Broken Property Chain Options
Weighing up your options when the chain breaks in a property sale
Did you know that one in four property sales fell through in 2019 due to a broken chain? Buying a property can be very stressful and there is nothing more frustrating than a sale falling through at the last minute when there are problems in the chain.
Chances are that the seller of your new property is planning to buy another home to move into and unless you are a first-time buyer, you are also selling your existing home. This is known as the chain and all it takes is one broken link for the whole thing to come crashing down. With only 10 per cent of property sales chain-free, this is a problem that many people face. Not only can these issues be frustrating but they can also be very costly, with estate agents, lawyers, and surveyors fees all tied up in the sale.
Why do property chains break?
The process of buying and selling homes can be complex. Chains break for many reasons including one party failing to secure a mortgage, unexpected issues with surveys, legal paperwork taking too long, a change in personal circumstances, or a house seller being unable to find the right property for them. Being gazumped (where a seller accepts a higher offer from another buyer) or gazundered (where a buyer reduces their offer at the last minute) are just a couple more examples of what can do wrong.
What can you do if your property chain breaks?
If you are in this situation it might feel like the end of the world, but there are plenty of options available. Here are some of them:
Improve communication: Remain in constant communication with the other people in your chain, so you can effectively manage relationships. Ask your estate agent to check in with the other parties regularly. If there are any issues, the estate agent can help to navigate these, so your chain remains intact. For example, if your seller pulls out due to reasons such as improvements that need to be made, you can either make these yourself or accept a new offer based on the work that needs to be completed.
Take out a bridging loan: A bridging loan will allow you to take out a loan against your current property so you can afford both your existing home and your new property. This is a good way to ensure that you do not miss out on the house of your dreams. Talk to our team about your options and what you could borrow.
Move into rented accommodation: If your seller pulls out of the chain, consider moving into rental accommodation, so you can still sell your home. This will then allow you time to find a new property. Alternatively, you could sell your home and move in with friends or family for a few months. When you find another house, you will no longer be in a chain and this will potentially make your offer more appealing than other buyers in the same circumstances.
Sell your home to a ‘quick sake’ house buying company: There are companies that buy homes quickly in a short timeframe but at a reduced rate. Tread carefully and do your research properly because you could lose out financially.
Use technology: There are tools designed around keeping house chains together and ensuring quicker completions, such as View My Chain. This tracks the conveyancing process. Another company called Gazeal locks buyers and sellers into a deal to avoid a break in the chain.
Recover costs: If a seller changes their mind or you are gazumped, it would be possible to recover any fees through fee insurance or Home Buyer’s Protection Insurance. This will cover you for any loss of costs you may have made in good faith to buy in the event of a property purchase falling through.
For more details about bridging loans and how they could help in the event of a broken property chain, get in touch with our team today.