When entering the housing market, buying a house, presents its own set of challenges. This article sheds light on why house sales sometimes don't conclude as planned. From sudden changes in buyer's decisions to unexpected issues during property evaluations, we explore the factors that can derail you. Keep reading to learn how to anticipate and overcome hurdles, ensuring your journey of selling is as smooth as possible.
Reasons why house sales fall through and what to do
Buyer changing their mind
Buyers, enthused by a different property, which might have just come up on the market, could have a change of heart about a previous decision.
Other causes might have something to do with their financial situation, or merely getting cold feet about the whole process.
How to minimise this risk
Foster open communication with your potential buyer, addressing any concerns immediately.
Work with estate agents that offer thorough buyer vetting.
Set clear timelines for moving house to keep momentum and minimise doubts.
Gazumping
Gazumping occurs when a seller accepts a higher offer from a new buyer, even after verbally agreeing to another deal. Although controversial, it remains legal in England and Wales.
Steps to safeguard against gazumping
Request the property be removed from the market upon your offer's acceptance.
Speed up the sale process by having your mortgage approved in advance.
Consider drafting a 'lock-out' agreement, securing the seller's commitment for a period.
Also learn how to avoid being gazumped.
Issues with mortgage applications
Securing a mortgage agreement can be a lengthy process. Failed mortgage applications arise from major financial changes, inaccuracies in bank statements, or down valuations by the mortgage lender.
Tips to ensure a smooth mortgage process
Vet the buyer properly, to ensure they have provided accurate and comprehensive financial information.
Talk to the buyer's agent or ask your agent to ensure the buyer has the required proof of funds.
Conveyancing delays
The conveyancing process involves local authority searches, land registry checks, and other legalities. Delays can result in a buyer or seller reconsidering.
How to accelerate the conveyancing process
Choose an experienced conveyancer familiar with the local area.
Respond promptly to any requests for information.
Stay informed and anticipate potential hiccups.
Negative property surveys
A property survey can unveil structural issues, dampness, or other unexpected problems. Poor survey results can deter potential buyers from proceeding.
How to address and prevent poor survey results
Undertake a pre-sale survey on your own home to pre-empt any issues.
Address and fix notable concerns before listing.
The TA6 form, helps offer full transparency to prospective buyers about any known property issues.
The housing chain conundrum
The property chain involves interconnected house sales. A chain break occurs when one sale falls through, potentially impacting multiple transactions.
Strategies to maintain a stable property chain
Opt for buyers who are chain-free, enhancing the sale's stability.
Stay updated on every party's progress in the chain.
Have a backup plan, such as a no obligation cash offer from a chain free buyer.
Gazundering- the reverse of gazumping
Gazundering is when a buyer lowers their offer just before contracts are exchanged. It places the seller in a tricky situation, especially if they're keen on their onward purchase.
Precautions to take against gazundering
Set a firm and realistic asking price from the outset.
Keep abreast of current property valuations in your area.
Establish good rapport with your buyer, emphasising commitment from both sides.
Protecting your finances during a house sale
Addressing financial concerns during a house sale prepares you for unforeseen challenges.
Will I incur costs if my house sale doesn't succeed?
Every sale journey comes with associated expenses. Should your property sale falter, you'll still likely be on the hook for certain fees.
While solicitors typically operate on a 'no sale, no fee' basis in the UK, some exceptions might apply. Before engaging a solicitor, always scrutinise their terms.
Estate agent fees, on the other hand, tend to be contingent on a successful sale.
Still, there are fixed fee arrangements to be wary of. Keep in mind that if you've had specialised property surveys or valuations at a buyer's request, you might not recuperate those costs if the sale plummets.
What to know about mortgage offers when house sales fall
As sales proceed, mortgage agreements loom large for both sellers and buyers.
Mortgage offers are generally valid for a set duration, often up to six months. If your house sale takes longer, the buyer's mortgage offer might lapse. Delays could arise due to conveyancing hold-ups or longer chains.
If a sale doesn't culminate before the mortgage offer expires, buyers may no longer borrow the previously approved amount, especially if their financial circumstances have shifted.
It's in your interest as a seller to expedite the sale process and maintain open communication with buyers about their mortgage timelines.
Remember, even if the buyer's mortgage offer is secure, there's no guarantee until exchanged contracts render the deal legally binding.
Be on the lookout for signals of a potential down valuation. If the property gets a down valuation post the buyer's mortgage application, the bank may only sanction a reduced loan amount, causing potential hiccups.
While a buyer may renegotiate the deal based on this new valuation, they also have the option to withdraw altogether.
As a seller, knowing the true market value of your property and being open to negotiation can safeguard against such scenarios.
To secure the best deal, sellers often wait for multiple offers. However, until contracts are exchanged, there's no assurance of the sale culminating.
The more you know about the buyer's financial health and readiness, the more informed decisions you can make, helping to stave off potential sale fall throughs.
Legal concerns when house sale falls
Do solicitors still charge if the sale breaks?
Solicitors often bill for their time and services rendered even if a house sale doesn't finalise. Their fees cover the various tasks they've undertaken during the conveyancing process.
Before engaging with a solicitor, it's wise to enquire about their billing practices, particularly concerning failed property sales.
Some may offer a no-sale-no-fee agreement, providing a degree of financial comfort. However, this arrangement might result in slightly higher charges if the sale goes through, compensating for the risk the solicitor assumes.
Is there legal recourse if a sale doesn't complete?
In the UK, a house sale isn't legally binding until contracts are exchanged. If a buyer or seller pulls out before this point, legal grounds for action are scarce. However, after contract exchange, if one party retracts without stipulated grounds, they're in breach of contract. The party left in the lurch may:
Keep the buyer's deposit if the buyer retreats.
Pursue a claim for any costs endured due to the sales fall, such as accommodation fees if they've moved out.
Before going into any property transaction, be clear about your legal obligations. A robust contract, transparent communication with all parties, and an understanding of when a house sale becomes legally binding can prevent expensive misunderstandings.
The most common reason for sales falling through
House sales can often encounter hurdles after property inspections. Specifically, reports suggest that a noticeable percentage of house sales fall through post-inspection due to previously undisclosed defects or issues that alarm buyers.
With statistics as our guide, one can discern a trend. About 25% of property sales fell through before completion in the second quarter of 2023.
It's been observed that of all the failed property sales, a substantial chunk can be attributed to negative outcomes from inspections.
By staying well-informed about the property's condition and ensuring regular maintenance, sellers can mitigate these risks.
Options to consider if sales continue to break
If you find your house sale falling repeatedly, don't despair. Multiple options stand ready to assist.
Firstly, consider revisiting the asking price. A mismatch between the house's value and its listed price can deter potential buyers. Seeking advice from an estate agent or valuer ensures your price aligns with market expectations.
Secondly, consider enhancing your home's visual appeal. Small refurbishments or cosmetic improvements can make a significant difference.
Lastly, offering flexibility with sale terms, like move-in dates or fixtures included, can sweeten the deal for buyers.
Outcomes if your next property purchase is jeopardised
When a house sale falls through, the ripple effect might jeopardise your next property purchase.
If you find yourself in this predicament, communication is paramount. Inform the seller of your prospective home about the delay.
While there's no guarantee they'll wait, transparency builds trust.
Simultaneously, consider arranging a bridging loan. This short-term finance solution can fill the gap between your house sale and your next purchase.
However, it's important to weigh the costs and consult a financial advisor before pursuing this route.