You've found your perfect home. But what if there's a break in your property chain and everything stalls? Here's how to keep your purchase on track.
A property chain is when buyers and sellers are linked together because their sale or purchase is dependent on another transaction.
And even as a first-time buyer with nothing to sell, property chains are a major consideration.
While there are no buyers and sellers below you, the party you are buying from may be affected by the sellers of the house they are buying and so on. This is known as an ‘onward chain.’
Any property chain can only progress at the pace of the slowest link. And if one transaction falls through, the chain will break – and the effects of which can be felt by everyone, right down to the first-time buyer on the ground.
With many people planning to buy before the stamp duty holiday ends on 31 March 2021, there's an added incentive to keep transactions on track.
So it's worth getting your head around property chains and what can get them rattling.
How can you avoid a property chain?
If you're already a homeowner, think about selling your existing home and renting so that you're chain-free at the point of taking your next step on the housing ladder.
And if possible, find a seller who is not looking to buy a property at the same time as selling theirs to you.
Why might a property chain collapse?
There are many reasons why a sale may fall through somewhere along a property chain.
A buyer down the line can’t get a mortgage for example, or just changes their mind and takes their property off the market having agreed a sale.
Other reasons could include one of the parties being made redundant, or a buyer pulling out after a survey throws up costly repairs that need doing.
Gazumping and gazundering also play their part. Gazumping is where a seller accepts an offer from one buyer but then takes a higher offer from someone else at the last minute, thereby scuppering the sale.
Gazundering is where a buyer reduces their offer at their last minute, often just before exchange, which may result in the seller being unable to accept and the chain breaking.
Check out our jargon-buster for more details.
It is possible to buy specific home buyer's protection insurance, which will pay out if your purchase falls through. Make sure you read the terms, conditions and exclusions thoroughly.
Collapsed property chains can prove costly, as you may have shelled out already for a survey, searches or even legal fees.
How can you keep your property chain intact?
If you do find yourself in a property chain, here are some steps you can take to minimise the chances of it collapsing.
1. Keep communicating
Communication is key. Keep in touch with your solicitor, estate agent and mortgage broker. Make regular progress checks and respond promptly with all information you’re required to provide.
By building relationships, you can increase your chance of keeping a chain together - and it becomes harder to let somebody down once you’ve built up a rapport.
2. Be organised
Get your finances in place and line up experienced professionals, such as a conveyancer and mortgage broker, to advise you. And keep a record of correspondence.
If you’re organised, the process should be quicker and there is less chance of things going wrong.
3. Get involved
If you discover that someone in the chain has pulled out because of money issues, you could try getting everyone in the chain to agree to a lower sale price. Persuading all parties it is of mutual benefit will be no mean feat, but there are occasions where this has worked.
4. Ask your seller to rent
If the seller of the home you want has lost the home they want to buy and is telling you they're stuck, ask them if they would consider moving out anyway to a rented home or with friends and family. You could even offer to give them a few months' rent in cash as a sweetener.
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