Navigating the property world when trying to buy or sell a house can be treacherous. This year alone, over 50,000 property sales have fallen through. To help you through this sometimes-fraught period, we have provided five possible ways a house sale can fall through and the steps you can take to avoid disappointment.
1. Mortgage problems
Mortgage problems occur, generally, in two forms - down valuations and mortgage offers falling through.
Sometimes, a mortgage lender will value a property for less than the buyer has agreed to pay. This is known as "down valuations". It means that the buyers will have to either renegotiate the price with the seller or find extra cash to make up the shortfall.
How to avoid: Buyers should carefully research recent sale prices in the area before making an offer, and not let their head rule their hearts. It's possible to appeal a down valuation or apply again with a different lender, but it's vital to make sure you're not overpaying, especially in a slow market. If you’re selling, you should seek valuations from several estate agents before listing the property and be realistic about its value.
Mortgage offers falling through
Deals can sometimes collapse because of the buyer's mortgage offer expiring or a change in circumstances, meaning they can no longer borrow as much as they require.
How to avoid: Buyers should secure a mortgage agreement in principle, which will generally be valid for six months. Don't get this until you're ready to view homes with an intention to buy. Avoid any major financial changes (such as switching jobs) in the run-up to buying a house. Sellers should ensure the buyer can provide evidence that finance is in place before accepting their offer.
2. A break in the chain
When a string of transactions is linked together, it is known as a property chain - and just one sale collapsing can cause the whole chain breaking and leaving many people out of pocket. Chains break for myriad reasons, including mortgage offers falling through or changes in circumstances, or if there is a problem with one of the properties.
How to avoid: Since you can only really control your own part of the chain, you need to make sure you have a good conveyancer, provide key documents when asked and answer any queries quickly. As a buyer, consider a long chain before making an offer, and ask yourself whether the home is worth the difficulties and potential disappointment. If you find yourself in a position where you are unattached, you can also use your 'chain free' status as a selling point if there are several bidders.
3. Problems found in a home survey
House surveys have the potential to uncover a variety of problems with the property, from large structural issues to small cosmetic blips. If a home survey uncovers a major problem, the buyer may look to negotiate the price or leave the deal entirely.
How to avoid: When buying, always seek a suitable home survey, which prevents any nasty surprises long term. Equally, it is recommended that sellers have a survey done on their home before putting it on the market, especially if yours is an old or unusual property, or needs renovation. It is important to take action to fix anything that could put buyers off.
Gazumping can be the most frustrating reason that house sales fall through. It is when the seller accepts a higher offer from someone else after they've already agreed to sell to you. This is most common in very competitive markets and highly sought-after areas. As a buyer, there's not a lot you can do once you've been gazumped, as the sale isn't official until the contracts have been exchanged. You might wish to approach the seller with reasons to go ahead with your purchase, but the key thing is to not overstretch yourself financially in an attempt to win back the property.
How to avoid: There are some things you can do to avoid being gazumped. When you offer you can ask for the property to be taken off the market, but the seller doesn't have to agree to this. You can also set up a formal agreement through your conveyancer, however, this is uncommon. You should ensure that the seller is fully confident that you'll go through with the purchase by emphasising why you're a trustworthy buyer. If you are able to do so, make sure that the seller knows that you have a big deposit, are chain free, or if you have a mortgage agreement in principle.
5. Conveyancing delays
Sales fall through when buyers lose patience. When the conveyancing process is delayed, the patience of the buyer is tested. It can take time for the legal practicalities of buying a house to finish, either because of a conveyancing problem in the chain or delays in documentation arriving.
How to avoid: The best way to avoid these delays is to instruct a conveyancer early. Sellers should consider a conveyancer when they put their house on the marker. Likewise, buyers should instruct a conveyancer as soon as they make offers.