Guide to Property Chain

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Guide to Property Chain

A broken chain is one of the phrases guaranteed to terrify anyone selling their home. But what is a broken chain? What is a chain in the first place? And how do you go about fixing a broken property chain?

What is a chain?

A property chain is a line of buyers and sellers who are all simultaneously involved in linked property transactions. When one transaction falls through – for instance, someone cannot get a mortgage, the entire chain breaks and all the transactions are held up or even fail entirely.

What is an example of a broken chain?

Imagine you are selling your home, and waiting for a buyer to complete the purchase. For some reason, the buyer pulls out, and the deal falls through. This may mean you have to pull out of the purchase of your new property, causing a similar problem for the other seller. As well as causing considerable stress and strain, property chains can cause financial headache.

Does this happen often?

Unfortunately, yes. Apparently, one out of every three property transactions in England and Wales collapses. This can come at the cost of the survey, the estate agent and legal fees incurred and all the time spent on the deal. All of these are non-refundable.

What else could break a chain?

If finance is not available, the chain will break… for instance if someone is refused a mortgage. Also, the buyer may just withdraw their offer. When contracts are exchanged the buyer is still under no legal obligation to purchase the home, and doesn’t have to pay for any costs. Furthermore, the results of the survey can turn a good deal sour if previously unknown problems with the house become apparent.

A cheeky tactic known as Gazundering is also becoming more common. This happens when the buyer puts in a lower offer at the last minute. This is not illegal but it is unethical. This is somewhat like gazumping, where a seller accepts a higher offer on a house at the last minute.

How should I avoid getting caught in a chain?

You could avoid chains from the start by finding out the status of the people you are dealing with. You should also make sure that you have all your finance in place. You should have your mortgage offer in place before you start making offers, but in reality this can be difficult. Some companies offer bridging loans to cover financial shortfalls, but this can be an expensive way of borrowing money.

You should also examine all paperwork closely. As a seller you should make your home as attractive as possible, and be aware of when to lower the asking price. Keeping communication between all parties lessens the chances of a chain collapsing.

What should I do if I get caught in a chain?

Some companies specialise in repairing broken property chains by co-ordinating reductions in price. However, for various reasons, this can prove an even more expensive way of keeping a chain moving than a bridging loan.

Please use our Mortgage Enquiry Form and one of our experts will contact you for further assistance.

Alternatively, you can give us a call on 0845 108 0505. I am worried that my chain may be about to break, what should I do?

Please use our Mortgage Enquiry Form and one of our experts will contact you for further assistance. Alternatively, you can give us a call on 0845 108 0505.

I am worried that someone above me in my chain is about to withdraw his or her offer, what should I do?

Please use our Mortgage Enquiry Form and one of our experts will contact you for further assistance. Alternatively, you can give us a call on 0845 108 0505.

 

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