Q: Many clients are worried about property sales falling through at the last minute and losing any fees they have already paid. What options are available in terms of insurance and how comprehensive are they?
A: Normally a by-product of a stronger housing market, it’s not as bad as it was at the peak of the market five or six years ago but it can still destroy the dreams of would-be buyers and cost them serious money which few can afford.
Whether gazumped by a last minute higher offer or a mortgage lenders’ valuation below the price offered, cold feet by the seller, illness or damage to the property, one-in-three house sales fell through last year. Back in 2008 nearly half (45%) failed to get to completion.
There are a number of things that your home buying clients can do to protect themselves before they make an offer such as having a mortgage application lined up and ready, having a solicitor who has completed the relevant checks and making sure their dream home is taken off the market for an agreed period.
One of the things we have seen during the recession has been the innovation of new products as brokers look to diversify and offer real value to clients by protecting their needs. At a time when mortgage funding is difficult to come by and fees are through the roof clients can ill afford to lose the property they are purchasing through no fault of their own.
On the back of this we have seen an increasing number of purchase protection insurance products coming on to the market. These policies are specifically designed to cover fees and costs incurred during a purchase in the event that the purchase does not go ahead through no fault of the purchasers.
Typically the types of things covered would include; gazumping, ill health, death, redundancy or relocation, property damage incurred before completion or down-valuation by the lenders valuer or simply cold feet on the part of the seller. Policies tend to provide cover of between £1,000 and £1,800 and would include conveyancing and search fees, survey and valuation fees as well as mortgage and lender fees, including any broker fees.
The cover would be available for up to six months and the one-off premium is typically a modest fraction of the fees covered.
Today many brokers and conveyancers are including this type of cover as part of their service in order to protect their clients and offer real differentiation and with the increasing activity in the housing market I am sure we will see the rise of the auld enemy again.
