According to a recent Homeowners Alliance survey, more than 300,000 sales are now falling through every year costing consumers an average of £2,700 on costs such as surveys and legal fees*. Thousands of buyers and sellers say they are losing more than £5,000, plus of course the stress, wasted time and upheaval of missing out on a promised home.
Reasons for fall throughs include buyers changing their minds or not having their finances in order. However, the most common reason for a property sale to fall through is the collapse of a chain. Just one property transaction breakdown can risk a domino effect and the tumbling down of all properties in the chain.
The average chain is about three properties long according to View My Chain – a firm set up by a property lawyer to create an online database of all properties involved in a transaction. View My Chain also tell us that, the length of chains has not altered in past couple of years but there are now more transactions involving a chain. There is now an average of 105-115 days between an offer accepted and exchange of contracts with some sales taking considerably longer. The time is generally governed by sales falling through in the chain, which means new buyers or sellers entering the chain at different points.**
Weak links in property chains are often quoted as being slow solicitors, slow sellers but increasingly also online estate agents who can hold things up. By the nature of their business model and customer offering, many such companies fail to communicate properly with buyers and sellers during the process - especially after an offer has been accepted on a sale and in the lead up time to the exchange of contracts. This naturally makes the chains more vulnerable to collapse. Some online, or hybrid agents, are also said to not carry out enough checks and due diligence on buyers before an offer is accepted, which again can make the chain exposed to higher risks of fall throughs.
Martin Robinson, National Sales Director for Hunters Property Plc, says, “It seems clear that there is an apparent link between agents charging an upfront flat fee and chains falling through as the agents will be less concerned about the sales completion or final outcome for the customer. Having already received the fee, they are naturally less motivated to see the transaction through to a successful outcome. Conversely, traditional estate agents will only charge their fee once a property sale has completed. This means, agents are motivated to oversee the transaction throughout and will offer full sales progression services to customers.”
Martin added, “At Hunters we have dedicated sales progression staff who are here to support customers throughout, and part of their role is to make sure the chain is managed tightly and effectively to reduce the risk of any fall throughs. Several of our sales progression agents report very challenging situations when dealing with chains that contain properties sold by online agents as these sales are not being managed and moved along by the agent, who frequently leave the work to the seller themselves. This is far from ideal and causes great concern for everyone involved and can frequently lead to a breakdown in the chain”.
There are some things sellers can do to give themselves the best chance of a successful sale, but when. you have your property valued, make sure you ask the potential agent about their sales progression set up and support. Will you have a dedicated person who will keep you in the loop at all times?
Choose the agent with the best reputation and who can assure you that a potential buyer will be thoroughly vetted and proven as able to proceed before agreeing a sale. It’s important that your agent checks proof of funds, is able to agree a target exchange date and can confirm that searches and surveys are requested by the buyer within two weeks of the sale being agreed.
Some additional questions to ask before you choose an agent are:
- What is the agent’s fall through rate? The national average in 2018 is around 38% (according to Quick Move Now). A good agent should be less than 25% with the exceptional agents being less than 20%!
- When does the agent request customer feedback? To get the clearest picture of an agent’s performance, the feedback should always be requested at the end of the process, rather than at the initial launch marketing stage.
You should also choose a reliable and pro-active solicitor or conveyancing firm who can assure you of regular updates and a speedy service.
If possible, try to shorten the chain at each end as this will end up reducing the risk of fall through. A good estate agent will work hard to ensure this happens as a matter of course and should offer advice to you on any offers that are presented and carry out and present to you a full assessment of the whole chain involved, including all buyers and sellers.
Like it or not, property chains are part of the DNA of the UK’s property market and sellers and buyers need to be mindful of the pitfalls and complications that can cause a chain to collapse. Choosing an agent who offers communication, support and advice throughout the process is a big step towards making sure your sale or purchase stays on track with a successful outcome.
To find out more about the process involved in buying or selling property, contact your local Hunters branch here!
You can also get a free sales or rental valutaion here or book an appointment with your local branch.