5% exchange deposit - ATBU?

[MaMaMaMySharona]

I’m handling the sale of my DM’s house on her behalf as she has had a poor experience with previous buyers that have pulled out and is now nervous of the whole thing.

It’s been on the market since June 2016 and under offer 4 times. All of these have fallen through for different reasons, always to do with the buyer and not the house.

We got another offer about a month ago and this was accepted.

This buyer is very keen and has progressed quickly in terms of surveys etc. We want to exchange in mid June with completion at end of July (as he’s on holiday mid July, which we’re fine with).

Just had an email through from their solicitor stating that they want to exchange with a 5% deposit rather than 10%. My mum isn’t in the process of buying a property herself at the moment as she’s lost a lot of money in the past from others pulling out of the chain so is waiting, and she won’t need the full 10% to exchange on her own anyway as she is downsizing significantly.

I know that once we exchange, the buyer is legally bound to the agreed sale price and will also forfeit the exchange amount if they pull out. Due to the price of my DM’s house, when 5% is quite a significant amount - nearly £70k!

Are there any risks we should be aware of, or should we just accept 5%? Their reason is that they are upsizing and so a 10% deposit will clear their bank for the month and a half until completion.

Due to such bad luck in the past with people pulling out, I’d rather not rock the boat if we don’t need to.

I would, just to get the sale signed up. As you said yourself, it’s not an insignificant amount of money!

If they do pull out they do still legally owe the remainder of the 10% - it would be just a case of how you get it. As you say the 5% is £70k I think there is minimal risk that they would fail to complete. In fact if they can't get their hands o £140k then there is more chance they will pull out as they may indeed be getting a 95% mortgage and need their cash for stamp duty etc.

I’d accept it.

They will only need to give you five percent on exchange, but I they default they would still have to give you ten percent as that’s considered to be the full normal deposit (I’m asusming the standard documents haven’t changed since I worked as a lawyer, but check with your solicitor).

It’s not an unusual or unreasonable request, especially where there’s such a long gap before completion.

I believe the majority of the money is coming from the sale of their house, topped up with a mortgage so don’t think they’re getting 95% - don’t think the bank would go for that on an expensive house!

Thanks everyone. I was hoping that would be the response, but I’ve only ever bought one house myself and it was very straight forward so was keen to get some other opinions!