What you should do when the house sale falls through
Paran Singh, financial advisor at TIC Finance, has put together his tips to help house sellers recover from the fall-through of a sale and avoid the situation in the future, as along with advice on dealing with a mortgage application rejection.
He says: “Although the housing market remains open and strong, furlough could mean that more workers are set to receive only 80 per cent of their wages. This, as well as other challenges from the rising rates of coronavirus, could mean sellers are at risk from sales falling through. Here is some advice on what to do if a fall though happens:
Don’t rush: Holding out for a buyer for a little longer is usually much more beneficial than immediately dropping your property below its value. Increased time pressure shouldn’t result in monetary losses. Ask any buyer for proof of finances early: Before accepting an offer, make sure to ask for proof of finances, for example, bank statements or an agreement in principle to avoid sales falling off. Ensure regular communication:
Keeping a hold on prospective
buyers and their solicitors could mean spotting the signs of a collapsing sale earlier so you can have a back-up plans before it happens. Communicate with your chain:
Keeping your property chain informed will be just as important as staying informed yourself. Close contact with all other parties will keep the process stable until you can find another buyer. Ask for a non-refundable deposit from future buyers:
Some sellers may be able to secure a small deposit to act as a holding fee to insure against another fallthrough. This would only need to be around £100. Review pricing: While it’s not always necessary to reduce your asking price immediately, with house prices rising, there’s an increased risk of overvaluation which could lead to collapsed sales after further surveys. Search for more than one potential buyer: Complete your own survey:
Some buyers pull out after issues revealed in the survey so
If you are eager to move on from your property, keeping your house available for further viewings even after finding a new potential buyer gives you added insurance in the event of a fallthrough and can incentivise the existing buyer. carrying out your own survey before finding a buyer can add confidence to anybody considering your property and help speed up the process for you.
If you are going on to buy, here are some common reasons for mortgage rejections and how to avoid them
■ The lender doesn’t predict profitability so paying off debt too early can actually negatively affect your credit score as lenders can see this as a sign that their expected profit won’t be as high when lending to you. Spacing out your payments evenly can help keep your credit score balanced.
■ The income you have submitted isn’t acceptable. Some lenders have different requirements if you’re self-employed or include commission as part of your income, so make sure the lender you are applying to is accepting of your methods of income.
■ Down valuation. Your lender will do their own valuation of the property and might value it lower than the amount you’re applying for, leading to rejection. Check the valuation report if you have been rejected to see what problems the lender found to see if they can be more easily resolved.
Sometimes, mortgage rejections are more to do with the lender’s objectives so ask questions.