What is a property chain and who’s involved?
A property chain is created when a number of buyers and sellers are linked together because their property purchase or sale depends on another transaction. Each buyer and seller are a ‘link’ in the property chain, and chains are very common since most property purchases will be made by homeowners who are dependent upon the sale of their own house in order to make their purchase. Property chains can be long, and whilst it’s difficult to determine the average length of a property chain in the UK, chains have been known to reach lengths of more than 8 buyers and sellers.
Chains are composed of buyers and sellers, but those buyers and sellers are typically dependent on third parties (such as solicitors, surveyors and estate agents) to complete each part of the transaction. With so many parties involved it’s easy to see how chains can very quickly become complex, delayed or even broken!
How can property chains delay and even break?
Property chains only function smoothly when each party plays their part. There are several key steps that are involved in the majority of property chains:
- Obtaining a mortgage in principle
- Having an offer accepted
- Instructing a solicitor
- Getting a property survey
- Exchanging contracts
- Completing on the purchase or sale
With so many steps and parties involved in a property chain, a delay by any party at any stage in the process can delay a chain or even cause it to break entirely. Some of the typical reasons for delay are:
- Expiration of mortgage offers
- People changing their minds
- Delays in document completion
- Issues surfaced by property surveys
- Slow instruction of solicitors
- Lack of funding by any involved party
Chain breakage is incredibly common. In fact, data from Which suggests that around 1 in 3 property chains break. This can be incredibly stressful for homebuyers and wreak havoc on their onward plans.
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What does being ‘chain free’ mean?
Chain-free homebuying occurs when neither the buyer nor the seller is dependent on any other party completing a transaction. These purchases occur most commonly with first-time buyers, cash buyers, or people purchasing a second home. In short, being chain free means that both buyer and seller can complete the transaction without depending on any other ongoing deal.
There is a significant financial benefit to being a chain-free buyer. A recent poll by Clearscore indicated that 74% of all sellers would accept, or consider accepting, an offer 5% below the asking price if the buyer was in a chain-free position to proceed. Some sellers value the certainty of a chain-free buyer, and are prepared to sell at a discounted price for that certainty.
There are other benefits to being a chain-free buyer. It is a lower risk in the sense that there are no delays or failed sales to worry about, which in turn makes the whole experience much less stressful. The fact that sellers prefer to sell to chain-free buyers also improves your negotiating position, and puts you in a position to complete on your property much more quickly than you might have been able to otherwise. This is particularly useful on popular properties that go to a best and final offer.
How can I be a chain free buyer?
Being a chain-free buyer requires you to have the cash available to be able to purchase your desired property without depending on a sale of your existing property. The easiest way to do this with certainty is to sell your property to a reputable cash buying company such as SmoothSale. Our cash house buyers service is designed for vendors looking for a guaranteed sale of their property in as little as 7 days. Alternatively, we offer an ‘Investor Marketing’ route to market for vendors who want to sell their property to our network of trusted investors in under 30 days.
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What happens if a property chain breaks?
If a property chain breaks, it can lead to delays and added costs. Buyers and sellers may need to find temporary accommodations or reschedule their move-in dates.
Can I avoid property chains?
Avoiding property chains is challenging but not impossible. You can consider buying a property with no chain, such as a new build or a vacant property.
What can cause delays in property chains?
Delays can be caused by various factors, including issues with surveys, mortgage approvals, or legal complications.
Should I have a backup plan when in a property chain?
Yes, having a backup plan, such as temporary accommodation, can reduce the stress of unexpected delays.
Are property chains common in real estate transactions?
Property chains are relatively common, especially in areas with a competitive real estate market.
How can I speed up the process in a property chain?
You can speed up the process by staying organised, being proactive, and working with professionals who specialise in property chains.