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Contract failing to settle

Discussion in 'The Buying & Selling Process' started by Rayan, 15th Dec, 2015.

  1. Rayan

    Rayan Active Member

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    How often have you seen contracts fail to settle? That is, a property has sold, contracts signed and exchanged and deposit paid, but the buyer fails to come up with the finance and ends up forfeiting the deposit in the end.......
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    I have only seen 1 ever.
     
  3. JacM

    JacM VIC Buyer's Agent Business Member

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    Nope I haven't seen one fail to settle, but I've seen plenty of gung-ho people ready to take the world by storm with 10 purchases they cannot afford in a year and every intention of going to contract on things to satisfy this "goal" with little regard for the consequences. It's scary how many people are convinced that one particular property is the deal of a lifetime and worthy of going to contract with no conditions just to secure it. Wouldn't want to miss out. Figure out the finance later and all that. It's always a delicate balance, talking through these goals with people and correlating them with the reality of affordability, achievable timelines etc. It can be quite upsetting to someone to hear that despite having equity in their home, the bank may not lend against the equity due to inability to repay the loan. It can be tough for people to understand that just setting a goal doesn't necessarily mean it will certainly happen.
     
  4. Scott No Mates

    Scott No Mates Well-Known Member

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    I have had a sale not settle (kept deposit).
     
  5. RPI

    RPI Property Lawyer, Town Planner Business Member

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    Many times. Longest running one has been in litigation for almost 2 years, legal fees on our side (vendor) have exceeded the 10% deposit and will likely double it by the time it is over, it is somewhat more complex than normal.

    In most instances the vendor decides to walk away, litigation is not worth the time or money involved.
     
    larrylarry likes this.
  6. Rayan

    Rayan Active Member

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    Thanks for the insights so far. In the post AHPRA days I wonder if it may be more common for buyers to fail to convert "paper pre-approvals" into formal approval. I have a friend who recently bought a 2 bed terrace in Darlington with valuation coming back at 200k less than contract price. They managed to settle but had to throw in the extra money themselves. I once was 4 weeks into a 6 week settlement and had finance refused. Broker able to sort the loan pre-AHPRA days via another lender, however options would be considerably more limited now.
     
    Last edited: 16th Dec, 2015