Pulling out of a house sale, or having your buyer pull out, can leave you in limbo.
It can happen for various reasons — some within your control, others unavoidable.
Either way, there are some practical steps to help you move forward or even get the sale back on track.
Let’s explore these further.
Seller pulls out of a house sale
The legalities surrounding sellers pulling out of a house sale are complex. Once a seller has signed a deal with a buyer, they have entered into a legal contract.
This contract outlines obligations for both parties, including completion dates and other terms.
When considering withdrawing from the sale, sellers should review this contract.
Conditions may allow them to pull out, such as if the buyer cannot secure a mortgage.
However, withdraw for no valid, documented reason is likely is a breach of contract.
Buyer pulls out of a house sale
Pulling out of a house sale is easier for more straightforward for buyers. This is the case even if they (buyers) have signed a contract.
Their lender declining the mortgage or personal circumstances changing can lead to this. But if a buyer rescinds without grounds, they break the purchase contract.
In this case, there are charges associated with pulling out of a property sale.
When a buyer does back out, the sale immediately falls through, even at an advanced stage.
At what stage can a buyer pull out of a house sale?
In England and Wales, the property buying process follows three main stages.
These determine obligations around withdrawing from an agreed house sale.
1. Pulling out after making an offer
This informal initial stage means either party can back out without legal consequences.
Buyers may proceed with surveys before confirming intentions. And sellers can keep marketing the home.
But once positive surveys are received, buyers should sign intent. This will help formalise the transaction.
2. Pulling out after exchanging contracts
Signing a legally binding contract obliges both parties to complete the sale.
Buyers pay a non-refundable deposit of around 10% of the purchase price. Withdrawal at this advanced stage allows the other party to pursue financial damages.
But there are still a few circumstances in which one side can withdraw without penalty.
3. Pulling out after completing the sale
This final legal stage makes the transfer binding. The property deeds change hands. And outstanding monies get paid on the pre-agreed completion date.
Failure to complete by the buyer or seller constitutes a contract breach. Compensation claims or legal action may follow against the party responsible for non-completion.
Buyers can sometimes get cold feet and withdraw their interest even after exchanging.
But once contracts are signed, backing out has consequences.
The sale becomes legally watertight at the completion stage, barring extreme circumstances.
What to do when buyer pulls out of house sale
If a buyer pulls out of a house sale, most sellers simply put their house back on the open market. This means starting the selling house process over again.
Some may look for an alternative channel to sell their property through. This is likely done if they need to sell fast.
Once of these options is cash house buying (see below, ‘Turning to cash house buyers as a fallback option’).
Financial implications of a collapsed sale
As highlighted, the ramifications of an agreed house sale falling apart can be costly.
Until actual completion, uncertainty remains. And failed transactions hit your pocket in various ways:
Losing the sale
Having no proceeds from the sale impacts plans to rely on these.
It may mean you cannot buy your desired home or pay off existing debts as intended.
Remaining in a property you wish to leave creates indirect stress costs, too.
Conveyancing fees
You still owe conveyancing solicitor fees for work undertaken on the failed sale.
Further charges will apply when finding another buyer and progressing the sale anew.
Minimum legal fees for selling are around £850 but rise significantly if issues arise.
Solicitor’s fees
When house sales fail, buyers lose deposits paid to sellers’ solicitors. (These deposits are for exchanging contracts.)
And you, as the vendor, remain liable for the fees you accrued even for a failed sale.
Unfortunately, conveyancing fees already incurred are not refunded.
These include fees for:
- Work on searches
- Administration of paperwork related to a sale
- Money transfers
- Liaising with lenders up to the point of withdrawing.
Solicitors charge for time expended on these failed completions.
No one can refund buyers’ sunk costs.
But you may recoup losses from relisting and legal expenses under some conditions. In particular, if they withdrew without valid grounds at an advanced stage.
Mortgage early repayment charges
If remortgaging, early repayment charges from your current lender may apply.
This can amount to thousands based on your outstanding loan term and deal type.
Double move logistics
Cancelling and re-organising removals or redirections of posts can be frustrating.
And it can result in extra fees, depending on suppliers’ terms.
These expenses show how a failed sale can cost thousands of pounds. This is in addition to the headaches generated…
Keep thorough accounts of this. It is evidence of the financial impact of any potential claim against a backing-out buyer.
Key reasons people pull out of house sales
Many issues can scupper what seemed like a sure house sale, even at the eleventh hour.
Here are some of the most common reasons transactions unravel.
1. Mortgage problems
The number one cause of sales falling through is homebuyers failing to secure a mortgage.
Banks might decline mortgage applications or the timing of offers might not work out.
Stricter affordability checks for mortgages often make securing finance tricky today.
2. Issues in the property chain
If other links in the buyer’s property chain fall apart, your sale collapses, too.
For example, if they cannot sell their home in time to buy yours. This is the peril of longer chains.
3. Delays from legal proceedings
Lengthy conveyancing delays or unexpected legal troubles can prevent timely transactions.
In this case, they may exercise the right to end the contract.
4. Down valuations of the property
Getting a house valued by an estate agent is usually reliable.
The buyer’s mortgage lender values a home lower than the agreed price. So, they may only offer finance based on this lower amount.
This leads to many buyers walking away.
5. Change in circumstances
Sudden changes to finances can force buyers to pull out after exchanging contracts. These could be due to health or employment.
While frustrating, personal emergencies may leave them little choice. You have limited options to oppose this.
When buyers withdraw their home offer, they don’t need to give definitive reasons.
But understanding what scuppers transactions can help renegotiate terms or take preventative steps.
These steps can because of to finance, timescales, etc.
6. Gazumping and Gazundering
Gazumping is when sellers accept offers from buyers after (verbally) already agreeing to sell to someone else. These offers are almost always higher offers.
By accepting a gazumping offer, buyers face the risk of gazundering. This is when the second buyer lowers their offer at the last moment.
Withdrawing an offer
What if you are a prospective buyer and wish to retract your original offer?
You can withdraw your initial offer on a property at any point before the exchange of contracts.
This risks annoying sellers and agents you were negotiating with. The seller may have accepted your offer or turned down another bidder because of it. If so, they might be able to seek compensation costs.
When withdrawing, communicate with the estate agent and vendor as early as possible. You must rescind the offer with apologies and reasons why.
Expect frustration or appeals from the seller to reconsider.
Stand firm in your retraction. But leave the door open should your situation change and you want to approach them again later.
Turning to cash house buyers as a fallback option
If an agreed sale falls apart, there are ways to make a house sell faster.
These include improving property’s desirability when relisting on the open market. And it includes alternative selling channels.
If you are looking at selling a house fast for cash, there are specialist companies or investors.
We Buy Any Home is a cash house buyer. Our funds are immediately accessible. So, we can buy homes without requiring mortgages or external financing.
This avoids the risk of lender rejections that often derail mainstream sales. As cash buyers, we have pre-approved funding pools and act quickly. This avoids property chains.
Once we inspect your property and make an offer, we can complete deals within 7 days.
