Sale agreed 9 weeks, buyer looking to add clause of mortgage approval

R

reggie3234

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Hi folks,

I went sale agreed on a house to a charity body couple of months back, estate agent said funding in place and ready to go. Got an email from my lawyer asking is it ok to add a clause that sale is subject to mortgage approval from local county council 9 weeks after sale agreed.

I was a bit shocked they are still looking for funding (have raised this with EA) and thought it was cheeky they are now looking for a contract subject to mortgage approval, that could take another few weeks and then draw down. has anyone thoughts on this or experience with similar situation?

I'm quiet frustrated with situation and trying to get some perspective here.

Reg
 
I take it that the Contracts are not yet signed?
In that case, you are only at the non binding Sale Agreed stage in the sale process and everything is still negotiable.
It's quite normal.
You could refuse but, if you go back to the market, will you get the same or a better price from a cash purchaser?
A non cash purchaser will probably seek the same clause.

mf
 
No contracts not signed, ah yeah it's a risk going back to market but I turned down a cash buyer for this charity but feel like sticking it to them at this stage (not that they will care!)

No wonder there's such a housing crisis with these housing bodies going through the motions.
 
This happened to me, went sale agreed with a so-called “cash’ buyer who then asked for subject to loan clause in contract. All grand until they decided to pull out right before closing, invoking that clause and leaving me rightly stuck. Ended up going back on market but a royal waste of time.
 
reggie3234 said:
Hi folks,

I went sale agreed on a house to a charity body couple of months back, estate agent said funding in place and ready to go. Got an email from my lawyer asking is it ok to add a clause that sale is subject to mortgage approval from local county council 9 weeks after sale agreed.

I was a bit shocked they are still looking for funding (have raised this with EA) and thought it was cheeky they are now looking for a contract subject to mortgage approval, that could take another few weeks and then draw down. has anyone thoughts on this or experience with similar situation?

I'm quiet frustrated with situation and trying to get some perspective here.

Reg
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There is a world of difference between saying there is 'funding in place' versus a 'cash buyer'. Funding in place could mean anything. Such as that the charity knows it will get funding. It's not clear anyone set out to deceive you, or that the estate agent misunderstood.

If you feel the Charity are playing silly beggers than go back to the cash buyer.

Personally I'd be loath to deal with any kind of state, semi state, state funded type entity as they would, in my opinion, be nightmares to deal with.

Currently I'm sale agreed with a mortgage clause, but it was limited to the purchasers having 2 weeks to get funding. (with actual sale months later). Once they had mortgage approval that clause no longer applies and they are tied now, so if they back out they lose their deposit. Not sure if that is common in Ireland.
 
Funding in place - some times the estate agents ask for proof of funds too accept a bid.
Surely the agent would have been aware of this and advised accordingly ?
 
Current market you are unlikely to lose by going back to market assuming nothing totally odd about your property
 
If you went sale agreed a couple of months ago, what have the charity been doing for the last 8 weeks to get the mortgage? Do the charity need the local authority to apply for the mortgage? Or do the need the local authority to agree it is the right house to buy and they have offered a fair price for it before they can even start the process of going to a bank for mortgage approval. Does “funds in place” mean the local council said to them, if you find a suitable house we will consider funding it depending on budget, approval, other calls on the budget etc. You could be at the end of a very long administrative process for all you know.

As someone said the EA often asks for proof of funds so you can ask for proof the potential buyer has taken active steps to have “funds in place” in the last couple of months. While they are gathering this info go back and see if the cash buyer is still interested, check if they have the cash and you are in a stronger position to progress with one or the other. Or else limit the clause to 2 weeks as someone suggested.
 
The charity get the mortgage off the local authority and then rent the house back to tenants, EA couldn't explain any more about funding nor could the lady in the charity who does purchasing (that's another persons role!)

I think EA knew the story when offer came in as she mentioned they had bought other houses in the estate. I went into EA to complain yesterday but at this stage I'm gone too far and EA knows it, I will look for a reduction in fees there. Going back to market now is a risk and hassle. I wouldn't mind but the house is immaculate, only 15 years old and no issues.
 
As I’ve posted consistently over the years here, this imaginary legal status of “Sale Agreed” is mythical.


Two words pasted on an EA’s notice board amount to nothing legally. Nothing is “agreed” until contracts are exchanged. The buyer has expressed an interest in purchasing the property by placing a no-contract , refundable deposit, usually with the EA.


Get rid of that notion of having entered into a binding transaction with the seller because the EA changes the wording on a for sale hoarding, effectively a piece of advertising. Up to the signing and exchange of contracts everything is negotiable, which is exactly where you’re at, the negotiating stage
 
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reggie3234 said:
The charity get the mortgage off the local authority and then rent the house back to tenants, EA couldn't explain any more about funding nor could the lady in the charity who does purchasing (that's another persons role!)

I think EA knew the story when offer came in as she mentioned they had bought other houses in the estate. I went into EA to complain yesterday but at this stage I'm gone too far and EA knows it, I will look for a reduction in fees there. Going back to market now is a risk and hassle. I wouldn't mind but the house is immaculate, only 15 years old and no issues.
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Go back on market, sell to a regular person and be done with it, anything to do with councils or charities will take forever. If it’s even half decent it’ll be snapped up,
 
As mf1 says, subject to finance is quite normal, most purchasers will insist on this. EAs can check for finance approval all they like but that still offers little protection as the finance provider will not release funds if their valuer does not feel the property value sufficiently protects their risk (they find structural or compliance issues or feel the price is far too high).
 
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