Problems with the buyer’s mortgage
Q: We are selling our house in North London. Interest has been high and so a few months ago the estate agent recommended we go to sealed bids. We got a great price. But a few weeks later the buyer can’t get his mortgage approved and the other 2 top bidders have since moved on and are no longer interested. What do we do now?
In a seller’s market and in an attempt to get the best price for your property you’ve done the right thing in opting for a sealed bid auction. But going to sealed bids is not legally binding and offers no more security to either party than the usual house buying process.
The temptation to offer more than a property is worth when bidding blind is often overwhelming. Over bidding can lead to a property not valuing up at the survey stage and the would-be buyers, as in your case, being refused sufficient funding by their lender.
When this happens it is advisable to try and renegotiate the price, but, if this fails, it is common for the estate agent to offer the property to the buyer that came second in the sealed bid. It is very unfortunate that in this case both your second and third runners up have run off.
The best option would be to start the process again. This time round avoid just accepting the highest bid and look at the strongest in terms of the buyer’s ability to proceed. Ask the estate agent to inform bidders that as well as the right amount of money, you will be looking for other information such as:
- the amount they are borrowing and details of their lender
- a proof of deposit (bank statement)
- proof of funds (if cash buyer)
- a timescale to exchanging contracts and completion
- their solicitors details