our buyer has signed and sent contracts to us without 10%?

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ski

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just wondering if this senario is unusual, we have been going through the process of selling our apartment for the last number of months and it has been frustrating to say the least. We went sale agreed at the end of February with the booking deposit with the estate agent approx March 5th. We weren't in a huge hurry to close originally however after about 6 weeks we started to put pressure on our buyers to sign contracts. for about two weeks they claimed they had signed them but still hadn't sent them (which was of no use to us). We issued an ultimatum for today saying we would withdraw from the sale if we didn't receive the contracts and an agreed closing date of June 1st. My solicitor informs me this evening that yes contracts have arrived to him signed with the agreement to close by June 1st but WITHOUT the 10% deposit. Solicitor isn't of much assistance saying he has on occasion come upon this before. The purchaser is claiming that she want to get 100% mortgage to be drawn down on closing, however we also believe she is an investor (didn't think they could get 100% mortgage)
would anyone have any ideas what they may be playing at?
If we sign without the 10% what does that mean
any ideas would be really appreciated

ps i do appreciate selling an apartment in the current climate does not put us in the strongest position
 
ski said:
The purchaser is claiming that she want to get 100% mortgage to be drawn down on closing, however we also believe she is an investor (didn't think they could get 100% mortgage)
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This is possible, say, if they are cross-securing on another property in which they have built up equity, bringing the overall LTV within the lender's limits.
 
I would assume that if she has signed and the contract is not subject to the deposit then the contract is valid and you can force her to close within 28 days of the closing date on the contract.
It is a bit cheeky but It is a buyers market and you will not be at a loss financially as a result of this.
 
The 10% deposit is for your security - if a purchaser pulls out after exchanging contracts and paying the 10% deposit, s/he stands to forfeit the deposit. In recent years there has been a fair amount of downward negotiation on the amount of the contract deposit required, as 10% of any house value now is an awful lot more than 10% fifteen years ago.

But the contract deposit should still be sufficiently large as to discourage the purchaser from pulling out after signing contracts. I'd suggest that your solicitor contacts the purchaser to say that the contracts will not be accepted until a bank draft of, say, €10,000 is forthcoming.

I'd be highly suspicious of the excuse of the 100% mortgage, to be honest. If your purchaser is a First Time Buyer, many lenders that offer 100% mortgages will also offer a short-term deposit loan as part of the package. If the purchase is an investor and securing the finance across two or more properties, s/he's had plenty of time to raise the 10% against the second property. My gut feeling is that your purchaser is keeping the option to pull out open for one reason or another.

Liam D. Ferguson
www.ferga.com
 
My 2 cents from a different point of view.

I was your buyer once. Investor, 100% mortgage on apartment. Why should I pay 10% deposit when im going to get 100% mortgage? I didnt pay it and carried out the sale just as intended.

There may not be a master plan for your buyer to cancel the sale at the last minute - in fairness who would bother?
 
yankinlk said:
Why should I pay 10% deposit when im going to get 100% mortgage?
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What's to stop you getting bridging?

yankinlk said:
There may not be a master plan for your buyer to cancel the sale at the last minute - in fairness who would bother?
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There doesn't have to be a masterplan, but people can change their mind after signing contracts-there has been more than one example of this on AAM in the past.

Would you be willing to accept a contract rom a buyer without a deposit? i.e. there may be no financial penalty if the buyer decides to pull out.
 
I was also that buyer too with a 100% mortgage....Obtaining bridging was a lot of hassle that I didn't want to have to go through...the lender was basically making me go through a formal loan application for the bridging finance that would incur more cost over a six month period and the gap I needed to bridge was about a two week one!

Thankfully my seller saw sense in it..but to provide them with a level of comfort I sent a copy of my 100% loan offer...
 
Lauren said:
I lender was basically making me go through a formal loan application for the bridging finance that would incur more cost over a six month period and the gap I needed to bridge was about a two week one!
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What was to stop you paying the bridging off when you drew down your mortgage? That is generally a conditon attaching to the bridging loan offer.

A mortgage offer wouldn't provide me with much comfort-that doesn't prevent someone from walking away.
 
When we bought our house in December, we originally paid €6,000 booking deposit. We had arranged a bridging loan(no excuse for not getting one nowadays, as they aren't as expensive as you would think at all) to cover the 10% balance until our sale had gone through.

However, our solicitor decided rather than 'messing' with bridging loans he was going to do the whole transaction on one day. He never consulted us about this, and I presume sorted it with other estate agent.

Our entire transaction only took 6 weeks from holding deposit to keys, so I guess it was a different situation. Do you have much of a holding deposit?

Hope everything works out for you.
 
CCOVICH, as it was explained to me at the time the lender (who was ICS)were referring me to BOI for the 10% bridging finance. With two weeks to go to the close (or thereabouts), I was having to start from scratch and apply for a short term loan from BOI. It was particularly frustrating as I was dealing with a broker who wanted nothing to do with the bridging finance part. The biggest problem for me was the administrative hassle this was creating and BOI could not guarantee that the finance would be available before the close...It just seemed like a farce to me... Just for the record, I had provided a small deposit 2000 Euro I think when I initially bid and went sale agreed....
 
thanks for all your advice, our booking deposit is €7000 for apartment that has gone sale agreed for €340,000 - I suppose it depends on their circumstances ( of which I have no knowledge) whether that is worth losing or not?
 
CCOVICH said:
Would you be willing to accept a contract rom a buyer without a deposit? i.e. there may be no financial penalty if the buyer decides to pull out.
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Yes. Yes I would. Chill with all the negative waves...if he gets the hump about the deposit he is likely to lose the sale anyways. it tis a buyers market after all!
 
It is very rude to simply return contracts without a deposit and without an offer of some sort.

There is a huge power shift currently - early last year, all the power was with the Vendors with the purchasers all feeling insignificant. Now its entirely shifted the power to the Purchasers. I find that people always behave badly in these circumstances.

When I was young and foolish 20 years ago we were still in a recession, houses were where people lived and there was just not such a sense of power play going on.

I understand that purchasers do not want to bother their ****s arranging deposits but it is still very good practice to try and keep some semblance of contractual liability with consequences into property dealings.

mf
 
I agree with mf - perhaps there is a valid reason why the purchaser doesn't pay a deposit with the contract, but the fact remains that it is standard practice to do so. If the purchaser or their solicitor wants to break with this practice, the least they should do is ask permission first.
 
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