What to do when buyer pulls out of house sale

It’s every seller’s worst nightmare. After months of waiting you finally received an acceptable offer for your house and agreed the sale, job done, or so you thought.

Now you are weeks, if not months, into the conveyancing process and your estate agent or solicitor has just called to tell you the bad news. Your buyer has pulled out of the house sale but what can you do?

In this article we shed the light on the how, what when and why, and most importantly what you can do if your buyer pulls out of your house sale.

What to do when buyer pulls out of house sale

Can a buyer pull out before exchange of contracts

Unfortunately for sellers there is nothing in law preventing a buyer from pulling out of a house sale at any time before contracts have been exchanged. The sale only becomes legally binding at exchange of contracts so before then you are just relying on the buyer being committed to the sale. More bad news for sellers is that the price that you agreed isn’t even set in stone until the exchange of contracts so a buyer can revise their offer at any point. There is even a special name for when a buyer lowers their offer during the buying process, usually at the last possible second it is known as gazundering.

buyer pulls our before exchange of contracts

How often do house buyers pull out

The total amount of house sales that fall through varies depending on market conditions but it generally hovers around 1 in 3, yes that one third of agreed house sales that don’t see it through to completion! This number does vary by region with data suggesting that the north east sees as little as one in four sales falling through, which is in stark contrast to Wales which has a whopping fall through rate of nearly one in two.

The main reason for a buyer pulling out of a house sale is cold feet, they have had a change of heart either at taking on the financial responsibility of the sale or they have just decided that the house is not for them. There are a whole host of reasons that a buyer might back away from a house sale and some are completely reasonable.

Why would a buyer pull out of a house sale

As mentioned previously the main reason for a buyer to pull out of a house sale is down to a change of heart or a change in circumstances but there are other reasons that a sale might fall through;

A broken chain

If you are sitting in a chain, meaning that you are relying on other sales to complete for your own to go through. Then the chances of your sale not going through is far higher, in fact if you are in a chain of 3 or more house sales then the sale has a less than 50% chance of actually completing. In this situation you are at the mercy of several buyers all with different circumstances and potential issues.

Mortgage Issues

Another common issue for a buyer to pull out is if they are having difficulty securing a mortgage or if their mortgage offer expires during the buying process and they can no longer secure a new deal that they can afford.

Delays during conveyancing

If a sale is taking a long time to complete the buyer can lose faith in the process. If there are any minor issues that slow down the conveyancing process or the solicitors are being sluggish and poor at communicating where the process is at this can cause a buyer to get frustrated and pull out from sheer frustration.

Buyer pulled out after survey

One of the other common causes of a house sale falling through is if an issue is flagged during a survey.

This can range from the major, such as structural issues like subsidence to more minor issues such as the windows being in poor condition. This is very much dependent on the buyer and how much work they are willing to take on, some might not worry too much about minor issues and could use the survey results to negotiate a better price.

For some it could be a deal breaker if they are just looking to move straight into a property without having to commit to added work.

What costs do you need to pay if a buyer pulls out of the sale before exchange

If you do find yourself in the unfortunate position of your buyer pulling out before exchange of contracts, an already bad situation gets worse when you consider the fact that you are still liable for certain costs, namely the solicitor fees.

The exact amount that you have to pay will in part be determined by how much work the conveyancers had done before the buyer pulled out. If the buyer had pulled out fairly early in the sales process then the costs won’t is not likely to add up to that much but if the conveyancing was virtually complete when they decided to back out of the purchase then the costs could be substantially more.

It is worth noting that you might not need to pay these costs straight away, if you still plan to sell the house and use the same solicitors again, most will carry the costs over until the house is again sold.

Signs that your buyer might be thinking about pulling out of the sale

It would be great if you had a crystal ball that could tell you if the buyer was going to pull out of the sale before you accept their offer. Sadly, at time of writing, no such magic object exists but there are some tell tale signs to look out for that could indicate your buyer isn’t fully invested in the buying process or they are getting cold feet.

Sluggishness

A sign that your buyer might not want to see the sale through to completion is if they are dragging their heels. If they are slow to respond to questions from your solicitor or if they say they are going to have a survey on the property but never quite get around to booking it this could indicate that the buyer is reconsidering the purchase or at least considering their options. Of course there are genuine reasons that a buyer could be slow to respond, if they are on holiday for example so don’t get too disheartened if they are a little bit slow sometimes but if the whole sale seems to have ground to a halt for some time then the alarm bells should start to ring.

Renegotiation

A pretty big red flag is when a buyer wants to revise their offer. A change in offer will only ever be in one direction, down. If the buyer is looking to get a lower price for the house it could be due to a change of circumstances they are having financially, they could be finding it difficult to get a mortgage for the agreed amount or they could just be getting cold feet on the deal especially if the market is going through a turbulent time. Either way a reduced offer is a fairly concerning sign that your buyer might be about to withdraw from the sale. Even if you agree to the lower price there is still no guarantee that the sale will complete.

They do a houdini

Sometimes a buyer will pull the disappearing act of the century and will vanish all together, unsurprisingly this is a major red flag. Without a contactable buyer the sale is dead in the water and unless they are hiding behind a curtain somewhere waiting to jump out and shout “surprise” you should probably prepare yourself for the worst.

Your options if your buyer pulls out before exchange

If your buyer pulls out you have several courses of action available to you. Which one you choose is dependent on your circumstances and the need you have to get your house sold fast – if you have an ongoing purchase that you are at risk of losing if your sale is delayed or you just can’t afford to hold on to the property for much longer for example.

If you can afford to wait

Perhaps the best course of action, especially when it comes to getting the highest amount of capital for your house is to speak to your estate agent about getting your house back on the market, they might already have some potential buyers lined up that showed interest before your sale was agreed, if not you are essentially starting the whole process again from scratch, which could take up to 6 – 9 months or more before you eventually get a sale over the line.

If you can’t afford to wait

If you simply have to get the sale done no matter what you still have options, although you will likely have to compromise on one thing, the price.

Renegotiate with the original buyer

The buyer that pulled out could be a good place to start, especially if they were just suffering from cold feet. You could offer them a reduced price to go ahead with the sale. However this might not be possible if they pulled out due to mortgage issues or a chain break.

Sell to a house buying company

Perhaps the easiest way to save your sale is to contact a house buying company, these companies are set up to purchase properties fast, they might even be able to pick up from where you left off with the conveyancing without having to start from scratch which can lead to a significant amount of time saved and they even pick up your solicitor fees.

The downside of using a house buying service is the amount of money that you will get for your property will almost definitely be lower than the price you had agreed on the open market. However in this case the fallen through sale could actually work to your advantage. There is a special type of stamp duty relief that companies can apply for if they are repairing a broken chain, if this is the case they can offer more on your property, sometimes up to 85% of market value.

This drop in price can’t be absorbed by most sellers but if you can take the hit and still proceed with your ongoing plans then this type of service can be a real lifesaver giving you the certainty that you need to get on with your life rather than sitting at the mercy of the property market and another private buyer that might pull out again.

As with any service the trick to having the best experience is choosing the right company, this is especially true in the quick house sale market. There are countless horror stories about people being ripped off because they chose the wrong company and ended up at the mercy of a rogue operator.

At Cash House Buyer Guru it is our mission to help people find the right house buying service for them. If you are considering the quick sale option we suggest you read the information provided on this website. We have also carried out extensive research and have our own list of top rated companies, which you can find by clicking on the button below.

See our list of top rated cash buyers

Summary

Having a buyer pull out of your house sale is never a good situation and knowing that it happens to around 1 in 3 people is no consolation. If you think that your buyer is showing signs that they might back out of the sale there is not much you can do other than having a contingency plan in place. That could be preparing to go back on the open market or if you can’t afford to wait that long selling to a house buying service.

If you are in a position where selling to a house buying company is an option then I suggest that you read the guides we have on this website so you avoid the pitfalls of the industry. If your buyer has just pulled out and you need to speak to someone urgently then you can use our list of top rated house buying companies.