asked if we'll forfeit the 10% deposit that's usually paid on exchange of contracts.

We told the estate agent representing us that we'd be happy to accept a smaller deposit, say half the amount due as we'd feel very exposed if the people buying our house can walk away even after exchange.

Our estate agent is making us feel like we're being unreasonable. Any thoughts or similar experiences? Is this a common thing in the current climate?

thanks in advance
 
If no money is involved at contract signing, then effectively the contract is worthless. The buyer can walk away at any stage and lose nothing.

Your estate agent shouldn't make you feel like you're behaving unreasonably to ask for a 5% deposit. It sounds like a very fair compromise. Surely the buyers have some available funds that they would be spending on furnishing, etc. that they could use now. It sounds like your agent is not doing the job you employed him or her to do.

How soon is the completion date?
 
"If no money is involved at contract signing, then effectively the contract is worthless. The buyer can walk away at any stage and lose nothing."

Not true; A Purchaser who defaults does get exposed to a liability and can be sued. Of course, the forfeiture of a deposit is a lot easier than suing the defaulting purchaser for the money. However, if a purchaser is willing to sign the contract, even one with a nil deposit, it can be assumed that they are serious about buying.

That said, I would be concerned about a nil deposit. The basic minimum I would regard as acceptable is the circa €5k minimum which is usually paid to the auctioneer as a booking deposit.

Remember the Auctioneer wants to get paid too. He\she is not going to want to waste his\her own time on a buyer who won't come up with the goods. And just to be absolutely clear on the issue, I would take time to make it clear to the auctioneer that he\she does not get to deduct fees from the booking deposit if the sale doesn't actually go to completion.
 
The above poster is correct in that if the buyer does not pay a deposit, you are potentially exposed in that you have nothing to forfeit if they default. Presumably they paid, however, a booking deposit?

The whole 10% thing is largely no longer adhered to. For example, often in the case of new build apartments, there is a standard deposit of 10,000 or 15,000.

It is definitely not the case that everyone has money put away for furnishings or whatever. Self and partner are closing this week - 570,000 house - 100% mortgage - it is our dream house but we fully expect to have no furniture bar a borrowed bed, sofa & table for the next God knows how long - we haven't a penny to spare.

We requested Vendor let us off with paying balance deposit (7,000 booking deposit had been paid) on grounds we would complete quickly and provided them evidence (copy of front page of loan offer) that we had 100% loan approval already in place. They decided not to go with it and insisted on full deposit. We could not draw down deposit until we had complied with all conditions of loan offer anyway so they ended up waiting longer in the end - we could only return contracts when we could actually have closed the whole deal had we been allowed to return contracts (which would still have bound us to complete, full deposit not being provided notwithstanding) without balance deposit.
 
Is the contract even a legally-binding document though if no financial consideration is handed over? It shows an intention to complete the purchase of the property, but in practice, I don't see how the seller could force the buyer to do this.

I wouldn't be happy to go along with this situation, but it comes down to how determined/trustworthy the buyers are, which neither you nor the estate agent can fully assess. At the very least, the closing date should be very soon after contract-signing to reflect the lack of security in this transaction.
 
I can understand this buyers position as they are 100% mortgage meaning when they pay you a deposit they have to borrow that money and start making repayments on the 10% all grand if you live at home with your parents but if you rent it can drain all your money and there is not usually a time limited from when deposit is paid to closing date.

Ask them for evidence that they have arranged a loan and try asking for credit card statement and bank account statements, try and get background information on them see if they are going to be able to buy you don’t have to wait on the banks to say yes or no to them.

What really matters the most is if you had to pull out of the sale could you get a new buyer at the same price??????
 
The good news is that the purchasers have agreed to pay a 5% deposit.

Fingers crossed that everything else will go smoothly.

thanks for all the advice.

Streamer
 
I think NiallM is right!
 

What about an exchange bond?

Jaid
 
it would be amazing if anyone with no backing or savings is getting a 100% loan at the moment. Sounds like a pack of lies.
 
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