29% of homebuyers leaving sellers at risk
The latest research from House Buyer Bureau has found that 29% of homebuyers who made an offer on a property were not actually in a position to proceed, with many lacking either a mortgage in principle, a deposit, enough saved to cover stamp duty and buying costs, or all three.
House Buyer Bureau commissioned a survey of UK homebuyers who had purchased a property within the last 12 months, asking them whether they had a mortgage in principle in place when first enquiring about properties, whether they had all of the funds required when making an offer, and whether proceeding without these funds caused delays or a collapse in the transaction.
The research found that 55% of buyers did not have a mortgage in principle in place when they first started enquiring about properties they wanted to view.
What’s more, when it came to making an offer on the property they wanted, 29% of buyers still were not in a position to proceed.
Of that 29%, 7% admitted that they had not yet saved enough to cover stamp duty and other buying costs, albeit they did have a mortgage in principle and deposit saved.
A further 2% had not yet saved either their deposit or enough to cover stamp duty and other buying costs, whilst 16% said they had sufficient savings but still did not have a mortgage in principle agreed.
Most concerning of all, 4% admitted that they made an offer without having a mortgage in principle, a deposit saved, or enough put aside to cover stamp duty and associated buying costs.
Despite not being financially ready to proceed, many buyers were still able to have their offer accepted.
Whilst 62% said that the seller or estate agent was aware that they did not yet have the required funds in place, often because they had provided further proof of money owed, 38% said they were never challenged on the issue at all.
Perhaps more worryingly, 69% of those who did not yet have all of the required funds in place still proceeded with the purchase after their offer had been accepted.
For the vast majority, this caused problems further down the line. Just 11% completed as planned, whilst 25% said that their exchange of contracts was delayed and 52% saw their completion date pushed back.
In 12% of cases, the transaction collapsed altogether, leaving the seller back at square one and often out of pocket.
Managing Director of House Buyer Bureau, Chris Hodgkinson, commented:
“For sellers, there is nothing more frustrating than accepting an offer, taking the property off the market, and beginning to make plans for your onward move, only to discover weeks later that the buyer was never actually in a position to proceed.
The industry should be doing far more to protect sellers from this situation and estate agents, mortgage advisers, and solicitors all have a role to play in ensuring that buyers are properly qualified before an offer is accepted and a sale is allowed to progress.
Unfortunately, that doesn’t always happen and, even when the correct information is provided, many sellers still feel they have little choice but to proceed with a buyer who isn’t ready, because the market has softened significantly over the last year.
Buyer demand is weaker, homes are taking longer to sell, and transactions are taking longer to complete. As a result, many sellers are understandably reluctant to walk away from an offer, even when there are clear warning signs that the buyer may not have the finances in place.
The problem is that this can leave sellers facing months of delays, missed onward purchases, additional legal costs, and in the worst cases, a complete fall-through. In the current market, certainty has become just as important as price.”
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