Non Refundable Reservation Fees for Property Sales
Always trying to learn in the this property business game. We sell professional HMOs and Social HMOs along with all the ones we keep. When we sell ourselves directly we get a non refundable reservation fee for property sales. It is unfortunate that we have to go this approach as there are so many time wasters. In the US you have a contract and place a 10% deposit. If you do not complete the sale there are legal implications. In the UK you can tie up a vendor and back out at the last minute whilst trying to play games on lowering the price. We had an investor from Asia that was buying a 6 bed Social HMO. They did a survey stating one issue is that a back wall was damaged. Our contract includes no voids, no management and no maintenance. This would have been covered until the 10 year lease. As a sign of good will we said we would deduct 2k. Then this buyer stated they wanted to get a mortgage even though it was a cash sale. They crossed the line and we backed out and sold the same property to another investor now. The funny thing is we sent our builders to look at the back wall to see the damage…To our non surprise…wall was fine…They sent us pictures and wall was fine.
Then today we have a professional HMO that had a memo of sale from March 19th from an estate agent…Cash sale…quick closing..Fast forward to today… 4 bed in Salford cash flowing approx 22k a year. We were informed they are looking for a mortgage and now want us to buy the freehold. Our reply, you wasted our time…we provided you a letter that the leaseholder was interested in selling the freehold…You can buy yourself…plus this was a cash sale…By Friday you can submit a BACS for a non refundable reservation fee or we are out….we will put back on the market at a higher price…
Bottom line suggest getting a non refundable reservation fee…including this with legal fees…surveys …shows commitment on behalf of buyers…
Good Morning XXX…I just spoke to XXX the buyer for XXXXX. I told him we are beyond disappointed due to his lack of commitment. It was supposed to be a cash purchase now there is discussion of mortgage funding as well as the issue of the leasehold & now changing of solicitors. I told him prices have shifted upwards, it was supposed to be a quick sale. We do not have any confidence in them due to the above issues. I told him on all our other properties we get a non refundable reservation fee of 3k applied to the purchase price. If he wants to continue we are willing to accept this reservation fee and convey with 30 days of today’s date or we are pulling out and putting the property back on the market at a higher price.
XXXX stated he will call XXXX in order to get our BACS details and XXXX will prepare the reservation form….If this does not occur timely we are pulling out….
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