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Thursday, 27 November 2014

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Watching out for these signs can save you property sale heartache

I was once advised not to pay too little for professional advice. This sounds like the sort of thing a professional with a vested interest would say, but over many years I have found it to be correct.

Cumbrians know that we usually get what we pay for, and the ‘cheap’ advice can turn out to be an expensive mistake.

One thing which makes solicitors at BPK very angry is when our advice is wasted – when we give a client a bill for work which comes to nothing and where the reason is that the other side in the transaction has just pulled out for no good reason.

It happens occasionally when conveying houses where the seller pulls out and the official word for this is apparently ‘gazanging’. It also happens in commercial deals. More often it is the buyer who pulls out.

There is always the possibility of a lightning strike reason for pulling the plug but over the years we have observed certain behaviour patterns which can signal impending doom.

Any one of these patterns may be entirely acceptable and explicable, but if there are more – be aware.

1. Ask the buyer how the deal is to be funded. This may seem an intrusive question, but a fair-minded, genuine buyer can easily say he/she is a cash buyer, or obtaining a loan from a bank which is already approved in principle.

If the buyer does not have a plausible answer, you might want to reconsider.

Many ‘cash buyers’ do not understand that ‘cash’ means readily available funds, and having to sell another property, or obtain a loan do not qualify as ‘cash’.

2. Watch for signs of genuine interest. Time wasters who just want to look over your property or business out of curiosity or for some more malevolent reason may not take enough time to view the features of the property and ask relevant questions.

3. One way to encourage good faith in commercial transactions is to require the purchaser to pay your legal bill up to a certain limit whether or not the sale actually concludes. So, if the purchaser pulls out for no good reason then at least your wasted legal fees are paid. If this has been negotiated by yourself or your agent, then get your solicitor to have it confirmed in writing by the purchaser’s solicitors so there is no room to wriggle.

4. Beware of a purchaser who is paying too much attention to a peculiarity in your property. No property is ever perfect. For example, shared rights of access are never ideal, but as long as they are workable, everyone should be happy. If a purchaser is seeking some sort of copper-bottomed deal to remove all future risks to do with repair costs etc, then is it really just an excuse to pull out?

5. Watch out for signs of interest in how the purchaser is going to occupy the property. Are they checking out the services, planning etc to reflect the intended use? Where is the seller relocating to? Is there a plan?

6. Are proper enquiries being made at the right time? We had one case where the confident cash-buying purchaser made no arrangements for survey until two days before the agreed exchange date.

A bad survey result is a common reason for a purchaser pulling out, so ensure the survey is organised at the beginning.

7. Agree a timeline for the transaction in terms of enquiries – replies – exchange of contracts – completion. If a party then strays away from the agreed timetable for no good reason this may indicate the purchaser is about to pull out.

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