Lock up the deal: Help for home buyers

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The Independent Online
SOME estate agents are still asking home buyers for a 'good faith' deposit before contracts are exchanged.

Drs Sara and Richard Cunningham agreed to buy a house in Nottingham for pounds 84,500, and were surprised when the agent, Black Horse Life, wrote asking for money: 'As is our normal custom, I would also be grateful if you could forward a pre-contract deposit in the sum of pounds 350 as an act of good faith . . .'

They spoke to their solicitor, who told them not to pay, and the matter was never raised again by the agent.

'It was just a try on,' said Mr Cunningham.

David Woodcock, deputy managing director of Black Horse Agencies, said pre-contract deposits were common 20 or 30 years ago. 'The buyer is expected to show good faith. We have an open policy. Sometimes deposits are asked for, but not insisted upon.'

Deposits were paid by about one in three of those who were asked to make one. The usual sum is pounds 200 or pounds 300, but an estate agent can ask for up to pounds 500 and can keep the first pounds 10 of interest earned on it. Further interest goes to the seller. Buyers gain nothing.

Mr Woodcock said house- selling methods in the East Midlands differ from the rest of the country, with the seller paying all the advertising costs and being charged a lower commission, about 1 per cent. But other agents in the area said they do not ask buyers for a goodwill deposit.

Mike Stevens, development director of Woolwich Property Services, said deposits are out of step with current thinking. 'They have no legal force and have to be returned if the deal falls through.'

Buyers who want to indicate firm intentions can always ask to have a clear-run agreement that requires the seller to give them exclusive rights to buy the property for a set period of time - usually two to six weeks. An alternative, the standard lock-out agreement which has been produced by the Independent in association with the City law firm Nabarro Nathanson, also pledges the buyer to instruct surveyors or accept liability for surveyors fees by making a mortgage application within five working days, and to propose any subsequent amendments to the sale within five working days of receiving the survey report. This will show the seller that the buyer is serious and is spending money on a survey.