House buying

[ColinE]

Hi people

Could some body help with some advice please, we have found a house in France which we want to put an offer on, I understand that if the offer is accepted, we must sign the first contract after 7 days, or cancel within this time. This is not a problem.

I have been told that at the signing of this contract I must prove to the notare that I have funds to finance the buying of the house, and that he/she will no accept we are financing the buying with our house sale in the UK. as we have not sold our house yet, we have about 5 monthes to do this as the seller does not want to move before May-June next year.

So I would have to get a loan or morgage to see me through until our house is sold. Can you tell me if this is correct.

 

Colin

[Benjamin]

There was a very recent thread about the pitfalls of taking out any sort of finance to cover a purchase until your current property sells. The consensus of opinion seemed to be don't do it! You need to do a search.

You could ask the seller and the Notaire to include a clause suspensive in the contract stating that your purchase is subject to getting your own property sold. Again you need to look back on some previous threads.

[Will]

In simple terms, when you put in an offer for a house in France, the sale will become firm when all parties have signed the initial contract, the compromis de vente. After this, you, as buyer, have seven days during which you can withdraw without penalty, at the end of this period you pay whatever deposit may be agreed.

If there are conditions to the sale, such as obtaining finance, or gaining positive outline permission for rebuilding/conversion, these must be written into the compromis de vente, and, by signing, all parties agree. There is nothing to say that finance has to be arranged before an offer is put forward or a contract signed, but many notaires and agents - particularly the more scrupulous ones - will expect this to be the case.This is, after all, for the protection of all parties. Sellers don't want a sale to fall through, and buyers don't want to risk losing deposits.

If you want to make the transaction conditional on the sale of another house, you can ask for this to be written into the compromis as a clause suspensive. However, the seller does not have to agree to this, and although sometimes they do, it is a very risky clause for a seller to accept, particularly if the house is in a different country with a different system, so the notaire will often advise against it.

For similar reasons it is important that you understand just what you are signing, as there could be conditions requested by the seller that you may find difficulty in meeting. The compromis is a legal, enforceable, document, which becomes firm much earlier in the sale process than the equivalent 'exchange of contracts' in English property sales.

You may be able to arrange a prêt relais, which is common in France, a bit like an English bridging loan but without some of the drawbacks like punitive interest, which doesn't have the same bad image, and will give you time to sell your present house.

[LEO]

What a comprehensive and well written answer given above by Will.

Will, must be one of the most well-balanced contributors to this and other forums.

 

[woolybanana]

Dont tell him that, we will all have to live with it[:D]

[Will]

Thank you Leo, the bottle of Calvados is in the post.

[:P]

[Just Katie]

I like Will too.  [:)]

 

[Lou]

Just as a matter of interest, our local Credit Agricole, whom I have spoken to on many occasions on behalf of clients (I work for a French estate agent) will no longer give Pret Relais to English customers if the house they want to borrow against is NOT in France.  This is a policy change as a direct result of what they see as a downward turn in the UK housing market.  I don't know if this is a very local decision, a regional decision or a national trend.

Lou

[Will]

[:)]Thanks Katie, I'll send you a kiss (can't afford any more bottles)  [kiss]

Lou, that's interesting. From what little I know about French banks I would say this is almost certainly a regional policy, but I would not be at all surprised if other regions of CA or other banks took a similar view.

[caroline]

Hello Colin

I recently read the thread about obtaining a bridging loan, and the advice which was mostly not to do it, and to wait until the house is sold, before finding one to buy. Well, I decided to focus on making my house sell, and I kept ringing up the Estate Agent asking what I could do to make mine more attractive than others.  I also went to a second agent. I got an offer about a week later - from a couple and the woman is pregnant so they want to move fast. I have also got information about a bridging loan, and I am hoping to have the paperwork for this in place, just incase there are any delays with the house sale. Of course it is a risk, however, for me, I had a flat and a much cheaper house, and I am selling the house - so if I can always let out the flat to bring in extra income if suddenly I am also paying for a bridging loan. I do think that there is some control over when your house sells, but - if you need to hold out to obtain the highest purchase price, then of course, it could take a long time, and that then is not financially practical, even if it is in the interests of your wellbeing !

[ColinE]

Thanks Caroline.

Our agent here seems to be doing his job had three veiwing in three days, there was to be a forth, they asked the agent to email  a picture to them, they cancelled saying its two modern.

Our agent seems to think it should sell ok, its a 3 bed semi, with a double garage, the way he spoke, the only one in the village, it also, being a corner plot has a large piece of ground which is block paved on the right where it could be extended.

So we will have to wait, I think the problem with a bridging loan it could cost a lot of money if the sale  does not go through quickly.

[Magnolia]

Hi ColinE

We have done exactly as you are intending to do and my advice is DON'T DO IT! We had 2 houses, one here in France and another in the UK. We had agreed a sale on both properties when we fell in love with the house we're in now. Our house in France completed successfully with no hiccups as once the compromis is signed you incur financial penalties if you pull out therefore your sale is pretty well sealed. However, our house in the UK was a different matter. Within a fortnight of signing the compromis for this house, our UK buyers pulled out due to a seperation. Fortunately, we found another buyer within 2 days so all was well - or so we thought. 6 weeks later our buyer pulled out because she found another house which suited her better. So, there we were, 3 weeks away from buying our second home in France with no money to purchase it. The only option for us was to get a bridging loan from the UK against our UK house. This was 5 months ago and we still haven't found a buyer for the house so yesterday, we decided to drop the price of the house to £210,000 from it's original price of £250,000. This will leave us in negative equity but the loan is crucifying us so we have to get rid of it. I'm not one for advertising our financial circumstances for all to see but I felt so passionately about what you are about to do that I had to reply to your post. Please, please think very carefully about what you are considering doing. The sleepless nights aren't worth it.

Whatever you decide, good luck

 

[ColinE]

Hi Magnolia

Thank you, most people have said the same thing, we have done nothing as yet, what we are worried about is loosing the house in France.

I am told things have slowed down here in England, I do not know if its the same in France.

Before we go any further we are going back for another look, as last time over in France we looked at some ten houses, we have got it down to two, with a preferance for one of them.

Our problem is we look after our grandchildren after school while the Mum & Dad are at work so its difficult to get away, we were hoping to go over before Christmas, but that now seem off, a visit in the new year seems to be what we have to do.

Happy Christmas to you and all the posters, thank you all for your help.

[dexter]

Colin,

See my recent post titled `Is it worth it.` I was in a similar position to yourself and believe me you will get sleepless nights if the UK property isn't moving. Some very good advice in the thread which I took and don't regret it one bit. Nearly another month on and still not one viewing on a 4 bed detached in a village in Lancashire. Good luck with whatever you decide to do.

Dex

[betty]

Hi Colin

I would also advise not buying in France before the sale of your UK house or getting a bridging loan. With it being only a month before Christmas no-one really will be looking to buy property anyway and I really feel things will not pick up quickly in the New Year. You say you have 5 months to sell your UK house, but believe me when I say that time will pass very quickly.

My OH and I stopped house hunting in France solely down to not wanting to find the house that we really wanted and not having the actual funds in the bank to buy. So we decided that we would sell first in the UK and then house hunt in France whilst renting. Our property went on the market mid-August. We had several viewings straight away and a buyer within 5 days. They were the ideal buyer with nothing to sell and ready to move quickly but they pulled out after 48 hours giving the reason that they had been informed of redundancies at work (perhaps they just changed their minds, but that it what the estate agent told us). House was put back on the market, more viewings and another buyer within 2 days. Again ideal buyer, buying to let and a cash buyer who was keen to move quickly as our house needs no work doing to it (buyer’s words, not mine) and they said they could move tenants in straight away. Survey done and after 5 weeks we thought all was going well and we could possibly be in France by late October if we were really lucky. Then the North Rock news hit the headlines and as Dexter says the media went into a frenzy and the news has not been good ever since. Two days later our buyer pulled out stating that they were not happy with certain things in the survey report but would not give the estate agent any clues as to what was wrong or allow us to rectify them or even re-negotiate on the price. The estate agent wanted us to put the house straight back on the market but we wanted to know what was in the survey report. I eventually rang the surveyor myself and he told me there was nothing wrong with our house (in fact he said it was in great condition for its age) and the buyer was just trying to nitpick on a couple of things that he had written in his report. He said he had told them there was no reason not to proceed with the sale and felt that they were just trying to use the survey as a reason to withdraw. I asked him if he felt we should get our own survey done and he said no. Back on the market again, more viewings and another buyer within 4 days. Again, buyer had nothing to sell and keen to move quickly. That was 8 weeks ago. Initially there was a problem with the mortgage paperwork being lost in the post during the postal strike but now we hear that the buyers offer of mortgage has been withdrawn, although it had been agreed in principal beforehand. Their financial advisor has now submitted their mortgage application to another lender. We now don't know whether to wait to see if this one is successful or try our luck with the house back on the market. Our estate agent now says they are not sure if they would be able to market our house at the price that it was valued at back in August. Taking a reduction in the price and the euro/pound situation now not so good, we would be losing quite a bit of money. We have also noticed in the surrounding streets where we live that similar houses which were being sold within days of being on the market since we first started selling ours, the 'for sale' signs are still up after several weeks so things do not look so good. Lenders have had their knuckles rapped for giving out money too easily in the past and are being made to pull the reigns in.

Sorry to bore you with my long winded saga but just wanted to show you how, after nearly 4 months on, we are still waiting for what should have been a fairly straight forward house sale. 3 buyers with no house chains involved, now just problems with money being borrowed.

Whatever you decide to do, I really hope it all goes well for you.

Regards

Betty

 

 

[AnOther]

Sorry to hear the tales of disappointment related here but they just go to highlight what a cockeyed ridiculous system of house selling we (they [;-)]) have in UK and no amount of tinkering around the edges with HIPS etc. is going to make an iota of difference.

The answer is quite simple, an agreement to buy at an agreed price should be deemed a contract and be accompanied by a substantial deposit refundable only in exceptional and provable circumstances.

Various parties with vested interests are doing their best to play down the dire, and deteroirating, state of the UK property market but I fear we (they) haven't seen the worst of it yet by a long shot and I would urge anyone considering bridging to buy in France to not do it.

If you lose that dream house there will always be another one and for the cost of that bridging loan you'll likely be able to spend a leisurely few months in rented accommodation looking for another, plus as a bonus you will be a cash buyer of course and likely get it for a better price.

[ColinE]

Hi

Thanks guys, advice taken, we still live in hope of a sale, will keep you informed.

 

Colin

[Iceni]

<<The answer is quite simple, an agreement to buy at an agreed price should be deemed a contract and be accompanied by a substantial deposit refundable only in exceptional and provable circumstances.>>

I have bought one property in France and never sold so have limited experience of the buying/selling system here though I have bought and sold a few in England. From what I have seen and read the systems in the 2 countries are remarkably similar prior to contract signing in France and contract exchange in England in that neither party has much of a guarantee of progress up to that point.

On a personal note I would have to be very desperate to sell my French house before agreeing to a clause conditional upon the buyer selling in UK, but perhaps that's just me.

Off at a tangent I remember from my days of contract law that there are very few (in England) that have to be in writing, sale of land (property?), marriage (?) but what are the others, if any pls?

John

not

[Magnolia]

Good luck Colin. If by any chance you change your mind and decide to buy another house in the UK, we know of a lovely 2 bedroomed cottage just outside of Exeter in Devon priced only at £209,000 hee-hee!! [;-)]

Let us all know how you get on

Bonne Chance!

[:D]

[AnOther]

[quote user="Iceni"]From what I have seen and read the systems in the 2 countries are remarkably similar prior to contract signing in France and contract exchange in England in that neither party has much of a guarantee of progress up to that point.[/quote]They may be similar John but the crucial difference of course is that in France the buyer commits to the purchase at the beginning of the process but in UK almost at the end thus providing far greater opportunities for bad faith and timewasters.

[Iceni]

We are destined to disagree Ernie. As a buyer I say "yes I want to buy and you the seller must/should take your house off the market" knowing full well that I can delay signing the compromis or even not bother or having signed it pull out in the 7 day cooling off period - ideal opportunities for bad faith and timewasting.

Though I agree that in France the period between contractual commitment and completion is normally longer. And I further agree that HIPS in England is typical govt knee jerk "let's appear to be doing something even though it will not make any difference"

John

not

 

 

 

[AnOther]

I could be wrong John but my understanding is that the vendor does not legally have to take the property off the market until a compromis is signed. Certainly if I were selling I'd be reluctant to do so if the potential buyer were dragging his feet.

Interesting point if someone could confim it or otherwise.

[P-D de Rouffignac]

Re 'taking a house off the market' - I think it depends on what you mean exactly by this term. The normal procedure is for a (potential) buyer to make a written offer at or below the asking price. Once this is agreed by the seller - who countersigns the offer document to confirm his acceptance - the house should normally be withdrawn from the market, as the offer/acceptance can be legally enforceable in French courts. Rare, but it may happen. Hence it is unwise for buyers to make more than one offer, just to buy time and reserve several properties while they think about it; and for sellers to accept several offers, for similar reasons. In theory there is no reason why the property could not be shown to other interested parties, if it is explained that the property is 'under offer' - and there is always a possibility that the 'sale' may fall through before or even after a compromis de vente is signed (due, perhaps, to the buyer's inability to secure funds).

In order to avoid wasting everybody's time, buyers who make an offer should be in a position to prove they have funds available or a loan agreed in principle, and buyers will not normally countersign an offer document which does not contain such assurances. Both sides will at this stage also have a reasonably clear idea of a completion date, appointment of a notaire to handle the transaction, and any likely suspensive clauses (such as subject to satisfactory survey etc) that are to be written into the compromis. If either side is uncerain at this stage best to get these points clarified before anyone signs or countersigns anything.

I have known situations in which buyers and/or sellers have been obliged to complete a purchase/sale after changing their minds, initial deposits have been forfeited, agents fees have had to be paid and transactions held up for several months while the Courts decide the issues.  So once again my advice to both sides is to proceed with caution and only if you are serious about selling or buying.

P-D de Rouffignac

 

[PaulT]

There is that age old thing of something only being worth what someone is prepared to pay.

A few years ago we were looking to move in the UK. The house was on the market and we were looking at a particular area where the property had to meet certain criteria and none were.

Suddenly one did come up and the vendors were looking for a quick sale. I therefore contacted my agent and asked what I needed to do for a quick sale. The answer was to drop the price by £10k which I did. Two days later had a buyer whose chain had fallen through and needed to move quickly. Result got the house we wanted.

Colin, the house buying times in the UK are a little uncertain at the moment. If you are really serious about the house in France then you need to review the price that your house is on the market for. Adjust to a figure that will make it attractive so that it sells - and you need your estate agent fully on board to achieve a quick sale.

Paul

[ColinE]

Hi Paul

Our house went on the market last Friday, we have had five viewings so far, have just been told by the agent another couple are coming down from Derby, a long way from Basingstoke, for a look, so we are not in a panic as yet, just a little concerned.

 

Colin