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Why Do House Sales Fall Through?

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Congratulations! You have accepted an offer.

It’s best to take a step back and ensure the deal can go as planned. So, what can cause a house sale to fail?

When does this typically happen? And how can you make sure yours doesn’t? 

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Why do house sales fall through?

Buying or selling a home is a lengthy process that involves many people and professionals. As a result, there are plenty of potential pitfalls that can cause a sale to fall through. So, why do house sales fail? Common reasons include:

  • The buyer changes their mind
  • The seller receives a higher offer, also known as ‘gazumping’
  • The buyer cannot secure a mortgage
  • Delays in conveyancing
  • A bad survey
  • The buyer is unable to sell their property, leading to a ‘broken chain’
  • The buyer reduces their offer at the last minute, known as ‘gazundering.’

According to Rightmove, 1 in 3 sales collapse.  This is because right up to the exchange of contracts, a buyer or seller can walk away without any financial penalty.

Why Do House Sales Fall Through
If the sale doesn't go through, the buyer will have to cover the costs of local searches, mortgage arrangement fees and getting a survey.

Will I lose money if my sale doesn't go through?

In all likelihood, yes. How much you’ll lose depends on where you are in the process, and the losses can increase over time.

The average seller can be left thousands of pounds out of pocket in terms of legal fees, council tax, mortgage payments and repairs.

If the sale doesn’t go through, the buyer will have to cover the costs of local searches, mortgage arrangement fees and getting a survey.

Both parties will need to pay their conveyancer for the work done so far unless they have a ‘no sale, no fee’ conveyancing agreement.

As a buyer, the best way to protect yourself from financial losses in the event of a failed sale is to take out Home Buyers Protection Insurance.

You can do this when you have an offer accepted on a property, and you must get a policy before appointing a conveyancer. This insurance will enable you to claim back some of your conveyancing fees, survey costs and mortgage fees if your purchase falls through.

How to avoid your house sale falling through

Ideally, instruct your estate agent to find a committed and motivated buyer.

These are some of the common reasons why sales collapse:

1. The buyer changes their mind

Buying a house often takes four months, but the time between an accepted offer and the exchange of keys can often be longer. This creates the opportunity for issues to arise and the buyer to back out.

To avoid this:

  1. Encourage your solicitor to reply to queries promptly and for sellers to send the TA6 form early.
  2. As a buyer, you should arrange for searches, surveys, and a mortgage as soon as possible.

2. Gazumping

This is when another buyer makes a higher offer, which is accepted by the seller, leaving you to start from scratch.

To maximise your chances of selling:

  • The seller is within their right to accept a higher offer should they wish to.
  • To avoid an abortive sale further down the line and to increase your chances of selling, why not issue both buyers with contracts and effectively put them into a contracts race?  This would motivate them to act quickly, and if one of them decides to pull out, it doesn’t matter.
What are mortgage problems
Before making an offer, it's important to carefully research the sold prices of similar properties so that you don't end up overpaying.

3. Mortgage problems

Mortgage issues come in many forms. For example, a sale might not be completed before the offer expires, or a change in circumstances might mean the buyer can’t borrow as much as they need.

It’s always best for buyers to have a mortgage agreement in principle before making an offer, as it’s the strongest form of confirmation that the money is available. However, it’s not a guarantee.

What can be done to avoid this?

  1. Before making an offer, it’s important to carefully research the sold prices of similar properties so that you don’t end up overpaying.
  2. In the case of a down valuation, you can either ask the seller to lower their price or find additional funds to increase your deposit.

4. Conveyancing delays

Conveyancing delays are common when either party isn’t as responsive as they should be, particularly in more complex cases such as divorce, probate, or leasehold property.

To avoid this:

  • Buyers and sellers should instruct a conveyancer early and provide them with as much information and paperwork as possible.
  • As well as documents required to sell a house, the solicitor should be consulted. When selecting a solicitor, don’t just focus on the fees.
  • It’s important to use a firm with a good reputation that will make the house purchase process a smooth one.

5. A bad survey report

A house sale may not go ahead if the survey reveals issues with the property’s condition. This is a frequent cause for the sale not going ahead.

To avoid this:

  1. Sellers should be realistic when putting their houses up for sale. If they are looking to get the full asking price, they should ensure that the condition of their property is well-kept. If not, it is more likely that the survey will identify any issues which can lead to delays.
  2. Buyers should ensure they carry out the appropriate house survey to get the level of detail they want.  If the house needs repairs, buyers can get quotes for the work and use these to renegotiate their offer. For more tips and advice, check out our guide to surviving a bad survey.
The housing chain breaks
Sellers could look for a chain-free buyer, like a first-time buyer or cash house buyer. We are one of the trusted cash buyers.

6. The housing chain breaks

If you’re a buyer, but you have to wait until the seller buys their next home, you’re in a property chain. If one person drops out, the whole chain can collapse, and everyone can be back to square one.

So how can you avoid this? 

  • Think carefully before entering a transaction with a long chain. Get a good estate agent and conveyancer to help keep the chain moving.
  • Sellers could look for a chain-free buyer, like a first-time buyer or cash house buyer. We are one of the trusted cash buyers.
  • As a seller, you could break the chain by moving in with family or renting.

7. Gazundering

‘Gazundering’ is a practice where a buyer lowers their offer at the last minute, just before contracts are exchanged.

So, what can you do? 

  1. Be realistic about your asking price; if you set it too high, there is a greater chance of the buyer reducing their offer.
  2. Move quickly – the sooner you can get to the contract exchange, the better. Have a second potential buyer on the standby;
  3. If you think the buyer might use this tactic, ask your estate agent to keep in contact with other interested parties.
  4. Calculate your finances; if you’re in a chain, you probably don’t want gazundering to ruin your move.
  5. See if you can absorb a price drop and still progress.  Or have two buyers in a contract race.

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