According to Which? One in five property deals fall through due to property chain problems. This is an alarmingly high figure but what exactly is a property chain? How does a property chain work and what is the average property chain length? These are just a few questions we’ll answer along with many more all relating to property chains.
What is a Property Chain?
The phrase property chain is used to describe the process of buying or selling a sequence of houses which are linked together, with each being ‘chain’ dependent on the one before it to succeed so the whole chain can progress and complete.
One question people often ask is how many homes are in a chain? A property chain will have a minimum of two people in it unless you are buying a new build home. There is no maximum number of people in a property chain so yes – it can go up to and even over ten!
One of the risks that comes with purchasing a property in a housing chain is that, not only do they rely on buyers and sellers being competent enough to sign documents on time, be organised and gather funds. Chains are also reliant on solicitors, estate agents and even mortgage brokers to their job properly to avoid any complications later down the line.
With so many parties involved, the likelihood of the chain being delayed or broken is increased!
Generally speaking, the people at the start and the end of the chain have the least responsibility. The people in the middle have to worry about several parties getting everything done on time so the chain can progress.
Below is an example of a house chain and the processes involved.
For those who are unfamiliar with the steps involved in a property transaction, they include:
- Getting a mortgage agreed in principle.
- Making a legitimate offer and SSTC (Property Sold Subject to Contract)
- Getting a solicitor or conveyancer in place to do the legal work.
- Arranging surveys (All the types needed to ensure the house is structurally sound and not in poor condition)
- Finalizing & confirming the mortgage.
- Exchanging contracts.
As you can tell from the above, the process is quite long so when people ask how long does it take to buy a house with a chain, we can only estimate as there are so many variables involved. In addition, the longer the property chain, the longer it is likely to take. It could take 8 weeks, 8 months or even 18 months!
Why Could a Property Chain Collapse
A property chain can fall apart for a number of reasons, many of which will be out of your control. It’s not totally uncommon for a chain to collapse after exchange either so if you are someone who is involved in a property chain, it’s important that you remain vigilant during and after the exchange as well! Below, you can read some of the reasons why there could be a break in a property chain.
- One of the buyers or sellers in the chain may change their mind.
- A house survey reveals there are structural or other issues with the property and the buyer decides not to proceed.
- The buyer is unable to get a mortgage approved.
- The buyer or seller faces personal issues or financial difficulties such as divorce, illness, family bereavement, job loss or redundancy.
- The seller cannot find another property to move into in time.
- The legal firm takes too long to process the legal paperwork.
- State of the market and other economic issues causes a party to back out.
- A party is GAZUMPED meaning someone else made a higher offer for the house.
- A party is GAZUNDERED meaning the buyer makes a reduced offer at the last minute.
Tips to Prevent a Chain from Breaking
Being stuck in a property chain can be one the worst feelings imaginable. Most the issues involved in a chain are usually out of your control so all you can really do is wait and hope the other parties can get their acts together so the chain can progress.
Theoretically, it is the job of the professionals that you have employed to keep a chain moving if there has been a break. That said, here are some things you can do to reduce the chance of a property chain breaking:
- Try to avoid getting into a chain to begin with by looking for a chain free property. For example, if you’re selling, pick a buyer who isn’t in a chain such as a first time buyer.
- Consider buying a new build home as there is no upward chain.
- If you’re buying, try to get owner of the home you’re buying from to agree to a date they will move out on even if they have to move into rented accommodation until they find a place of their own.
- Employ experienced professionals rather than cheap alternatives.
- Make sure you are organised & everything on your side is sorted financially.
- Consider putting clauses in your buying and selling contracts including the dates of exchange, surveys and completion.
How to Break a Property Chain
If you find that you are stuck in a chain but have the option of being able to break it so you can buy or sell at will, would you take it?
Being stuck in a chain can be both stressful and expensive but there are a couple of things you can do to break a chain and put yourself in a better and stronger position. The 3 most common ways of breaking a chain are:
1) Selling a House before you Buy One
This one is pretty straight forward. If you can get someone to buy your house before you buy a new one, you won’t have to worry about being stuck in chain. Of course selling your house and then having to rent for a while can be stressful but not as much as being stuck in a chain and having to worry about factors totally out of your control.
You may even get a good price for a new property if you’re patient and find a seller who is looking to sell up quickly.
2) Getting a Bridging Loan
Bridging loans are definitely risky and expensive, however, if it means breaking out of a chain and getting your dream home then it may be the right option.
Also, having a loan secured against your name will show the seller just how serious you are about buying which could result in a quick house sale so you can move in earlier!
3) Extending your Current Mortgage
Extending the mortgage on your current home is another way to break out of a chain as you can use the money you get from it as a deposit for the mortgage on the new property you’re going to buy. This again a little risky as you are adding more debt, however, if it helps break you out of a long chain, it may be a risk worth taking.
How Can Selling to Housebuyers4u Help if you’re Stuck in a Property Chain?
If you’ve ever had your property chain collapse then you know just how stressful and expensive the whole process can be. If you’re someone who has experienced this or are currently stuck in a chain, why not get in touch with us here at Housebuyers4u and see if selling your house to chain free buyers is the right option for you.
We are genuine cash house buyers who guarantee to buy any house in any condition within 7-14 days and have the cash funds available to purchase a property at any time. Below is a chart outlining our services compared to estate agents and other house buying companies
If that’s not enough, we are also proud members of the National Association of Property Buyers meaning we have to follow even stricter regulations when purchasing properties. That should help put your mind at ease if you’re unsure of selling your home to a house buying company!
Move forward with the sale of your house – Get your free no obligation cash offer today!