A new service has launched aiming to tie sellers and buyers into the deal once a sale has been agreed.
A third party company, Property Pledge, holds a signed agreement together with a refundable deposit of £1,000 until the transaction completes or falls through.
The money is held in Escrow and gives the buyer ten weeks’ exclusivity.
If the sale goes through, the buyer gets their money back and pays nothing in costs.
If the buyer fails to proceed, £199 is deducted from the deposit, which is transferred to the seller.
Buyers cannot reduce their offer during the ten-week period without forfeiting their deposit.
There can be a two-week extension if needed for chain reasons.
Property Pledge has been founded by Nick Richards, a former estate agent for nearly 15 years. He worked with independent agents in Dorset until this year.
He says he devised his scheme after seeing fall-throughs and wasted costs for his clients and purchasers, and couldn’t see why a product could not be created similar to those available when buying an expensive boat or car.
The first product to be released is the ‘single agreement’, described above, where only the buyer lodges a deposit.
However, a dual agreement will be launched in January allowing both buyer and seller to lodge deposits.
Richards said: “There is very little trust in the current house buying process, but our system offers protection against gazumping and gazundering, and generally removes time wasters.
“In addition a pledge agreement can also strengthen a buyer’s offers if a seller has multiple offers to consider.”
Comments (12)
There is in my opinion a much easier solution, you apply to a lender and they agree to lend you a some of money, not an AIP an actual amount. You then go and look for you new home, make offer based on the amount of deposit and agreed mortgage sum. The agent then writes to all parties as is done now but you have two weeks to get the survey done, adjust purchase price if needed based on survey and after the two weeks agent reconfirms in writing to all parties and job done, you are buying that house
Obviously there would need to be some agreed term allowing you to withdraw but at least this would give both seller and purchaser some degree of certainty.
Maximum-Mortgage Offer, subject to valuation?
I like it, although buyers would then also need to find before the offer expires, which is typically after 6 months.
6 months should be plenty of time for most people and mortgage lenders, conveyances and surveyors would also need to up their games as well.
But the best mortgage deal depends on details of the property, even a small change in LTV changes who the best lender is.
Meaning lenders will also have to change and adapt, house buying procedure in England is antiquated and needs meaningful reform. Not sure if Wales is the same and the Scottish system does work better but still has it issues.
I like it, I don’t love it. I don’t think the loss of £200 is enough. All this nonsense with fall throughs is exactly that…nonsense. If ALL Agents chased the sale and followed the process up correctly, agressivley and with urgency, you’d have fewer fall throughs and even when a transaction does fall through If it’s being chased correctly you’ll find out much much sooner. An Estate Agent near to me let a sale run for nearly 4 months and it had hardly progressed, the buyer couldn’t actually get a mortgage and pulled out. If it was chased correctly to begin with, they would have discovered the issues within the first week and found a new buyer, that buyer would have exchanged contracts within the same time frame. I do think the entire legal system needs to change, but I think bad solicitors and bad Estate Agents are to blame mainly.
Agreed. Within a transaction worth many thousands, a two hundred pound hit is not a big enough incentive to stay in the deal.
If the sale goes through, the buyer gets their money back and pays nothing in costs.
If the buyer fails to proceed, £199 is deducted from the deposit, which is transferred to the seller.
The buyer loses £1000 not £200. The seller gets £801.
I would probably be better to make this a percentage of the sale price with a min/max figure.
…I completely agree on all points. It can be done, but needs more than what’s on the table. Good estate agents make sales happen and this is why I would never sell through just any agent, let alone an online one. Unfortunately in my experience, solicitors are much of a muchness unless their client has come from the selling agent, and then they are motivated!)
Would like to see a copy of the agreement Nick: rh@boldgroup.co.uk
Wont work. Too complicated to explain to sellers and buyers.
Exactly and you need it to be for much more. I have just agreed a £5,000 version today to be surrendered by the buyer or seller if they withdraw – for ANY reason.