buyer signing contract conditional on bank survey

[mir2001]

Hi
We are selling a family property and we have gone sale agreed with a buyer. The buyer said they could wrap up the whole procedure very fast However I have now been told that the buyer is getting his loan from a bank (as opposed to a broker) and therefore the bank will not perform the survey until the very last minute. This means that he will have to sign the contract but make it subject to bank survey approval of the property. I was hoping to get the contracts sorted asap as I am looking to use the proceeds to purchase a house and I cannot make an offer until the contract is signed. Friends of mine who have experience of house selling have warned us that this conditional sign sounds odd and that if we sign our side of the contract we could be left hanging around for any length of time for that loan to be sorted out.

All this complication emerged post sale agreed and I am urgently trying to figure out if this is something I should be concerned about. I would be incredibly grateful if anyone has any knowledge of this area, thanks

 

[dewdrop]

prior to retirement some years ago i worked in a bank in an area that dealt with security for house loans. firtstly a broker does not make the loan and whether you deal directly with a bank or via a broker it does not matter. usually it is the purchaser has to arrange a surveyors report which is passed on to the lending agency. rarely has this caused problems and if it did you would like to know yourself. what can hold up matters is that the solicitor acting for the purchaser makes some reservations about the title..that is he qualifies his certifficate of title. the lender has to agree to this and this can hold matters up. also the purchaser has to be in a position to provide the required insurance cover to comply with the legal requirement. i would not worry but would set some kind of deadline to have thissorted out. your solicitor should advise you

 

[csirl]

the purchaser has to arrange a surveyors report

Usually the bank will do a valuation survey using their own valuer. This is done independently of the purchasers own structural survey. The reason the bank does this is quite simple - they want to protect themselves by ensuring that the loan amount does not exceed the value of the property - the valuer has a duty of care to the bank, not the customer (as is the case with structural survey). In most cases this is just part of the procedure and shouldnt cause any problems.

You should bear in mind that if the purchaser has already done his/her structural survey and this survey has shown that the house is in good repair and worth the price, then the chances of the banks valuer coming up with different conclusions are very slim, so there is very little risk.

 

[sadie]

Someone else may be able to advise you better, but from my own experience of being a purchaser, we got our mortgage directly from a Bank. We arranged the Bank's valuation survey directly with a local auctioneer & valuer from a list supplied by the Bank. We had to provide this along with our mortgage application documents. There is no way our solicitor would have agreed that we'd sign a contract without her having received our full Loan Offer pack from the Bank. In fact I get the impression that solicitors do not take a pen to paper to start work until the Loan Offer is approved and received by them. Solicitors generally advise only signing when everything is in order, rather than this kind of 'subject to this that and the other' as it's a waste of their time to draw up contracts that need to be changed later. I can't see why the Bank's valuation survey would cause any delay, it only takes a day or two to arrange. Chances are your purchaser's mortgage application, life insurance etc is still going through and they underestimated the time this might take and the thing about the survey is just an excuse. But going directly to the Bank or using a Broker won't affect the time this takes either way. So even if the Bank is only going to get the valuation survey at the end of the process that shouldn't delay things that much - I'd say a week at most. Maybe in this case the Bank is paying for the valuation survey (the purchaser usually pays for it) that's why they don't waste money carrying them out till the purchaser has been approved for their loan.

 

[davidoco]

then the chances of the banks valuer coming up with different conclusions are very slim, so there is very little risk.

Or in my case the bank's valuer coming up with a price that was 10k over the purchase price. They really didn't know how to handle that and it took a few days to move things along again.

 

[mir2001]

You should bear in mind that if the purchaser has already done his/her structural survey and this survey has shown that the house is in good repair and worth the price, then the chances of the banks valuer coming up with different conclusions are very slim, so there is very little risk.

The buyer is getting the property at a reduced price and is aware there is a good bit of modernisation to be carried out (nothing structurally wrong). He himself decided to dispense with the survey. On the other hand the price was so low I cant see how anyone could describe it as overvalued - we just wanted a quick sale as the whole thing is very stressful for my mother.
On reading some of the replies here I must agree that I cannot understand myself why he cannot arrange a bank survey asap. Part of the reduced price deal was that he would wrap everything up in a short period.

 

[outspann]

The banks often organise this valuation/survey independently. So it is not necessarily the fault of the purchaser. At the end of the day - as stated above - the banks have to make sure that the money they are loaning is appropriate for the house that is being bought. You say it is a low price given that there is a lot of modernisation to be done. But that's not necessarily a low price - it's just a price that takes into account that a lot more money will be needed to bring the house up to a certain standard.

Once the bank is happy, the process should move along fairly speedily, so I wouldn't be unduly concerned. There's nothing that you or the prospective customer can do to convince them otherwise.

 

[csirl]

On reading some of the replies here I must agree that I cannot understand myself why he cannot arrange a bank survey asap. Part of the reduced price deal was that he would wrap everything up in a short period.

In fairness, this could be out of his control - delay could be due to the bank. But, as stated by a previous poster, routine bank valuations are done within a few days. The fact that there is work to be done on the house and no structural survey may mean that the bank are being more thorough with the valuation (as banks are risk adverse).

Or in my case the bank's valuer coming up with a price that was 10k over the purchase price. They really didn't know how to handle that and it took a few days to move things along again.

Banks love this situation - means that there is much less risk for them as the amount they are lending is a lower % of the value of the property. Happened to me also when buying last house (comforting to find out), but no delays. Banks are happy once the valuer signs of that the property is worth the agreed price or anything in excess.

 

[twofor1]

Friends of mine who have experience of house selling have warned us that this conditional sign sounds odd and that if we sign our side of the contract we could be left hanging around for any length of time for that loan to be sorted out.

Your house is only sold when you have a signed unconditional contract.

Purchaser signs first, if you are satisfied they are serious tell your solicitor to send out contracts and if they are not signed unconditionally and returned within say 2 weeks (plenty of time for surveys and valuations) then no sale.

If they are serious and in a position to buy this should not be a problem for them.

 

[mir2001]

thanks for all the contributions,
discussed the issue with the solicitor and he mentioned the notion of setting a 2 week deadline himself but the only problem with this is that we have no alternative buyers to fall back on if nothing happens at the end of the two weeks.