WA: Is buyer taking too long for finance?

[davden]

Hi,
I am from WA, Mandurah. We have an investment unit that we are selling. It was on the market for 3 weeks and we accepted an offer.

The contract gave the buyer 4 weeks for finance approval and 4 weeks settlement. We were a bit unhappy at this lenght of time, but assured buyer is sound but finance can take longer (Buyer is a familytrust, and borrowing 100%).

Contracts signed: 11 March.
Extension given until 20th April as finance still not approved. Banks taking longer and valuations need to be done. Was advised that our valuation on our property had been done and all ok, but waiting on valuation of 2 other of his properties ... ????)

Have now been advised they want a further extension. This will be 6 weeks for finance. As our unit is sitting unoccupied, still mortgaged it is costing us a lot of money to sit empty. (We didn't renew tenancy agreement as we wanted it sold without tenant) we are upset that we have waited patiently for this buyer and he still is not organised.

Was advised by our agent that we have to give the buyer 10 days notice if we don't want to proceed with contract. No-where in our contract can I see that, just that we have to give written notice.

We have no comeback financially from the buyer for these delays.

We have advised that he has until 24th April and that's it, the last and final extension. Have asked agent to remarket the property.

Are we being fair?? Thank you for taking the time to read this.

 

[AUSPROP...]

if I was selling in mandurah and had secured a buyer I would be very patient and wait for the finance - half of mandurah is for sale and you may struggle to find a new buyer

 

[rugrat]

Turnaround times for the banks are taking a long time at the moment. We were told that finance would take about (at least) six weeks to get approved through st george, because of the backlog of first home buyers and our need to get LMI which is being held up. I would be a little more patient if I were you, provided you can afford to wait a couple more weeks.

Why do they need the extra 4 weeks for settlement after the financial approval? Is there an actual reason? Maybe you could negotiate on this aspect of it (although I am not sure how if contracts have been exchanged.

 

[davden]

Thank you so much for you quick response.

The unit actually had 2 offers during the first 3 weeks and had a lot of interest .. it was priced to sell quickly. It's a really nice unit, and it's unfortunate we have to sell it. We recarpeted, repainted it and it's in a great location blah blah blah .. sound the real estate agen

With regards to settlement, our contract states "within 28 days after finance approval"

 

[rugrat]

Well if you have other buyers lined up... I don't know, your call.

 

[AdamP]

From my mortgage broker friends, all banks are backlogged at the moment and taking forever to get their act together.

Its happened for a number of reasons
1. As rugrat says the FHB have flooded the market
2. There are a lot of inexperienced people in the banks, as they never retained their long term employees (of course this depends on the bank)
3. Banks are downsizing to increase their profits

So even if you did get another buyer, it would most likely take another 6 weeks for them to get finance approved. The only way to get around this is for your next buyer not to have financial approval as a condition on the contract.

But giving them a firm deadline always makes them work very hard to get everything done.

 

[davden]

Just an update, we ended up given another extension to the 29th July. Seller still didn't have finance arranged. We did not proceed any further and now our unit is being actively marketed again.

My impression of the buyer, who was dragging out the "finance approval" knew exactly what he was doing. His finance came through yesterday and he doesn't want to buy the unit. And nothing we can do, as his finance came through after contract expired!! He is apparently a wealthy businessman and was dealing through lawyers ... enough said!

 

[INVSTOR]

If I understood your first post correctly according to Reiwa you could have writen to purchaser once his finance clause expired saying he breached the terms and contract is no longer valid. My agents said the same thing to me except said I had to give 72 hrs notice which wasn't true as purchasers had exceeded finance clause by a week. In future you should consider putting a 48hr seller clause on all conditional contracts. Contact Reiwa in future if you have any queries and speak to someone who specialises in Selling properties.

 

[davden]

Thanks for your reply. We have learnt from this experience and will certainly have the 48 hour clause that you talk about on any future offers.

Our agent was advising all along that the buyer was sound, he really wanted the property, just waiting for his properties to be valued ..... banks were taking longer etc etc. I think we were being spun a yarn and the buyer wasn't as keen as the agents were making out. We should never have granted the first extension and wasted all this time. There are no financial repurcussions for the purchaser ... he gets all his deposit back, even after 8 weeks of us waiting around for him for his finance.

Life is one big learning curve ... we are now a bit more the wiser. Funnily enough, my husband did ask about a 48 hour clause when we got the initial offer, but we were told it wasn't necessary. Mmmmmmm!!!!

 

[Peter_Tersteeg]

If it's not approved by now, it probably won't be. Lender are definitely taking way to long to get things approved, but at 6 weeks, it's a bit rich.

Having said that, I do have a client who's currently at 6 weeks with another to go. I've been in touch with the agent and the client. They're very much aware of what's going on and why it's running so late (a relative of the vendor is actually holding it up).

100% loans are also dead and don't look like coming back soon. A finance clause stating 100% (or even 95% nowdays) is probably just in place to give the buyer an exit strategy.