What You Can Do if The Housing Chain Fails
Only as good as the weakest link
If you’re part of a long chain of buyers and sellers, there is a strong chance that the chain will fall through.
The problem? You'll probably have to start all again.
The longer the chain, the more people involved, and therefore the bigger the risk.
However, there are some things you can do to make sure that you have options when a chain breaks. Preparing for such an event is obviously worthwhile, as is knowing exactly what you have to do to survive the trauma.
Why do chains break?
A large number of chains break, and there are a variety of reasons for this. What’s interesting is the fact that a large number of chains withstand the pressure. Around one in three chains break, so there is always the possibility your’s won’t break.
There is a definite possibility that the worst will happen though, and if you have a chain ahead of you, don’t make the mistake of thinking a break is inevitable.
Some reasons why chains break:
- A house buyer may find that they meet an unforeseen difficulty in arranging finance. It happens, and is often unavoidable
- Someone in the chain can simply feel that they don’t want to move. They may become nervous about the prospect of changing their living space, or the money involved
- Gazumping can occur, or gazundering. Gazumping happens when the seller decides to sell to someone else who is willing to pay a higher price, and gazundering happens when a buyer in the chain suddenly reduces their offer right at the very last minute in the sale
- A failed survey. Surveys are important and necessary parts of the house selling process and if a survey finds something worrying that needs to be fixed with a financial outlay, a buyer may lose interest
- Life events can easily cause a chain to break. For example, a divorce could happen to someone, or a bereavement, meaning that a sale won’t happen, or a purchase for that matter
A word on gazumping
Gazumping is when a seller decides to sell to someone else for a higher price. It happens more than you would hope it would, and it can feel particularly awful, especially if you've fallen in love with your potential new home.
It’s legal too. This doesn't mean it's liked by anyone, but it does mean that you aren’t going to get it through the courts. What’s worse, any sale is ‘not final’ until exchange of contracts occurs. This means that there could be potentially a period of weeks before houses change hands.
This also means that the long period of waiting could bring out more buyers who are prepared to pay more for the house you want. And if this happens, the whole chain falls apart.
It could also be the case that the seller rejects your offer for other reasons, including that you don't have finance in place.
The best thing to do here is to act quickly on things like surveys, and making sure your mortgage is there and ready to move on. Get in touch with a surveyor as soon as possible after starting your house hunt, and they will be able to get the process moving quickly. Essentially, you’re doing everything you can to avoid delays.
There are other ways to keep the damage to a minimum. One is to buy insurance that pays you a set sum if gazumping occurs. This doesn’t stop the chain from breaking of course, but it does take some of the financial outlay back.
If it's going to break, it'll break
Chains simply break, and the longer they are the more stressful and unpredictable this can be. However, if you’re able to prepare yourself for the eventuality, you can reduce a lot of that stress quite easily.
If you’re yet to find a mortgage and want to purchase, be as clear and honest as you possibly can with the lender. It’s a very good idea to ensure you have a mortgage in principle before you go looking for a property. There are a number of reasons for this, but two are very important. For one, you need to be certain that your mortgage offer is solid and won’t hold up the chain.
You also need to know exactly how much you can spend. This again will stop the risk of a chain breaking from your position.
What could happen if the chain breaks
First of all, you’re looking at a situation that is nothing less than frustrating and highly stressful. You could have spent months as part of the chain, and all that time has now been wasted. This is not pleasant, and can cause huge stress.
Because you weren’t the ‘reason’ for the chain breaking, the frustration and helplessness can be significant.
The whole process was only under your control in small parts, and then to find that someone else has caused you months of waiting then to cause collapse. That’s not an easy situation.
You may also have considerable financial problems to manage, simply because the chain has broken. You may have paid fees, such as a booking fee or mortgage arrangement fee, that are non-refundable. A survey could have taken place, and the fees to a solicitor can also be thrown into that same mix.
How to prepare for a chain breaking
Remember that you cannot stop a chain from breaking! You can only prepare for it so you have the best possible scenario.
It’s very easy, as a chain progresses, to lose track of what is going on. Communicating with the agency or body that is managing your sale is absolutely vital. If this doesn’t happen, you could find that a problem occurs that directly causes the chain to break.
So ensuring you talk to the people most closely involved in your sale will help you to keep your part of the chain safe and secure.
Part of this conversation involves you giving a clear picture of the property you are trying to sell. If there are issues in the property that you know will come up in a survey, then be clear with this from the outset. The very last thing you want to happen is for a survey to take place, a problem to be ‘discovered’ and then the chain breaking down.
Full compliance with the process is also a big issue. The more you stay organised and on top of the whole thing (as much as you can be involved), the more things will move smoothly. This combination of honesty and clarity, as well as an organised approach, can save time in the future.
Check in on reps
At the very least, you should be checking in with your representatives on a regular basis, so you know if there's something you should be doing. Some solicitors and conveyancers, for example, are very laid back about the work they do. They may not even consider contacting you on certain matters.
Steps you can take if it falls through
The first piece of advice we can give here is to not panic.
If you panic, you’re looking at a situation where objectivity disappears. While a chain break isn’t pleasant for anyone, it does happen. And there are things you can do.
But if you panic you’re just wasting time.
- Contact estate agents and look online for another property, this is vital. You may not have the one you wanted initially, but life does go on. Start the search again and you’ll soon feel better
- Tell everyone who needs to know. If you’re selling and the person you were selling to has dropped out of the process, tell everyone who needs to know. This means the rest of the chain and the people, handling the sale
- If you’re selling it may be worth contacting the buyer who dropped out. If it was an issue tied to the asking price, there may be room to move. Other people in the chain will be as frustrated as you, and may consider lowering prices along the chain
- There are plenty of other ways to sell your house and some of them are very quick. It’s worth looking at all your options, so you know that you’ve done everything you can
- Only take it off once everything has been signed. One thing to bear in mind in the current property market is that the number of buyers is increasing. A common mistake is when people take their property off the market because they’ve had an offer, or even a very positive viewing
One thing to bear in mind if you have time on your side is that you can actively search for properties to buy that do not form a link in a chain.
This requires a little bit of work but again, talking to the estate agents can help in this area.
If there's a property being sold where the owner has recently passed away, or the owners have other property and want to sell the one you’re looking at, you can effectively end the chain right there. It’s worth thinking about, because just a little communication between yourself and their parties involved can give you a much stronger position.
It’s also worth working with the vendor (either through the estate agent or privately) to agree a date for them to move out. If you’re able to do this, you can move in even if the property chain falls apart, and the vendor can live in rented accommodation. It’s not always possible to arrange this, but if you can it will get you into a property quicker.
Keep the process moving
Other aspects of the process can be impacted upon by you, so there’s every chance you can reduce all possibilities that a chain could break. Make the following part of your approach and you'll find that things are a little more secure.
Become a stickler for details:
- Shortlist estate agents and solicitors
- Buy a box or storage and save correspondence
- Make notes of outcomes of phone conversations
- Sign and return any paperwork
However you do it, keeping this record of what happened can be invaluable if a chain starts to weaken. You’ll be able to answer questions from vendor and agency quickly and professionally, which should keep things moving.
Also, make sure that you sign and return any paperwork. It’s worth remembering that all paperwork, due to the nature of the process, is time-sensitive. Nothing can be delayed to the next day. So ensure you are returning all documents, signed, by (if not before) deadline. It’s also important that, if necessary, you deliver vital documents by hand.
Perhaps one of the most important things that you can do is find a good team to help. If you’re able to shortlist and choose solicitors and estate agents for example, you’ve already set yourself up for a more positive experience.
Being ready for the eventuality of a chain breaking is perhaps your best defence. Keep all the paperwork, know the buyers, and communicate with whoever’s helping you sell or buy. It’s vital that you keep momentum going and reduce the risks of a chain breaking. And remember, if it’s going to break, it will most likely be for reasons you can’t control.