Property Chains, Frustrating? Slow? Never Ending?
In this guide we will take you through what a property chain is and what to do if you’re stuck in one.
“The buyer’s surveyor has found a structural issue with their property and it could take months to resolve. We can’t move you into your new home until it’s resolved” – Estate Agent.
Have you heard something like that before from your Estate Agent or Solicitor? There are a number of reasons why property chains get held up but first, what is a property chain?
What is a Property Chain?
Property chains are formed when several property transactions are in place and need to occur at the same time to complete. These occur when a buyer offers on a property subject to the sale of their own property OR a vendor accepts an offer on their property subject to them finding a new home. As you can imagine, in certain markets, areas and demographics this cycle can snowball resulting in several properties being “SOLD” subject to the sale of another property.
What Completes a Property Chain?
There are several circumstances that allow a property chain to complete and finalise, they are:
- A Cash Buyer – Through the proceeds of another unrelated sale, savings or inheritance, a cash buyer can be the final link to a property chain. This is because their offer is not subject to another transaction.
- No Upwards Chain – Typically probate or inherited properties have no upward chain. This is due to the property being unoccupied and occupants not needing to be relocated. Buying a new build also creates the same opportunity as the developer does not create an upwards chain.
- First Time Buyers – FTBs can be the final link to complete a chain. With no property to sell as they move onto the property ladder, they can be the saviour the chain was waiting for.
What Breaks a Property Chain?
The moment that all occupants within the chain have feared, the chain breaking. Just the change of mind for one of the buyers or vendors can cause devastation for the rest within the transaction. So what could these reasons be?
- Fed Up! – It is all too common for vendors and buyers to become frustrated and say “enough is enough” and cancel the sale. This is often due to poor communication between estate agents and solicitors. Prevent this by asking for regular updates and if possible, remain in contact with the vendor/buyer. Make sure that you instruct a recommended, well organised solicitor that will not hold up the process.
- Uncovered Issue – When mortgage lenders are involved, almost all properties due to be bought will require a survey. The depth of these surveys can vary and some buyers will pay extra for a more detailed, structural survey. Once an issue has been highlighted it is then the buyers decision whether to continue with the purchase. Common findings can be subsidence (when the foundations drop), damp, wood-rot and more localised issues such as red ash and mine shafts.
- A Mortgage Offer Rejected – Upon a valuation of the property, mortgage lenders may retract their offer. Should their valuation of the property be lower than initially thought, the loan amount compared to the property value may be too risky for their criteria. This may result in them asking for a larger deposit.
- Change of Mind, Change of Circumstance – Unfortunately the nature of the industry can mean that just a change of mind can result in the collapse of a property chain. Should one of the buyers or sellers get cold feet or see a property they prefer they can ultimately withdraw their offer, usually with little consequence. Similarly a change of circumstances prior to exchange of contracts can also lead to collapse without any repercussion.
How Can I Stop A Chain Collapsing? What Are My Options?
Ultimately you cannot take full control of a property chain and prevent it from collapsing, however there are a few tips you can take note of and a few actions should things get desperate.
- Instruct The Right Team – As previously mentioned, it is paramount that you instruct the right Estate Agents (when selling) and legal team. Remain active in asking for updates and pushing them forward, respond to any queries promptly.
- Make Contact with Buyer or Seller – It may at first seem daunting and the communication barrier that the agent provides can be good for the initial negotiation. However if you know you are entering into a chain, there are likely to be moments of frustration. A quick message or chat with the other parties can greatly improve the cohesion and will often help find if any of the legal teams are dragging their feet.
- Introduce a Property Investor – It may seem like an impossible task but it can sometimes be just the ticket to get a sale over the line. If a property within the chain may present itself as an investment opportunity, attracting a cash buyer may be more likely. Just by tweaking the advert or altering the asking price might be all it takes for the property to be seen by a different crowd of prospective buyers.
- Auctions – Similar to the above point, auctioning a property often provides a more certain time frame for when the sale can be complete. This does require a certain type of property suitable to be auctioned and the right motivation for the vendor.
- Cash Buyers – Companies such as Money For Your House exist solely to assist those stuck in a chain or at loggerheads with their property sale. Money For Your House would offer within 24 hours of viewing the property and provide an option to complete in as little as 10 days. This might be the best option in a chain in tensions and frustrations are running high and no one within the chain wants to miss out on their new home.
I hope this guide to property chains was helpful. Should you find yourself stuck in a property chain or at a standstill with your property sale then please contact Money For Your House on the number at the top of this page or on our contact page.
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