My housing chain has collapsed - What do I do now?
One third of house sales fall through so broken chains are all too common. Here are our tips on what to do if your chain collapses.
What is a 'housing chain'?
Unless it’s your first step on the property ladder, you’re likely to be selling your current property while also searching for somewhere new. If the person you’re buying from is in a similar position, this creates what’s known as a housing chain – where the purchase of one house is dependent on the success of every other link in chain.
Why do chains collapse?
There are a number of reasons why housing chains collapse. You may already be familiar with the terms gazumping and gazundering. Gazumping is when a seller accepts a higher offer from a second buyer having previously accepted an offer from someone else . Gazundering is when a buyer reduces their offer at the last minute .
A sale can also fall through after costly defects are discovered in the property survey. Typically, a buyer will want to reduce their offer in line with the estimated cost of remedial works (repairs) identified in the survey. If the seller refuse, or a compromise cannot be found, the sale will probably fall through.
Chains also collapse when sellers can’t find another property and the buyer loses patience, or perhaps even their respective buyer. Difficulties in securing a mortgage due to a change in personal circumstances or a down valuation in the mortgage survey are also common reasons.
What are the first things to do if my chain collapses?
Once a housing chain has collapsed it can be very difficult to rescue the sale – especially if it is not your buyer who has pulled out. That doesn’t mean you shouldn’t try.
When a buyer has developed cold feet, it’s worth reaching out, either directly or via the agent, to discover why. If it is a financial issue, one possibility would be to press everyone in the chain to reduce their sales price.
If the other parties in the chain are uncooperative, you can still decide to take the hit and lower your asking price. This may be uncomfortable but when weighed up against the alternative of starting again, it may be preferable.
If you’re a buyer who is struggling to raise a large enough mortgage, consider renegotiating with your seller for a lower sales price. Renegotiating a lower price at the eleventh hour can fell uncomfortable but, depending on the reason and amount in question, may well be acceptable.
Securing a short term bridging loan is an option if you lose your buyer and still want to go ahead with your purchase.
These short-term loans are aimed at property buyers and are designed to ‘bridge the gap’ between buying a new house and selling your current property. But be warned, bridging loans come with high interest rates. Uptake of bridging loans in the UK is consequently low
If a seller withdraws their property from the market, or accepts an alternative offer, you are still in a strong position to find an another property as you have a buyer, and chain, in place. You will probably have to move very quickly though.
Speak to agents about sellers who are in a hurry – such sellers may well be prepared to substantially reduce their asking price given the strength of your position.
Communication is the key
Wherever you are in a chain, and whatever stage of the conveyancing process you are at, communication is a critical weapon in your arsenal.
By prioritising prompt and clear communication, you can set the tone for the whole transaction.
Ensuring that both you and your solicitor communicate clearly with all parties, and that you tackle any potential issues quickly and proactively, you can make the difference between a successful sale and a chain collapsing.
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