What Happens If Your Property Chain Collapses? 19 October 2020
Moving house is often fraught with excitement and stress, especially if you're buying a property and selling a property at the same time - so what happens if the property chain you are in collapses?
By buying and selling together, you are in a chain and it is likely there are many others in this chain. Every transaction is reliant on the next one in order for the chain to stay intact and, unfortunately, it only takes one transaction to fall through for the whole chain to break.
Fortunately, there are things you can do should your property chain collapse as well as steps you can take to reduce the risk of your property chain collapsing.
Why Do Property Chains Collapse?
A property chain can collapse for a number of different reasons, although some of the most common causes include:
- The buyer or seller's personal situation changes
- A buyer decides not to buy
- A building survey throws up issues
- Deadlines for paperwork are missed
- Finances fall through
- A buyer gazunders (reduces their offer)
- An external buyer gazumps (makes a higher offer)
What Can You Do If Your Property Chain Collapses?
If your property chain breaks, it doesn't necessarily mean all is lost - sometimes there are things you can do to rectify the situation.
If your situation has changed because your buyer has pulled out - for example, you may be unable to move into your new property - the best thing you can do is keep talking. Be sure to keep your conveyancing solicitor and everyone else in the chain updated and informed to help ensure you can find another buyer as quickly as possible.
There are so-called quick sale companies that buy your home fast for a reduced price, which may be one way of salvaging your property chain. However, think carefully before taking this step as quick sale firms offer a significantly lower price than market value and you may be better off in the long term to wait for longer.
You can get a bridging loan by borrowing against your current property and this may enable you to complete the purchase of your new home - but it's a costly option as these loans come with high interest rates, and the additional 3% Stamp Duty Land Tax may be payable.
Depending on the reason for your transaction failing, you may be able to negotiate with everyone else in the chain to find a way to make the chain still work. For example, if your buyer pulled out because of money concerns, you could suggest everyone in the chain take a lower sale price to keep the chain intact.
Can You Reduce The Risk Of Your Property Chain Collapsing?
While no property chain is totally risk-free, there are some steps you can take to minimise your risk.
Sell Chain Free
If you receive a number of offers, you could select the buyer who is chain-free such as a first-time buyer. This would mean you'd only have the chain on your buying side, with fewer transactions involved.
Instead of buying at the same time as selling, you could rent which would mean you had no chain above you - and no chain at all if you find a chain-free buyer for your home. You'd also be an appealing buyer when you do decide to buy as you would be chain-free.
There is homebuyer's protection insurance that covers you for the loss of fees involved in the buying process, should the transaction fall through. This wouldn't reduce your risk of the chain collapsing but it would minimise your exposure if it happens.
Helping You With Your Property Chain
Our conveyancing solicitors have the experience and thorough understanding of the property market to advise and guide you through the whole process, helping to keep delays and issues to a minimum.
It is only when the contracts are exchanged that the transactions are legally binding for both parties, which is why property chains can fall through. However, using a specialist conveyancing solicitor will improve the chances of your house sale and house buy going ahead smoothly.
Your conveyancing solicitor will advise you at every step of the way on the information your buyer's solicitor needs in order to progress, and you will be kept up-to-date to help ensure any potential problems can be rectified early to lessen delays. Any queries or concerns you have during the process will de dealt with swiftly and effectively too - and should the worst happen and your property chain collapses, we will be here to support you in every way we can.
To speak to one of our specialist solicitors about selling and buying your home, please contact us at our Chorlton office on 0161 860 7123 or at our Failsworth office on 0161 681 4005 or email firstname.lastname@example.org or email@example.com