It is probably the safest tactic at present, however, the dramatic improvement in the residential property market in the last 6-9 months has given sellers increased confidence in their ability to sell their home quickly. Unless you fell into the very small minority of buyers who could afford to purchase another property without recourse to the sale proceeds from your existing home, then for the last 5 or 6 years it was simply too risky to submit an offer for a new property unless you knew that you had achieved a sale or were at the very least a long way down that road. In fairness no reputable solicitor would have allowed a client to tie themselves into a concluded purchase transaction unless they knew the funds were available to settle the price on the due date. There are very good reasons for taking such a cautious approach. If you can’t pay the price on the date of entry then penalty interest starts to run on the full price until it is eventually paid. After a period of time (usually 28 days) if you are still unable to settle the price then the seller is entitled to pull out of the deal and remarket the property. You then become liable for the full costs of remarketing and if, after a period of marketing, the property is sold for a figure that is less than you had originally offered, you are also liable for the difference. In other words, the financial consequences can be catastrophic.
However as the market improves sellers are feeling more bullish about their prospects of selling quickly and we are now beginning to see people putting in offers before they have sold their own property. There is still an element of risk involved and we would suggest that at the very least you should have tested the market. If you have placed your existing property on the market and generated some quick interest you might now be prepared to take a calculated gamble and submit an offer. You should never do so unless you have taken advice from your selling agent who will be able to use their experience to help you decide whether you should hold off until you have sold or have the confidence to proceed with an offer. One thing is for sure - we are still a long way away from the market of 2006 and at this time a cautious approach would be recommended.
For more information please see our residential property site or contact a member of the Hunters Residential team.
Head of Residential
0131 446 2346
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