Can You Withdraw An Offer On A House?

Whether you are a buyer or a seller, the process of buying and selling a property can be a complex and stressful journey. You have a small window of time to view a property deciding whether it's about to be one of the largest purchases of your life. Naturally, that leads to doubts. That is why one of the most common questions that arise during this house-buying process is, "Can you withdraw an offer on a house?"

In this insight, we will explore the stages of a property transaction, the reasons for withdrawing an offer, the potential consequences, and the steps to take if you decide to pull out of a house sale.

Key Takeaways

• Both buyers and sellers can withdraw an offer on a house before the exchange of contracts without major consequences.
• After the exchange of contracts, withdrawing can lead to legal action and the risk of losing the deposit.
• Buyers should have valid reasons for withdrawing, such as negative surveys or mortgage issues, while sellers may withdraw due to a change of heart or receiving higher offers.
• It is important to communicate promptly, follow proper procedures, and seek legal advice when withdrawing an offer on a house to minimise risks and costs.

Can you withdraw an offer on a house?

You can withdraw your offer on a house before exchange of contracts without legal or large financial consequences. After that, you are at risk of legal action and potentially losing your deposit. You do not have to provide a reason for withdrawing.

Before we jump in further, it's important to understand the stages of purchasing a property and any legal issues that could arise if you withdraw an offer.

The Property Transaction Process

Offer Acceptance

The first step in a property transaction is the acceptance of an offer. Ideally, once an offer is accepted, both parties would proceed smoothly towards exchanging contracts without any issues. However, unforeseen circumstances such as bereavements, legal issues, employment changes, and financial hardships can arise, making the transaction difficult or even impossible.

Exchange of Contracts

The point at which a property transaction becomes legally binding is the exchange of contracts. Up until this point, either party can withdraw from the sale without any legal consequences. However, once contracts have been exchanged, both the buyer and the seller are legally obligated to follow through with the agreed-upon terms and conditions.

Completion

Completion is the final stage of the property transaction process. At this point, the buyer pays the remaining balance, and the seller hands over the keys to the property. After completion, the buyer officially becomes the owner of the property.

Can You Withdraw an Offer on a House as a Buyer?

As a buyer, it is possible to withdraw an offer on a house up until the point of contract exchange. Before this point, you are not legally obligated to provide an explanation for your decision to withdraw. However, it is common courtesy to inform the seller of the reasons behind your decision, as they may want to address any issues before attempting to sell again.

Offer Withdrawal Reasons

There could be several reasons for a buyer's decision to withdraw an offer, such as:

• A negative survey revealing property issues
• A negative search disclosing new planning applications in the area
• Problems with securing a mortgage
• Changes in personal circumstances
• Legal issues, such as boundary disputes or title problems
• Chain problems, where the buyer's own home sale falls through

How to Withdraw an Offer on a House

To withdraw an offer on a house, follow these steps:

1) Contact the estate agent or your solicitor.

2) Inform them of your decision to withdraw your offer.

3) The estate agent or solicitor will then notify the seller of your decision.

Keep in mind that withdrawing an offer should not be considered a way of "reserving" a house while you make a decision. It is best to be as certain as possible that you want and can afford the property before making an offer.

Can You Withdraw an Offer on a House as a Seller?

Like the buyer, a seller can also withdraw from a house sale up until the point of contract exchange. Reasons for withdrawal might include:

• A change of heart and a decision to stay in the property
• A belief that the property was underpriced
• Receiving a higher offer, also known as gazumping.
• The sale of the seller's new home falling through

It is essential to inform the buyer as soon as possible if you decide to withdraw from the sale, as they may also be selling a property themselves and need time to find alternative arrangements.

Consequences of Withdrawing an Offer on a House

Before Exchange of Contracts

If either the buyer or the seller decides to withdraw from a house sale before the exchange of contracts, there may still be some costs to cover. These costs are often referred to as "abortive fees" and can include:

• Solicitor or conveyancer fees for work already carried out
• Survey costs incurred by the buyer
• Mortgage administration fees paid by the buyer
• Estate agent fees, depending on the terms of the agreement with the seller

After Exchange of Contracts

If either party decides to withdraw from a house sale after the exchange of contracts, they will be breaching the terms of the contract. This can lead to significant financial penalties and potential court proceedings. Some of the consequences can include:

• The loss of the deposit (usually 10% of the sale price) for the buyer
• The payment of daily interest on the agreed sale price
• The payment of damages or financial loss caused by the breach of contract

Property Auctions: A Different Scenario

Property auctions operate under different rules compared to traditional property transactions. During an auction, a buyer can withdraw a bid before the auction ends, but once the highest offer has been made, and bidding has concluded, the winning bid becomes a legally binding exchange of contract. The buyer must honour this agreement, barring exceptional circumstances. The same applies to the seller – once the property is declared "sold," the contract is complete, and neither party can withdraw from the sale.

Tips for Reducing the Risk of Offer Withdrawal

To minimise the chances of a buyer or seller withdrawing from a house sale, consider the following:

• Obtain a mortgage in principle before making an offer
• Conduct thorough property surveys and searches before exchanging contracts
• Communicate openly with your estate agent or conveyancer about any potential issues or concerns
• Aim to reduce the time between offer acceptance and contract exchange

Alternatives to Traditional Property Transactions

If you want to avoid the uncertainties and potential complications of a traditional property sale, consider the following options:

Cash House Buying Services

Some professional house-buying companies can make an offer within 24 hours and complete the purchase in as little as two weeks. This option provides a fast, chain-free selling method but may come with a compromise on price, typically around 85% of your previous sale price.

Property Auctions

Selling a property at auction can be faster than selling through an estate agent and may earn a higher price than selling directly to a house-buying company. However, keep in mind that the property auction market comes with its own set of rules and potential risks.

Legalities of Withdrawing an Offer on a House in Scotland

In Scotland, the rules for withdrawing an offer on a house differ from those in England and Wales. The key difference is the exchange of letters, known as "missives," between the buyer's and the seller's solicitors. A buyer or seller can withdraw from a house sale before the missives are concluded. However, once the missives are concluded, neither party can withdraw from the sale.

Legal Advice and Professional Assistance

If you are considering withdrawing an offer on a house, it is crucial to consult with a legal professional or a conveyancer to understand the potential consequences and costs involved. They can guide you through the process and help you make informed decisions based on your specific circumstances.

Next steps of deciding to withdraw

The process of buying or selling a property can be complex and uncertain, with various factors influencing the decision to withdraw an offer on a house. While it is possible to withdraw an offer before the exchange of contracts, both buyers and sellers should be aware of the potential financial and legal consequences. By understanding the property transaction process, seeking professional advice, and considering alternative selling methods, you can navigate the challenges of withdrawing an offer on a house and ensure a smoother experience.