First-time buyers guide: the property chain

If you’re buying a property for the first-time you need to know about the property chain.

In theory, it should be a simple process. But nothing in life is a certainty. You’d think that once you have viewed your property, had your offer accepted and the conveyancing has been done you can soon move in.

But there’s more to it than that. If the people you’re buying from are buying another property, you could be hit with delays. And that’s where the property chain comes into play.

The ‘chain’ means there are other properties that need to be sold and completions made before everyone moves.

This can often be a stressful time. If the property at the top of the chain fails to sell, or someone further down it pulls out, then the whole thing can collapse.

And that means a lot of time and money can be wasted. A recent survey revealed failed home sales in the UK cost homeowners a staggering £476 million.

Latest figures show that a quarter of house sales fell through last year due to the property chain collapsing.

Knowing what the problems are will prepare you – and can even help free up the chain.

Property chain problems

If you know what problems may happen, then you can be prepared and try to make a plan to avoid them.

Mortgage applications fail

When someone within the property chain can’t get a mortgage, they can’t buy! And that can create problems up and down the chain. Since new rules were introduced in 2014, homebuyers now face stricter lending criteria. That means many more people cannot get the finance they need, resulting in delays and, often, chains collapsing.

Someone changes their mind

Most property chain breaks are due to one of the parties changing their mind. A seller may decide that they don’t want to move after all, or a buyer might see a different property that they prefer. Remember, until completion, anyone can pull out of the sales process at any time!

Survey results

Having a survey carried out isn’t a legal requirement for buyers. But it is wise. However, around 10% of buyers say they take a gamble by not having one! Sometimes, an unexpected problem with one of the properties in the chain can lead to the sale falling through if one of the buyers cannot negotiate a lower price or the problem to be rectified.

Gazumping

It’s something many thought was consigned to history, butgazumping is back! This is where the seller accepts a higher offer from another buyer and rejects the original offer. Around 19% of house sales fail because of gazumping, and this can affect a complete property chain.

Personal circumstances

Not everyone chooses to pull out of a chain. Life can sometimes simply get in the way. An illness or unexpected relationship breakdown can result in a vendor or buyer needing to pull out of the sale.

Avoiding property chain problems

It can be difficult to avoid the property chain if you are a first-time buyer. That’s because you’re usually at the end of the chain. But there are some steps you can take.

Search for properties with no chain

Looking for advertisements that say there is no ‘upward chain’ can move things along quickly. If a property has vacant possession, for example, you won’t need to worry about how many homes need to sell before the chain completes.

Get finances in place

Getting an ‘agreement in principle’ from a mortgage lender before you view gives sellers the confidence you have the funds available. This means they know you won’t pull out because of a failed mortgage application. It also means you won’t be tempted to put in on offer on a property you can’t afford!

Agree a moving date

Communication between buyers and sellers (through solicitors) can avoid property chain problems. If a sale is taking too long with no prospect of completion dates, some buyers in the chain will pull out. Negotiating a moving date quickly can help ensure the chain completes, even if the person you’re buying from needs to consider temporary accommodation to stop the sale falling through.

How we can help

At The Mortgage Dog, we have years of experience in property sales. We can help get your agreement in principle in place so sellers can see you’re serious. Contact us today for a free chat about applying for your first mortgage.