Property chains are a common part of selling your home. But did you know that 1 in 3 property chains collapses? When that happens, the ensuing havoc can have a significant impact on your future plans. However, there are some things that you can do if a property chain collapses.
What Happens if a Property Chain Collapses?
It may be that you’ve been in the property chain for months, and then it collapses. That’s frustrating and stressful because all the time you’ve been in the chain has been wasted. What’s worse is that you were not the cause of the collapse, and you feel entirely helpless in this situation.
In addition, you could find yourself in deep financial trouble because the property chain collapsed. You may have paid fees that are non-refundable. For instance, perhaps a survey was done, and the fees for the solicitor need to be added in. Non-refundable fees may also include a booking fee, mortgage arrangement fee, and more.
There’s no question that there’s a lot to deal with if a property chain collapses. But what causes the chain to break?
What Causes Property Chains to Collapse?
There are a number of reasons that cause a property chain collapse. And if you’re selling property, there’s a good chance you’ll find yourself in a property chain. All it takes is one deal to fall through and the entire property chain falls apart.
Here are some of the most common reasons a property chain can collapse:
- A house buyer meets an unforeseen difficulty in arranging financing
- Someone in the chain feels like they don’t really want to move.
- Gazumping may happen
- A failed survey may also cause a property deal to fail
- Life events may cause a chain to break (such as a divorce, death, and more)
What Can You Do if a Property Chain Breaks?
Here are some things you can do in case a property chain collapses:
Option 1. Contact Your Estate Agent ASAP
When a seller pulls out, they may do so because they were offered a higher price from another buyer, they have problems with their chain, or they may have decided not to sell. This is the time to call your estate agent right away. They may be able to find out about the new asking price and make a higher offer for you to save the sale; however, it’s important that you can afford the higher price.
If the buyer pulls out before the contracts are exchanged, this is legal. If it occurs after the exchange, you could consider taking the buyer to court. If you win compensation, this could be used to buy a new home. Your estate agent can also learn about other reasons the buyer may have pulled out. In that case, they may be able to help you find an alternative solution.
What happens if the buyer pulls out because they can’t afford the house? In that case, you may want to consider reducing the asking price or opening a negotiation if you’d really like to sell. If the buyer wants the house, they won’t want to lose it, especially if they’re in another chain. So, it may be possible to come up with a compromise that works for both sides.
You may also choose to put the house back on the market. If the home you want to buy falls through, there may be other similar homes available nearby. So, it’s helpful to ask your estate agent if they know of any properties that are about to be advertised.
Option 2. Move into Rented Accommodation
A seller pulling out of a property deal can cause a lot of feelings, such as irritation and frustration. It may also feel as if all hope is lost. However, it may be the best thing that could have happened. If your home has been sold and the house you wanted to buy is no longer on the market, why not consider moving into rented accommodation? You may also want to consider moving in with friends or family. While it doesn’t feel like a positive outcome, it may be the best thing that’s happened.
Why could this be a positive development? For one thing, you’ll eventually find another house you’d like to buy. In that case, the seller may be happy you’re not involved in a property chain—your home has already sold. That means you’re a choice buyer to the homeowner, and they may be more willing to make a deal with you. In some cases, the homeowner may be willing to come down about 1.3% or more the sale price just because you’re not stuck in a property chain.
Option 3: Sell to a House Buying Company
If you’ve bought your new house, but the buyer of your old house pulls out, you may want to consider selling your previous home to a house-buying company.
These companies make a cash offer on your home and get the entire sales process done much faster. They allow you to sell your home within three days. Rather than putting the house back on the market, the house-buying company is cheaper, faster, and less stressful. What’s more, you end up with money in your account and a new home at the same time.
Option 4: Consider Taking Out a Bridge Loan
You may want to consider taking out a bridge loan so you can afford both your old and new homes. Bridge loans are made to “bridge the gap” between selling your old home and buying a new one. This way, you are still able to buy the new home – you won’t lose it.
However, bridge loans can be expensive. So, you may want to consider other options before taking out a bridge loan.
Option 5: Recovering Costs
When a seller changes their mind about their offer, it’s possible they may have received a higher offer than yours (that’s called gazumping). In that case, you could recover your costs through fee insurance or Home buyer’s protection insurance.
Home buyer’s protection insurance helps you recover money spent on conveyancing, home surveys, and mortgage lender fees. That’s a good thing, as these fees can add up quickly.
Summing It Up
When a property chain collapses, it can feel like the end of the world. But it’s essential to remember that you still have options that may put you in an even better position overall.
If you’re looking for a truly quick sale of your property then consider a cash house buyer like SmoothSale. We buy any house in any condition, and we can complete a purchase within 7 days. The best part? Our service is completely free, we even cover your legal expenses. Why not give us a call today on 0800 368 8952 and find out more?
Can I prevent a property chain collapse?
While you can’t control all factors, maintaining open communication with all parties involved and promptly addressing any issues can reduce the risk of a collapse.
How common are property chain collapses?
Property chain collapses are relatively common, especially in fluctuating markets or uncertain economic conditions.
What happens to my mortgage approval if the chain collapses?
If the chain collapses, your mortgage approval may expire. You’ll need to reapply, and changes in your financial situation could impact the outcome.
Is gazumping illegal?
No, gazumping is not illegal in the UK. However, it’s considered unethical and can damage trust between parties.
How can I protect myself from gazundering?
Setting clear terms and deadlines in the initial agreement can help minimise the risk of gazundering.
What professionals can assist me during a chain collapse?
Real estate agents, solicitors, and financial advisors can offer guidance and support in navigating the complexities of a collapsed property chain.