We are coming up to that time to year where property chains sink, swim and many tread water. I think I’ve mentioned on the blog before what a metaphorical full stop Christmas is for the property industry. As we enter December, many people’s minds turn to Christmas, not everyone’s, but if someone in your chain is beginning to think, ‘well, perhaps it might be better to wait until after Christmas to complete,’ and you’re keen to be in your new home for Christmas, it can be very frustrating. With that in mind, I thought it was worth blogging about house chains and what you can do to keep yours moving and prevent it from collapsing all together.
What is a house chain?
I often talk on the blog about buyers and sellers in isolation i.e. one transaction between buyer and seller when, in reality, there are often several sets of buyers and sellers. A property is probably the biggest purchase we will make in our lives and unlike buying a new car or television – still a significant amount of money – most of us don’t have enough cash in the bank just to go and purchase a new property. Many of us use mortgages and we cannot commit to fully buying a property until the capital from the property we are living in has been released. This is where a chain comes in. There will be a series of buyers and sellers. It’s likely to begin with a first-time buyer or an invest buyer, such as a landlord, with either a lump sum of cash to make the purchase or a combination of cash deposit and mortgage. They will be purchasing the property from the sellers of Home One, who, in turn, will be the buyers of Home Two. This could be where the chain ends. The sellers of Home Two might be elderly and going to live with relatives or in a retirement home, they could be moving abroad, or they might be going to rent in order to break the chain, before they purchase something else. Alternatively, the chain could go on from there with the sellers of Home Two becoming the buyers of Home Three and so on. The largest chain I’ve ever handled is ten properties and, in my experience, the longer the chain, the more fragile it can become. Because, you will be very lucky if everyone in the chain is being handled by the same estate agent. Frequently, the chain will involve a separate agent for each seller/buyer and separate conveyancing solicitors, which can involve in-depth communication between all parties and room for complications, if not handled with care and attention.
How to keep your house chain moving
Firstly, what I would like to say is that, if you have a good estate agent, your chain should be progressed efficiently. However, it only takes one party in the chain to not be efficient in responding to their conveyancer’s requests, chasing up mortgage funds, or signing forms to slow things down. Unfortunately, some of these matters will be out of your control, but there are some things you can do yourself to help progress your part of the chain:
- I am going to assume you have employed a reputable estate agent and conveyancer to hopefully progress your house sale/purchase, however, if you are reading this prior to placing your property on the market, please do get in touch on 01452 310999.
- Speak to your agent and conveyance regularly. Email is great for this; not so intrusive but reminding them to keep you updated.
- Get your finances in place. You should already have your Decision in Principle from your mortgage company, but find out now about the next steps from them and your conveyancer. How much is the cash deposit? Do you have this ready and available so that you are ready to exchange contracts?
- Start a house sale and purchase file. Keep copies of all correspondence relating to the sale of your property and the purchase of your new property, from all parties.
- Sign, date (and have witnessed where necessary) any paperwork promptly.
- Make clear your expectations, via your agent and conveyancer, on dates. Once a survey has been signed-off and your mortgage has been approved you can begin to talk about dates for exchange and completion. In a long chain, getting everyone to move at the same pace is difficult. Those higher up the chain will have agreed their sale/purchase later than you and will be behind you with mortgage applications, surveys, etc. You may need to be patient but this doesn’t prevent you making your expectations clear and trying to get others to work with this.
Why do house chains fail?
According to a survey with Which? in 2016, 28% of home-movers in the UK have experienced a property purchase falling through. There are many reasons why chains fail:
- A buyer/seller changes their mind.
- A buyer/seller has health, employment or matrimonial issues.
- A buyer/seller cannot achieve a mortgage offer to match the offer they made, based on a survey report.
- A survey reveals issues with the property, leading the buyer to withdraw from the sale.
No-one can predict the future and therefore, although you may come across any of the issues above, sometimes it is difficult to foresee them. Just because one of these situations does arise, doesn’t mean that they can’t be overcome, with the exception of a seller changing their mind; with the greatest will in the world, you may not be able to get them to change their mind! With the other situations however, here are some possible resolutions:
- As I’ve just said, if a seller is intent on staying put, nothing you do – even offering more money – may persuade them to change it. However, if you have a buyer, not all is lost. You could look at purchasing a different property, for example. As always, communication is key. Have your agent explain your purchase has fallen through, however, you really want to keep the sale between you and them going; would they be prepared to wait while you find a different property to purchase?
- Again, this might not seem like something you can have much influence over. You could take the same approach as I’ve suggested in No1, or you could explore a little further with your seller’s agent. Is it a couple splitting up? Are they still prepared to sell you the property? Nothing venture, nothing gained.
- If it’s your buyer who can’t get a mortgage offer to the sum they offered, what was the reason for this? If it was because the surveyor suggested the property is not worth that much, are you prepared to renegotiate the price of your property, so that you don’t lose your buyer? If you haven’t been able to achieve the price you agreed to pay your seller, can you renegotiate and, if not, do you still want to buy this property, and can you raise the funds elsewhere? If not, and you don’t want to lose your buyer, I would refer you to No1 again.
- Sometimes, surveys reveal issues with subsidence or structural defects and it is better to make the decision to walk away. In other circumstances, the survey might reveal issues which are negotiable. Perhaps the electrics need rewiring, a roof requires replacement or brickwork needs re-rendering or re-pointing. There are two ways to approach this; if your mortgage company is still willing to honour your loan, you could negotiate some money off the purchase price to rectify these matters when you move in or, if the mortgage company won’t honour the loan without issues being rectifying, you could proceed on the basis the seller attends to these matters prior to you purchasing the property.
How to avoid getting into a chain
If you are both selling and purchasing property, it is hard not to get into a chain. However, there are a few ways you can influence keeping the chain minimal:
- Sell to a first time or investment buyers, who has nothing to sell.
- Consider breaking the chain by renting. This can seem costly with too many upheavals; moving from your property, to a rental property or in with family, to another purchased property, but does avoid the stresses a chain can cause.
- Purchase a new-build property, being offered for sale by a company i.e. a building developer.
Back to Christmas is coming. If you are stuck in a chain going nowhere and you want to be in your new home for Christmas, I can sympathise. I once moved on 12th December, which was our cut-off point. I didn’t want moving house to ruin my children’s Christmas so we spoke to all parties in the chain and explained our wishes and why we wouldn’t move until January if exchange hadn’t happened by 10th December. And what do you know? It worked. We gave everyone two weeks’ notice and there were four parties in our chain. So, it’s not impossible, as I type this, for you to be in your new home for Christmas. But, equally, if it doesn’t happen before Christmas, don’t be disheartened; if you are intent on purchasing the property you’ve set your sights on, I am sure it will be worth the wait.
If you are currently looking to sell or buy in Gloucester, we would love to hear from you. Call us today on 01452 310999 or email us at firstname.lastname@example.org to book your free market valuation. With highly competitive fees, we are here to help you make your next move.
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