What you need to know about a property chain

When you’re planning to buy your next property in and around Washington, there’s one thing you need to be aware of: the property chain.

Unless the buyer and seller (often called the vendor by estate agents) are cash buyers or first-time buyers, there is likely to be a ‘chain’. That means there are other properties that need to be sold and completions made before everyone moves home.

This can often be a stressful time for everyone involved. If the property at the top of the chain fails to sell, or the buyer at the bottom pulls out, then the whole thing can collapse. And that means a lot of time and money can be wasted. Indeed, a survey has revealed failed home sales in the UK cost homeowners a staggering £476million over 10 months last year.

And another study by Which? revealed 21% of failed house sales in the UK are the result of buyers unable to sell their homes.

Knowing what the property chain problems are and how to avoid them can help take some of the stress out of buying and selling.

Property chain problems

If you know what problems may happen, then you can be prepared and try to make a plan to avoid them.

Mortgage applications fail: When someone within the property chain can’t get a mortgage, they can’t buy! And that can create problems up and down the chain. Since new rules were introduced in 2014, homebuyers now face stricter lending criteria. That means many more people cannot get the finance they need, resulting in delays and, often, chains collapsing.

Someone changes their mind: Most property chain breaks happen when one of the parties in it changes their mind. A seller may decide that they don’t want to move after all, or a buyer might see a different property that they prefer. Remember, until completion, anyone can pull out of the sales process at any time!

Survey results: Having a survey carried out isn’t a legal requirement for buyers. And 80% of buyers admit to taking the gamble and not having one carried out. A survey finds any significant issues a property may have. Buyers will expect that any issues are dealt with before purchase – whether that’s a new sale price to reflect the costs involved in rectifying them or the vendor having the work done first. As a result of these issues, the buyer can decide to pull out if they’re unhappy with the findings.

Gazumping: It’s something many thought was consigned to history, but gazumping is back! This is where the seller accepts a higher offer from another buyer and rejects the original offer. Around 19% of house sales fail because of gazumping, and this can affect a complete property chain.

Personal circumstances: Not everyone chooses to pull out of a chain. Life can sometimes simply get in the way. An illness or unexpected relationship breakdown can result in a vendor or buyer needing to pull out of the sale.

Avoiding property chain issues

Sell and rent while searching: If you don’t have a property to sell, then you become a more attractive buyer to vendors. Selling your property and then renting while you shop not only gives you the chance to trial living in a particular area, it also means you’re in a good position as you’re chain-free.

Choose a chain-free buyer: If you’re selling your property and have a number of offers, choosing the chain-free buyer can often make this easier to accomplish. Choose a first-time buyer or cash buyer who aren’t involved in a chain – even if their offer isn’t the highest – as this can help make your life a little easier and there’s less chance of them pulling out.

Put chain-free properties first: For buyers, it is sensible to search for properties with no upward chain. If a property has vacant possession, for example, you won’t need to worry about how many homes need to sell before the chain completes.

Get finances in place: Getting an ‘agreement in principle’ from a mortgage lender before shopping gives sellers the confidence you have the funds available. This means they know you won’t pull out because of a failed mortgage application. It also means you won’t be tempted to put in on offer on a property you can’t afford!

Agree a moving date: Communication between buyers and sellers (through their solicitors) can avoid property chain problems. If a sale is taking too long with no prospect of completion dates, some buyers will pull out. Negotiating a moving date quickly can help ensure the chain completes, even if the vendor needs to consider temporary accommodation to stop the sale falling through.

How we can help

Even taking these steps can’t stop the prospect of a property chain collapse. That’s why having a team of experts on hand to negotiate your sale or purchase is more likely to stop it from happening. If you would like more details about how we can help you buy or sell your next home, contact our team today.