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How to Repair a Broken House Chain
If you are selling a house in the UK, one thing to watch out for is a broken house chain. A broken property chain happens where something disturbs the sequence of events where properties are being bought and sold by various people. For instance, if you were selling your house, the chain would break if your house buyer pulled out at the last minute.
Broken property chains occur quite regularly in the UK and create very frustrating situations. Research by Countrywide estate agents in 2015 stated that more homes were then being sold without a property chain.
Although there may be growth in sales without house chains, the collapse in chains still happens all too often.
The chain may break because one of the seller’s house sales has fallen through. Another reason might be that a house buyer suddenly reduces their offer to buy your house.
Or there could be a combination of explanations, all of which add up to misery for buyers and sellers. Property chain collapse also often ends up costing the people involved money, too, in terms of estate agent’s, surveyor’s or lawyer’s fees.
In this guide, we look at what causes broken house chains and how to deal with this situation.
We have also included information here on what you can do to avoid a house chain.
What causes a house chain to break?
The process of buying and selling a home in the UK is usually complex and involved. When selling or buying a house goes smoothly, it is a great feeling.
But all too often, people involved in the process can experience hitches including property chain problems.
A typical house sale can take several weeks to complete and involves several different people, so problems are not surprising.
What is a property chain, exactly? You could define the chain as the link between two, three or more buyers and sellers of properties.
To avoid a broken house chain, each person in the chain relies on other parts of the selling and buying process completing. There is a lot that can go wrong.
At the ‘beginning’ of the chain you may have, for instance, a first-time buyer who has no property to sell.
The person at the end of the chain is only selling. Where the problems often lie are in the middle of the chain. This is where buyers and sellers especially want to prevent the chain from breaking.
These people are truly the ‘links’ in the chain. They are trying to manage the sale of their existing properties and buy a new house at the same time.
Complex buying and selling situation
The situation is even more complex in reality, according to a property guide from What House?
This says: “The links don’t just involve the buyers and vendors. Each of them is likely to be working with estate agents, conveyancers, mortgage lenders and surveyors too.
“Each of whom is relied upon to do their work to the timetable needed by their client.”
Frustratingly, a property chain will also move no faster than the speed of its slowest link, says What House? This often make the chain even weaker and adds to the stress of buyers and sellers.
Typical problems causing a house chain collapse
Let’s look in more detail at the reasons for a house sale to fall through, due to a broken chain.
There are lots of ways in which house chains can fail, most of which are usually beyond your control.
- A buyer in your chain may not be able to get a mortgage. Or someone else may lose their job, so be unable to afford to buy your house
- Another frustration is where someone in the chain changes their mind about selling their house. This can happen very late in the selling process, even after a sale has been agreed. But this can be a real ‘chain-breaker’
- A property chain can break at any time before contracts are exchanged. UK property law says the terms of a sale are only binding when all parties have signed, and exchanged, their final contracts. There are lots of opportunities for your sale to go wrong due to money, as you will see below
- When it comes to property surveys, more problems can emerge. Say costly repairs to your property (or someone else in the chain’s) are revealed in a survey. Then your buyers may well pull out, so your house chain breaks
- Because chains rely on people getting things right, there are many opportunities for a whole chain to be delayed. All it takes is one person who is involved to forget to sign a document or not answer an email message. Then the whole chain process can slow right down
What are gazundering and gazumping?
These are strange sounding words. And ones you would hope to avoid using in your everyday conversation. Unfortunately, they may be well known to anyone whose house chain has broken.
So, what do they mean?
Gazundering happens when a buyer reduces their offer at their last minute. This often happens immediately before the exchange of contracts. The result is often that the seller is unable to accept their offer, so this leads to a chain break.
Gazumping works differently. This happens when a house seller accepts an offer from one buyer. But, at the last minute, the seller then agrees a bigger offer from someone else for their house. Your sale is off, and the chain is broken.
Reasons for avoiding a house chain
They are two reasons why many house buyers and sellers would like to avoid a house chain, if they can.
The Countrywide research a few years ago said chain-free sales were being driven by a mixture of changes.
These included “structural shifts, such as the growth of the private rented sector, and changing market conditions”.
It is difficult to find official figures for the length of UK property chains. Typically, they would be as short as having three “parties” – buyers and sellers. But according to some anecdotes, there may be 10 or more links in property chains.
As you can imagine, the more links there are, the more opportunity there is for the chain to be delayed. Or collapse.
How to mend a broken house chain
While the advice above may be a depressing read, there are ways to avoid a broken house chain.
- If you are a first-time property buyer, this helps to avoid a chain. You will not need to sell your house or flat first to take the first step onto the property ownership ladder. So at least, your end of the chain should be easier to work with
- Likewise, it is easier to work with new-build homes. Because, as these are brand new properties, no-one will have occupied them before you move in and there will be no onward chain. What’s more, some developers may offer a part-exchange for your property to make the process faster. Watch out, though, for how much they offer you for your house
- Consider using a professional house buying company with a strong track record. House buyers are a new way of selling your house fast, to prevent a broken house chain and help you move on to your next home. Be sure you work with a company is part of the Property Redress Scheme which guarantees professional standards.
- Some people may suggest selling your house at auction. It may seem like a good option as surely bidders will drive up the price of your house? And you could become chain free fast. However, auctions are not for the unwary. While the sale of your house could go through quickly, after selling you won’t get a choice of the date when you move out. The auction house is very much in command as they are experts in this pressurised form of selling. Remember, the sale is binding from the moment the hammer drops, and contracts are signed and exchanged at the auction house. Also, if the right buyers aren’t there when your house goes under the hammer, you won’t sell or won’t get a good price.
- If you are selling, and have several offers to consider, look for a buyer who isn’t part of a chain. For instance, go with a first-time house buyer if you can secure a good price with them
- Could you sell your house and move into rented accommodation, even for a short while? This may not be ideal for the long-term. But renting would mean you would be able to sell the property on and complete your part of the chain. This kind of temporary move could cut the potential for hassle with a broken property chain.
- Alternatively, could you sell your house and move in with family and friends for a few months?
- To move things along, can you make an agreement with the seller of the property you want to buy? This would include a date for them to move out of the property. Whether they had found a new house to buy or not. While not all vendors are willing to make such an agreement, some would to avoid the deal collapsing
- Upward property chains. Are you able to find out more about the property chain beyond your “link”? Could you move into a house with a short, or minimal chain perhaps? You might have to wait a while, but an ideal house could be one where the occupants have retired to live in sheltered accommodation. Or perhaps a house that can be vacated easily – for instance, one that was a buy-to-let property. So, a property that is not the owner’s main residence
- Bridging loans. This may be something to consider if you are running low on options. This is where you would borrow money within the loan against your current property. But watch out – bridging loans are expensive, with higher interest rates than usual loans.
How to get the best out of a cash house buying company
Working with a company that will buy your house for cash has strong advantages. It will help you sell your house if there is a broken house chain.
If your house is slow to sell, holding up the property chain, then a house buying company can help you to get a sale quickly.
This would avoid you having to use the traditional estate agent route, which takes time. And this has many steps where the chain can fail. And you would avoid the risks of selling at an auction house.
But the trick is to find the right property buying company. There are many these businesses on the market, however, not all offer the same guarantees and service.
If you want to sell fast due to a broken house chain, we can help as a regulated house buying company.
We will make you an offer for your home at any stage in the selling or buying process in a property chain.
Selling your property regardless of condition
Our offer will also be made regardless of the condition of your home. Through our straightforward home buying process, we strive to make the sale as smooth and quick as possible.
National Property Buyers has been buying properties directly from homeowners for over 10 years.
During this time, we have demonstrated a strong work ethic. If you sell to us, we deliver on our promises every time. We do not make false promises.
Instead, we ensure you are kept fully informed throughout the sale all the way to your completion. We go the extra mile so that when you decide to sell to us, it is as stress-free as possible.
Want to find out more?
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Alternatively, contact one of our team at National Property Buyers on 0115 740 1900.