One in five sellers has experienced a sale falling through, often because potential buyers change their mind at the last minute.
What’s the latest?
More than 300,000 property transactions collapse each year due to broken chains and buyers changing their mind, collectively costing sellers £400m.
One in five sellers has experienced a sale falling through, according to research carried out for HomeOwners Alliance.
Just over half incurred costs which averaged £2,727, while 12% were more than £5,000 out of pocket.
The group called for the conveyancing system to be changed to give more certainty to sellers that a sale would go through at the agreed price.
Why is this happening?
More than two-thirds of home sales that collapsed did so for buyer-related reasons, with 39% falling through because a buyer changed their mind or found another property, and 28% failing because the buyer’s finances were not in order.
Sales falling through higher up the chain accounted for a further 20% of transactions that did not complete.
Nearly one in 10 sellers with a failed sale said they were gazundered, a practice in which the buyer lowers their offer often shortly before contracts are exchanged, and 6% experienced buyers pulling out after a survey had been done.
Who does it affect?
Sellers can be left significantly out of pocket as a result of buyers pulling out of a sale.
One in four sellers said they had already spent money on legal or conveyancing fees, while 13% had paid for legal search costs and 15% had spent money on surveys for a property they intended to buy.
The research found that the uncertainty of the sales process was actually putting off some people from putting their home on the market, exacerbating the current property shortage.
One in three people said the risk of chains breaking down would prevent them from putting their home on the market, and 19% cited uncertainty over the final sale price as putting them of.
Paula Higgins, chief executive of HomeOwners Alliance, said: “We often hear about would-be buyers losing their dream homes as a result of sellers accepting higher offers, but less is said about sellers forking out thousands in wasted fees only for buyers to change their mind, leaving the seller back at square one.
“The home-selling system is so unreliable it’s deterring homeowners from selling – adding to the ongoing housing shortage crisis as a lack of suitable homes is one of the barriers to people moving up the property ladder.”
What’s the background?
The Government recently announced plans to reform the homebuying process to help reduce the number of sales that fall through.
It wants to introduce voluntary reservation agreements, which would be legally binding and see both buyers and sellers have to put down a non-refundable deposit.
The HomeOwners Alliance research found that 65% of people support the idea of reservation agreements.
A further 80% would like buyers to have to show proof of funds before being able to put in an offer to buy a property.
Top 3 takeaways
More than 300,000 property transactions collapse each year costing sellers £400m
One in five sellers has experienced a sale failing to go through
Just over half incurred costs which averaged £2,727, while 12% were more than £5,000 out of pocket
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- More help for mortgage prisoners stuck on high interest rates