Warners Think Outside The Box For First Time Buyers
Wednesday, March 21st, 2012
on behalf of Warners Solicitors and Estate Agents
Estate Agents in high profile PR Scotland.
Edinburgh’s leading property firm offer their advice on the property market in the Metro.
The Metro article warned buyers of the dangers of pulling out of deals which could result in them being liable for various costs.
Scott Brown, estate agency partner at Warners, offers his expert advice by introducing the theory behind an innovative concept which allows a house to be bought using a non-refundable deposit as a way to help stimulate the stagnant market.
Scott Brown,believes both buyers and sellers and solicitors and estate agents all now need to show greater creativity and innovation to energise sales.
The concept highlights how Warners push themselves to think outside the box to help clients move.
Scott said: “We, as good solicitors, will always encourage clients to sell before they buy to avoid the risks of being penalised heavily for failing to honour missives on a purchase if they cannot sell.
“This creates a problem as often people have a set idea on their ideal location or type of property – their concern is that if they sell first and then there’s nothing of the criteria they require, they’ll be homeless or in temporary accommodation for an unknown period of time.
“The net result is that this sort of person sits tight when they really want to move – and the seller doesn’t get an offer.
The penalties involved in breaching missives are making people scared and risk adverse which is why reform is needed, according to Scott.
He explained: “Firstly, you pay penalty interest at around 4% from the day you were scheduled to pay until either the day you can pay or, if the seller resells it to someone else, until the date that resale is completed.
“In real terms, if a property is bought at £210,000, the interest paid would be about £777 a month, or over £9300 for a year.
“Additional costs are incurred if the buyer is unable to pay within 21 days of the agreed date, giving the seller the option to withdraw the sale altogether. If this occurs, then the original buyer is liable for all new marketing expenses.
“The scariest cost is that if the seller remarkets their property and have to accept a lower offer, then you will be liable for that loss on shortfall.”
But Scott believes that a purchaser could limit their loss to a figure that enables them to take a fixed risk if they cannot complete, which allows the seller and selling agent to gain something for the lost marketing if it doesn’t complete, and allows the market to move forward.
He gave an example: “I’ve recently negotiated a deal where the purchaser paid a set deposit of £10,000 to get their dream home – and on the basis they’d lose that (but it would be the maximum of their loss) if they did not complete.
“That purchaser then sold their own home and the £10,000 was part of the price. If that purchaser hadn’t sold in time, the seller would have retained the £10,000 towards costs of remarketing and their and their agent’s time.
“Obviously the level of deposit would vary according to circumstance and price and the party’s ability to pay a deposit.”