Buying a house in Negative Equity

iguana

We've been back and forth on it since December but only officially sale agreed for a few weeks. The discovery of the structural issue slowed us down as we had been going to offer much closer to the asking price. After we knew there was an issue we had to get the work priced up and we did a lot more viewings of other houses on the market as we weren't sure if the house would be worth the hassle of the work. In the end we decided to offer what we felt the house was worth minus an estimate for the work as it's the best location. We're cash buyers so we're in the position of being able to buy a house with this issue whereas I don't think it would be possible to get a mortgage for it. That may be why the bank has given verbal agreement so quickly? But it's still no guarantee that they'll actually discharge the mortgage when it comes to it. I've seen plenty of posters on this thread with a verbal agreement from the bank left languishing. I guess we'll have to pay a booking deposit soon, what sort of receipt do I want from the EA? As I'll want that to be fully refundable.

leinster93

iguana wrote: »

We've been back and forth on it since December but only officially sale agreed for a few weeks. The discovery of the structural issue slowed us down as we had been going to offer much closer to the asking price. After we knew there was an issue we had to get the work priced up and we did a lot more viewings of other houses on the market as we weren't sure if the house would be worth the hassle of the work. In the end we decided to offer what we felt the house was worth minus an estimate for the work as it's the best location. We're cash buyers so we're in the position of being able to buy a house with this issue whereas I don't think it would be possible to get a mortgage for it. That may be why the bank has given verbal agreement so quickly? But it's still no guarantee that they'll actually discharge the mortgage when it comes to it. I've seen plenty of posters on this thread with a verbal agreement from the bank left languishing. I guess we'll have to pay a booking deposit soon, what sort of receipt do I want from the EA? As I'll want that to be fully refundable.

The Booking deposit is refundable and you will get a receipt from the estate agents. It is refundable to the point where you sign contracts and is added in to the amount of deposit you handover when signing contracts. It shows you are serious about the property and only prevents the estate agent from showing the property to other potential buyers.
When sale agreed is achieved many buyers are coming up against contracts taking weeks to be sent out. In any of the cases I have heard of, the blame is being put on issues with the bank.

In our case there were no issues recorded on the property but that could be many reasons for it.
Anyway, when the contracts do appear you are legally bound to give over 10% of the agreed sale price for the deposit when you sign. This deposit will include the amount of booking deposit you paid over but, the vendor can delay in signing the contract for weeks while holding your deposit or even pull out. If he doesn't sign the deposit will be returned but this mechanism is unacceptable as the buyer is subjected to great expense, stress, hassle and all else that goes with buying a house. I have raised it with Shane Ross. At least I got a reply this morning from his parliamentary assistant to say that it will be raised with him.

Hope it works out for you.

Leinster

kaki

Quick question - can a vendor provide some form of a document from their bank to show that the bank give consent to sell before solicitors get involved?

Background, vendors selling house in negative equity, they say that the bank is happy for them to sell at the asking price, after seeing so many horror stories I'm 1) taking this statement with a grain of salt and 2) Not keen on flushing good money down the drain on solicitors fees/surveys if there's a good chance that the sale could be a long/drawn-out affair.

leinster93

kaki wrote: »

Quick question - can a vendor provide some form of a document from their bank to show that the bank give consent to sell before solicitors get involved?

Background, vendors selling house in negative equity, they say that the bank is happy for them to sell at the asking price, after seeing so many horror stories I'm 1) taking this statement with a grain of salt and 2) Not keen on flushing good money down the drain on solicitors fees/surveys if there's a good chance that the sale could be a long/drawn-out affair.

Yes, as far as I know the vendor should be able to provide documentation to say he/she is allowed to sell. You can ask the estate agent for this but it could cause a delay. However, the issue arises so far as to what price the bank will allow the vendor to sell at and an agreement/settlement made on the outstanding loan. The offers are presented to the mortgaged bank.

In the current climate where there are mortgage write off's and loan write-downs. God only knows how long it will take for the sale to go through as a result or how long the purchaser will be left hanging...

bovril

kaki wrote: »

Quick question - can a vendor provide some form of a document from their bank to show that the bank give consent to sell before solicitors get involved?

Background, vendors selling house in negative equity, they say that the bank is happy for them to sell at the asking price, after seeing so many horror stories I'm 1) taking this statement with a grain of salt and 2) Not keen on flushing good money down the drain on solicitors fees/surveys if there's a good chance that the sale could be a long/drawn-out affair.

Yes the bank can provide a letter of consent. We wouldn't sign the contract without getting this letter. It took months but when it arrived we had peace of mind that the bank consented to the NE deal. Just to clarify that in our case the vendors bank sent out a valuer to the house before this letter of consent was issued so as stated above the amount we were going to pay for the house was obviously taken into consideration with the deal the vendors were making with the bank. The key thing is not to engage your surveyor or sign the contract (pay out the 10% deposit) until this letter of consent arrives.

TheDriver

Also remember that some vendors are playing games with the bank re the price they want and writedown so you could be waiting for that game to play.

The one that really annoys me is the vendor who won't sign the contract and delay the process. I got accused once of rushing a vendor and I couldn't understand if you want to sell your house, then sell it or else get out of the market.....

markuskon

on_my_oe wrote: »

I was still eyeballing the ceiling at 2am stressing so emailed my local TD and asked;
Why pre-approved consent to sale certificates aren't issued?
Why banks valuations aren't done in advance of the property going on the market?
Why are consents taking so long, and specifically why are purchasers left dangling for the monthly/quarterly review meetings?
and last but least, why should we as purchasers be left out of pocket?

To be fair, got a reply today I am taking up these issues with the Minister for Finance by way of a Dáil Question. I should have a reply next week and will be in touch again at that stage

When I get an update, I'll post it here, but if you can contact your own TDs, it would be good to reinforce the message

email sent to Paschal Donohoe

gmisk

TheDriver wrote: »

Also remember that some vendors are playing games with the bank re the price they want and writedown so you could be waiting for that game to play.

+1....from what I have heard today from EA....this is what is happening RE my house.....sale agreed oh just 10/11 months.....

on_my_oe

I heard back from my TD

In respect of delays in issuing the consent to sell documents, I had a journalist in touch who saw my Dáil question and was interested in the issue. However he contacted one of the principal estate agents and they said they weren't coming across the problem. I wonder if this is true of if perhaps there is a particular problem with the <vendors bank name>

So us posters are just terribly unlucky?

leinster93

The issue was raised and discussed by RTE radio by Sean O'Rourke. You can listen back to it here http://www.rte.ie/radio1/today-with-sean-o-rourke/podcasts/ titled buying a home.

Although it has been raised as an issue the government need to be challenged on their policy on leaving buyers with large bills if a vendor pulls out from sale agreed.

I have another email ready to send to Shane Ross on the back of RTE's discussion.

gmisk

I got a reply below from Aengus Ó Snodaigh

* To ask the Minister for Justice and Equality if it is intended to change the law to ensure that properties being sold due to financial problems cannot be advertised for sale without the bank’s agreement/valuation to ensure subsequently a purchaser is left waiting months before the sale falls through due to a bank objecting to the sale price, or that consent from the bank has taken so long and has consideration been given to having pre-approved consent to sale certificates introduced..

- Aengus Ó Snodaigh

REPLY.
The position is that the sale of property which is subject to a mortgage normally requires the consent of the lending institution concerned. Where the proceeds of such a sale exceed the outstanding balance of the mortgage, consent is normally given by the lending institution concerned without undue delay. In such cases, it is usual for the vendor to obtain the required consent prior to the contract stage. The mortgage is usually discharged before completion and evidence of release must be provided on closing the sale.

Where, on the other hand, it is clear that the proceeds of sale will not cover the outstanding balance of the mortgage, or may not do so, an intending vendor should make contact with the lending institution in advance of sale. In the case of certain commercial properties, the agreement of the National Asset Management Agency may be required. Such contact will provide the parties with an opportunity to discuss sale of the property and arrangements for discharging the mortgage, and thereby avoid the undesirable delays which frequently arise where no such advance contact has been made between them. While I am in principle well disposed to the introduction of improved arrangements to facilitate vendor sales of mortgaged property, such as the possible introduction of pre-approved consent to sale certificates as suggested by the Deputy, this is a matter which would, in the first instance, benefit from discussions between the Law Society and the lending institutions. I have therefore asked my Department to draw the attention of both the Law Society and the lending institutions to the Deputy's suggestion.

on_my_oe

The response you got from Aengus Ó Snodaigh is more substantial than what I got from Roisin Shortall... And at least they're 'drawing attention to the suggestion (of pre-approved 'consent to sale')'.

Unfortunately it doesn't look like anything will seriously be done

gmisk

Possibly not.

It wont do me any good at this stage anyway......



I got a lovely two line fax saying the vendor has decided not to sell the house any longer....after 11 long months of being sale agreed.

I am out the cost of my solicitors fees (good knows how much they will be!), two valuations and a structural survey....
and nothing can be done about it....I have been taken for a total ride tbh

TheDriver

gmisk wrote: »

Possibly not.

It wont do me any good at this stage anyway......



I got a lovely two line fax saying the vendor has decided not to sell the house any longer....after 11 long months of being sale agreed.

I am out the cost of my solicitors fees (good knows how much they will be!), two valuations and a structural survey....
and nothing can be done about it....I have been taken for a total ride tbh

I would share in your frustration, that's awful. And worse again, it will probably be up for sale in few months again so they can keep the bank at bay...........they obviously didn't get the write down they were expecting

macnug

gmisk wrote: »

Possibly not.

It wont do me any good at this stage anyway......



I got a lovely two line fax saying the vendor has decided not to sell the house any longer....after 11 long months of being sale agreed.

I am out the cost of my solicitors fees (good knows how much they will be!), two valuations and a structural survey....
and nothing can be done about it....I have been taken for a total ride tbh

ohh ffs, sorry to hear about that.

Ms2011

gmisk wrote: »

Possibly not.

It wont do me any good at this stage anyway......



I got a lovely two line fax saying the vendor has decided not to sell the house any longer....after 11 long months of being sale agreed.

I am out the cost of my solicitors fees (good knows how much they will be!), two valuations and a structural survey....
and nothing can be done about it....I have been taken for a total ride tbh

OMG, this is totally unacceptable & unfair not to mention heart breaking. I hope you find you're dream house soon.

on_my_oe

I know that paying the booking deposit is effectively a "gentlemans agreement" but if people don't want to behave nicely, then they should have to pay a forfeit by at least reimbursing the would be purchaser the costs incurred.

I'm tempted to go down the 'Small Claims' route if our vendors don't deliver on their 'consent to sale'

gmisk

on_my_oe wrote: »

I know that paying the booking deposit is effectively a "gentlemans agreement" but if people don't want to behave nicely, then they should have to pay a forfeit by at least reimbursing the would be purchaser the costs incurred.

I'm tempted to go down the 'Small Claims' route if our vendors don't deliver on their 'consent to sale'

I can see where you are coming from but from talking to a few solicitors...this would just be throwing good money after bad, you wouldnt have a legal leg to stand on...very unfair :mad:

Mr.McLovin

on_my_oe wrote: »

I'm tempted to go down the 'Small Claims' route if our vendors don't deliver on their 'consent to sale'

I'd be tempted to give him a slap more like...

seriously though if I saw this clown trying to sell his house again I'd be outside every viewing warning people off

TheDriver

Mr.McLovin wrote: »

I'd be tempted to give him a slap more like...

seriously though if I saw this clown trying to sell his house again I'd be outside every viewing warning people off

that's probably the wiser option. Its the same as you walking away but there needs to be something for people who mess with dreams.......

riclad

THE solicitors should not charge you 100 per cent as the sale did not go thru,
any seller can stop the sale anytime , at least until the day they sign the contract .

on_my_oe

The solicitor can still charge the bulk of their professional fees, and we have still paid the surveyor and the valuer who weren't exactly free either..

iguana

That's truly awful gmisk, I'm really sorry. I can understand people going to great lengths to keep their home but screwing over an ordinary person like you is inexcusable.

riclad

THIS can happen to someone buying any house,if seller stops the sale at the last minute.
OBviously its more risky buying an negative equity ,banks are not noted for doing things fast ,effeciently or they may not all the staff they need to deal
with 1000,s of mortages in difficulty.
MY FRIEND was in negative by 20k,
bank stopped sale of house for 12 months even though they were offered the full market value of the house by an interested buyer.
House was empty for twelve months,
then sold at the full market value.

iguana

Quelle surprise! Written confirmation from the bank accepting our offer and discharging the vendor's mortgage is taking longer than the EA thought.:rolleyes: So glad I found this thread before going sale agreed because at least I was expecting the delays. It still makes me nervous though.:(

Mr.McLovin

anyone else on this thread make any progress on closing?

2013Lara

Mr.McLovin wrote: »

anyone else on this thread make any progress on closing?

I'm afraid to speak too soon but it looks like our vendor now has the consent letter and has done a deal with his bank regarding his negative equity. We had a phonecall on Tuesday evening from the estate agent saying so but we're yet to get any confirmation of this via our solicitor. So to date it's taken 43-44 weeks to get to this stage.

on_my_oe

I'm not sure we would have the patience to wait out 43-44 weeks!!

Fingers crossed

Ms2011

Emailed my EA earlier to see what was happening with our house (sale agreed 6 months now), he said it was out of his hands & he'd forward my mail to head office:mad::rolleyes:
So pissed off with this crap now, don't even care if the sale falls through, just can't stay living in this limbo much longer:(

HouseHunter13

gmisk wrote: »

Possibly not.

It wont do me any good at this stage anyway......



I got a lovely two line fax saying the vendor has decided not to sell the house any longer....after 11 long months of being sale agreed.

I am out the cost of my solicitors fees (good knows how much they will be!), two valuations and a structural survey....
and nothing can be done about it....I have been taken for a total ride tbh

I'm really sorry to hear this and by fax too, seems so cowardly...

I really wish you the best in finding somewhere quickly and as stress free as possible, you definitely deserve that.