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SarahBell

Chains Failing After Exchange

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It's as rare as hen's teeth.

first one is a fraudulent mortgage application - the bank is well within its rights to pull that one.

Second is just bloody odd - but sometimes you get oddballs. Me, I'd sue them for specific performance or offer them a deal now - my deposit plus £30K in my pocket plus my transaction costs (inc mortgage fees) paid and I'll walk away (without prejudice of course).

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It's as rare as hen's teeth.

first one is a fraudulent mortgage application - the bank is well within its rights to pull that one.

Second is just bloody odd - but sometimes you get oddballs. Me, I'd sue them for specific performance or offer them a deal now - my deposit plus £30K in my pocket plus my transaction costs (inc mortgage fees) paid and I'll walk away (without prejudice of course).

Not so sure it was fraudulent from reading he thread. It appears that the vendor may well have informed the lender of her bankruptcy. Even if she hadn't told them and they'd credit checked her, which would have shown up the bankruptcy, then there may be an argument that they had consented to dealing with her if they had gone on to offer the mortgage and let it proceed to exchange.

On the second point. You have to bear in mind that specific performance is merely an equitable remedy. you have no right to demand it.

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This is linked with Bloo Loos "land of broken chains" which recently has been much discussed.

Not sure how common this is, the official figures show fewer broken chains now than at the start of the year.

BOE Approval Cancellations

There was an article back in June about Homebuyers Left High & Dry as Lenders Cancel Mortgage Offers, but Lettingslady said it sounded more like an advertisement for Property Portfolio Rescue.

I did write to the NAEA as their reports use to include "Fall through rates". Does their current exclusion confirm the high levels of "fall throughs" that might put sellers and buyers off ? But at what stage are chains being broken?

Bloo reported a discussion on "Working Lunch" last week where it was suggested that agents had a backlog of 45 potential buyers with offers in awaiting mortgage approvals.

I guess a lot of potential sales don't even get off the ground perhaps giving weight to the First Rung article that said:

UK house prices (asking) have stopped their recent 'dead cat bounce' according to Miles Shipside and his team at Rightmove. Estate agents now have on average seventy properties each on their books, and are only selling ten per month according to RICS...

However, this RICS contention is not supported by recorded data. With only 35,000 property sales a month, according to Land Registry, and the head count of agents being circa the same this would suggest that agents are in fact only selling on average one property per month.

Perhaps this is the reason that the NAEA stopped including "fall through rates." Certainly the properties I have been watching for months, and on other threads on HPC there seems to be a high percentage of properties that get offers only to be put back on the market.

I assume this is for various reasons.

1. Offer made but own property not sold. The recent NAEA report said that, "the vast majority of buyers also had a property to sell, which they had not yet put on the market". EA's say sellers want 2007 value but as buyers want 2010!!!

2. Offer made but still waiting or not even applied for a mortgage .

3. Non FTB, offer made but unaware that the lender will only lend up to 60% of the value of the next property

4. Government Government Scrapped FTB's Schemes

No idea at what stage EA's say they have SOLD a property for stats one assumes thought the property has actually SOLD?

5. Lenders valuation coming in well below peak and offer value.

And article in Reuters last week referred to:

The most significant concern to the industry remains the chronic shortage of mortgage supply exacerbated by the widespread practice of down valuations by surveyors representing mortgage lenders

And there was this article a few weeks back Realistic Valuations Break Chains

Edited by Sybil13

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It's as rare as hen's teeth...

+1

While I have come across failures to complete, I did not see even one that did not complete within the following 14 days. That is over 10 years in the business.

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I've come across 1 story of a vendor pulling out after exchange. They were trying to get more money for their house.

These sellers were relatives and they thought they could pull a fast one.

The buyers weren't stupid and demanded the sale go through or they would sue which would prevent the sale to anyone else.

After 4 weeks of begging letter from my relatives with made up stories they capitulated and sold. Their solicitor had essentially also told them they had no chance and their estate agent also wanted their fees immediately.

Unfortunately greed is a nasty thing but needs and can be stamped on immediately.

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I've come across 1 story of a vendor pulling out after exchange. They were trying to get more money for their house.

These sellers were relatives and they thought they could pull a fast one.

The buyers weren't stupid and demanded the sale go through or they would sue which would prevent the sale to anyone else.

After 4 weeks of begging letter from my relatives with made up stories they capitulated and sold. Their solicitor had essentially also told them they had no chance and their estate agent also wanted their fees immediately.

Unfortunately greed is a nasty thing but needs and can be stamped on immediately.

Not sure we could stamp enough ! However, like all human qualities it has its place in the grand scheme of things , perhaps the point of greed is to bring us to the place where we are willing to admit we have had enough.

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Not so sure it was fraudulent from reading he thread. It appears that the vendor may well have informed the lender of her bankruptcy. Even if she hadn't told them and they'd credit checked her, which would have shown up the bankruptcy, then there may be an argument that they had consented to dealing with her if they had gone on to offer the mortgage and let it proceed to exchange.

On the second point. You have to bear in mind that specific performance is merely an equitable remedy. you have no right to demand it.

Not being daft, but who do you believe, a lender who would have so much bad publicity if they were caught out being sneaky or a bankrupt who has everything to gain by being economical with the truth...

As for SP being equitable, if I went to counsel, in the absence of significant other information, I suspect his advice would be so far as to say 80% likely you'd succeed in court (which as we know, is as good as counsel ever says !).

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There are now two stories on MSE about sellers deciding not to sell after exchange.

sounds nightmarish.

http://forums.moneysavingexpert.com/showth....html?t=1815053

http://forums.moneysavingexpert.com/showth....html?t=1806123

The first is about a buyer not completeing.

This is far more common that the seller pulling out.

It's almost impossible for the seller not to sell as one of the remedies in court is "specific performance" (I.e completion of the contract). A court can easily force a seller to sell, but can't force a buyer to buy.

tim

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Not being daft, but who do you believe, a lender who would have so much bad publicity if they were caught out being sneaky or a bankrupt who has everything to gain by being economical with the truth...

As for SP being equitable, if I went to counsel, in the absence of significant other information, I suspect his advice would be so far as to say 80% likely you'd succeed in court (which as we know, is as good as counsel ever says !).

Just telling it as I read it. It goes both ways because you could ask why a bankrupt would even bother lying as they would know they would get found out. I'm not insinuating that either of them are lying. She may have told them and they may simply have lost the notification or simply didn't notice it on the form or something. Just because someone is wrong dosn't mean they lied.

The remedy of specific performance is always an equitable remedy and, in fact, it is very rare to obtain an order for such in contract disputes. Property is one of the vary rare areas where it is likely to be used although, being equitable, you have no right to insist on it.

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Not being daft, but who do you believe, a lender who would have so much bad publicity if they were caught out being sneaky or a bankrupt who has everything to gain by being economical with the truth...

As for SP being equitable, if I went to counsel, in the absence of significant other information, I suspect his advice would be so far as to say 80% likely you'd succeed in court (which as we know, is as good as counsel ever says !).

Just telling it as I read it. It goes both ways because you could ask why a bankrupt would even bother lying as they would know they would get found out. I'm not insinuating that either of them are lying. She may have told them and they may simply have lost the notification or simply didn't notice it on the form or something. Just because someone is wrong dosn't mean they lied.

The remedy of specific performance is always an equitable remedy and, in fact, it is very rare to obtain an order for such in contract disputes. Property is one of the vary rare areas where it is likely to be used although, being equitable, you have no right to insist on it.

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Not being daft, but who do you believe, a lender who would have so much bad publicity if they were caught out being sneaky or a bankrupt who has everything to gain by being economical with the truth...

As for SP being equitable, if I went to counsel, in the absence of significant other information, I suspect his advice would be so far as to say 80% likely you'd succeed in court (which as we know, is as good as counsel ever says !).

Just telling it as I read it. It goes both ways because you could ask why a bankrupt would even bother lying as they would know they would get found out. I'm not insinuating that either of them are lying. She may have told them and they may simply have lost the notification or simply didn't notice it on the form or something. Just because someone is wrong dosn't mean they lied.

The remedy of specific performance is always an equitable remedy and, in fact, it is very rare to obtain an order for such in contract disputes. Property is one of the vary rare areas where it is likely to be used although, being equitable, you have no right to insist on it.

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Re my post further up the thread I wrote to the NAEA about "fall through rates" as they use to include these in their monthly reports got this reply. Any ideas what I can say I want them for that might produce a result? :

----- Forwarded Message ----

From: Wendy Webb <wendywebb@nfopp.co.uk>

Sent: Wednesday, 15 July, 2009 17:24:08

Subject: RE: Fall through rates

Dear

I do apologise but we do not appear to have received your original email.

We do not include the fall through rates in our reports although it is possible that we do obtain them. You do not state the reason for your request and it would be useful to know what you want them for so I know in what format you would want them.

Kind regards

Wendy

Wendy Webb

PA to the Group Chief Executive

The National Federation of Property Professionals

Arbon House

6 Tournament Court

Edgehill Drive

Warwick

CV34 6LG

Registered in England No. 897907

Telephone: +44 (0)1926 496800

Facsimile: +44 (0)1926 417788

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You are doing preliminary research for a PhD proposal regarding the current housing market. The exact focus of the research is as yet undecided.

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Sybil, I do not think this mortgage collapse after exchange is a major contributor to broken chains.

What is, and just looking at the number of SOLD SSTC on the 3 mile journey to the bank, is that anyone can walk into an EA, go look at a property and make an offer. Its then SSTC.

great, the seller may already have made an offer, but couldnt move because he needs to sell, now hes happy and confirms with his target he wants to go ahead, and its going to be soon.

this guy, however hasnt made an offer yet cos he wasnt sure he could sell. Well, now he definitely has sold, he goes and makes an offer on his target.

and so on.

to break this chain, it only needs ONE of the participants to have been a little optimistic on his mortgage requirement. He is simply rejected for his 6 times salary IO mortgage he needs ( werent like that last time he bought)

I must pass 400 houses to see 25 SSTC in a town of 50,000 houses. thats roughly 3000 SSTC in my town.

say it takes 3 months to complete... thats 1000SSTC per month...with 38,000 approvals, that only leaves 37,000 for the rest of the country, and there are way more than 37 towns larger than Colchester.

all guesswork, but the number of SSTC is quite incredible.

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Sybil, I do not think this mortgage collapse after exchange is a major contributor to broken chains.

What is, and just looking at the number of SOLD SSTC on the 3 mile journey to the bank, is that anyone can walk into an EA, go look at a property and make an offer. Its then SSTC.

great, the seller may already have made an offer, but couldnt move because he needs to sell, now hes happy and confirms with his target he wants to go ahead, and its going to be soon.

this guy, however hasnt made an offer yet cos he wasnt sure he could sell. Well, now he definitely has sold, he goes and makes an offer on his target.

and so on.

to break this chain, it only needs ONE of the participants to have been a little optimistic on his mortgage requirement. He is simply rejected for his 6 times salary IO mortgage he needs ( werent like that last time he bought)

I must pass 400 houses to see 25 SSTC in a town of 50,000 houses. thats roughly 3000 SSTC in my town.

say it takes 3 months to complete... thats 1000SSTC per month...with 38,000 approvals, that only leaves 37,000 for the rest of the country, and there are way more than 37 towns larger than Colchester.

all guesswork, but the number of SSTC is quite incredible.

Thanks for taking the time to explain your broken chain theory so fully MUCH APPRECIATED of course you know it will now be quoted!!!

Of course you are right people are out buying as if its 2007 not having a clue what is actually going on in the market at all which is hardly surprising given what they are being fed every day in the press and by EA's.

THEN SURPRISE SURPRISE having put in an offer decide to market their property and find they can't get anyone to offer them the 2007 value they have just offered on the overvalued semi that has been on the market 6 months on the other side of town !! Or they find even if they can sell the lender will only lend them 60% LTV on the new property. Or they find the valuation on the property they made an offer on comes it at 30% below peak and the seller will not reduce and on and on.....

It was why I was interested in the "fall through rates" with EA's and asked for ideas with regards what I can say to get the NAEA to give them to me.

According to your theory there should be a high % of failed sales at this level .

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Failed chains are not a new phenomena. They occur in boom times too.

True, there may be more currently, but clearly not enough to prevent transaction volumes increasing month after month.

They haven't prevented the market stabilising with prices rising on many indices.

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Failed chains are not a new phenomena. They occur in boom times too.

True, there may be more currently, but clearly not enough to prevent transaction volumes increasing month after month.

They haven't prevented the market stabilising with prices rising on many indices.

transaction volumes up....do you have figures for completions please?

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Failed chains are not a new phenomena. They occur in boom times too.

True, there may be more currently, but clearly not enough to prevent transaction volumes increasing month after month.

They haven't prevented the market stabilising with prices rising on many indices.

I am probably classed as a bull by some people on here, but.....

you can't say because volumes are up from 0 to 1 to 2 to 3, that it's great, or that prices are stabilising - they are still falling and, rightly or wrongly, are way way under peak values. I also believe that prices have a chunk to fall yet, not this year, maybe the middle to back end of next after an election when whoever gets in does the dirty work that just has to be done.....

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transaction volumes up....do you have figures for completions please?

Yes, which source would be acceptable to you. Or will you say they all have a vested interest.

I am probably classed as a bull by some people on here, but.....

you can't say because volumes are up from 0 to 1 to 2 to 3, that it's great, or that prices are stabilising - they are still falling and, rightly or wrongly, are way way under peak values. I also believe that prices have a chunk to fall yet, not this year, maybe the middle to back end of next after an election when whoever gets in does the dirty work that just has to be done.....

If you took an average of Halifax and Nationwide, they would be up this year to date, and that's seasonally adjusted. Albeit only marginally, but that would suggest stability to most.

They may have fallen from peak, but what we are discussing is the current trend, not the historical one.

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Yes, which source would be acceptable to you. Or will you say they all have a vested interest.

snip

.

Edited by Bloo Loo

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Yes, which source would be acceptable to you. Or will you say they all have a vested interest.

snip

website down....just for a change.

Edited by Bloo Loo

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Yes, which source would be acceptable to you. Or will you say they all have a vested interest.

snip

you doth protest too much.

Any source....for completions...not mortgage approvals, not asking prices, not rightmove sales, just completions, finished, done and dusted completions featuring a change of ownership.

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