An industry provider of reservation agreements says its services can “entirely eliminate” fall throughs and reduce failed transactions “to almost zero.”
PropTech firm Gazeal says a recent survey showing that one in six transactions currently fall through – with almost a quarter of them down to buyers failing to raise the funds they require for their chosen new home – reveals the need for greater transparency.
Gazeal, which says it devised the first commercially available reservation agreement, contends that those who sign up to the system are legally bound to complete and so fall throughs are eliminated.
And it says that under its system the buyer must have a mortgage decision in principal and then within seven days must submit lender details to its online platform.
“Our digital legal pack is created when the property is first listed for sale and includes the Law Society protocol forms – completed on-line via our platform by the seller” Duncan Samuel, managing director of Gazeal has told EAT.
“Having sight of the information much earlier in the process provides a much higher degree of transparency as the buyer knows exactly what’s included in the sale. This greatly reduces the opportunity of the buyer pulling out at a later stage” he continues.
Gazeal is one of several trade organisations and companies on the government’s Home Buying and Selling Group, which is expected to announce a pilot reservation agreement exercise in the near future.
Earlier this year Matt Prior, the lead officer at the Ministry of Housing, Communities and Local Government working on ways of improving the sales process, told conveyancers at an event that the government was at an advanced stage considering how much money should be put down in a reservation agreement and under what circumstances – such as bereavement or loss of a job – it could be negated.
“We recognise that a reservation agreement such as ours is not for every buyer and seller but if both parties want to be sure that a transaction goes through to completion it’s the only way to legally secure this” adds Duncan Samuel.
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19th March 2019