In England and Wales, an offer being accepted is not in itself legally binding and either party can withdraw from the sale at any point right up to exchange without penalty. This can happen many weeks or even months along the process, leaving multiple parties (including others in the chain if it collapses) out of pocket.
Purchase fall through rate can be as high as one in three, simply because of the way the sale process works. Vendors and buyers agree a price first and do their due diligence afterwards, which is when problems can arise. Many experienced conveyancing solicitors such as https://www.samconveyancing.co.uk/Conveyancing-Solicitors/conveyancing-solicitors-bromley have multiple branches and much of the paperwork is online or via post, so if you are, for example, purchasing a property in Bromley but live in Cardiff, you do not necessarily have to consider using firms specialising in conveyancing in Bromley only.
When a seller accepts an offer from a buyer, the sale process will begin but the sale itself is not legally binding until exchange. As exchange happens at the end of a very long road with many hoops to jump through and expenses to pay along the way, commitments are made on both sides at every stage but that time and money can be lost if the other side decides to pull out.
If your sale collapses before exchange, even if you have paid for surveys and legal fees, you have no redress legally and cannot sue for these losses.
The biggest worry people have in the wait before exchange is the sale price changing. Despite agreeing on a price at the beginning, either party can decide to change the offer at any point before exchange.
Gazumping
If you have made an offer on a property and it’s accepted, you may believe this is definitely the price you will pay for it. However, the seller could still receive a higher offer between accepting yours and exchanging, and may threaten to pull out of the sale unless you match or better it. This is particularly common when the market is rising sharply, as the sales process takes a long time and prices can rise. If you are a buyer, the Home Owners Alliance has some good advice on how to protect yourself against gazumping.
Gazundering
This is when the buyer decides to drop their offer, often very close to exchange, based upon the survey results or the finer details of the fixtures and fittings, or even for no reason at all. Many times they hope that the seller is too committed by this point to have to start over with a new buyer. Gazundering can happen in any market conditions.
Although frustrating and frowned upon, there is nothing in law preventing either side from doing this.
What About After Exchange?
Once you have exchanged contracts, you are contractually obliged to continue with the transaction. You cannot pull out of the sale without being in breach of contract and liable for the other party’s costs. The buyer will put down an exchange deposit (usually 10% of the sale price) which will be forfeited should they not proceed with the purchase. If the vendor pulls out, they will be served a Notice to Complete and can then be sued to cover all losses incurred by the buyer.
Exchange is the pivotal point in the process and before that, the sale can fall through at any time. This gives flexibility in commitment for what is normally a major lifetime purchase, however, it can also mean uncertainty and losses along the way.