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Common property chain problems and how to avoid them

When you’re moving to a new home, the last thing you need is disruption caused by a broken property chain. Let’s take a look at what property chains are, common problems that arise with them, and how you can overcome any issues.

What are property chains?

Firstly, it is important to understand what property chains are and how they work. In a property chain, one transaction is linked to the next, establishing a chain-like structure in which each buyer uses the sale of their current property to fund the purchase of a new one.

Related: Why do chain-free properties command a premium?

How long can property chains be?

The length of property chains can vary significantly. Some chains may consist of just two or three properties, while others may include several buyers and sellers. The longer the chain, the greater the potential for disruptions and delays.

Common property chain problems

Financial issues

There are several reasons why a property chain can break and delays can be caused.

One of the most common causes of delays is financial problems, which can occur when a buyer fails to secure a mortgage or when their financial situation changes, preventing them from completing the purchase. In extreme cases, the entire chain may collapse, causing frustration for all parties involved.

Conveyancing issues

Another common reason for property chain breakage is delays in the conveyancing process.

If a home survey is done on one of the properties in the chain and it reveals significant issues, it could lead to the sale falling through and the collapse of the chain. This is particularly likely if the party selling the home in need of repairs refuses to reduce the asking price to cover the cost of renovation work.

Related: Property conveyancing explained

Gazumping and gazundering

Gazumping occurs when a seller accepts a higher offer from another buyer after already accepting an offer from a different party. On the other hand, gazundering occurs when a buyer reduces their offer just before the exchange of contracts, often as a direct result of issues discovered during a survey.

Both of these scenarios can result in last-minute decision changes by buyers or sellers, causing a domino effect that puts the chain at risk of collapse.

Related: How do down valuations affect your house sale?

Change of mind

It is also possible that a chain could break simply because a seller or buyer changes their mind. A buyer may find a new property they would rather buy, or a seller could decide they no longer want to sell their property.

Personal circumstances may also have an impact on property chains, such as a couple deciding they no longer wish to buy a home together or other family issues.

How to avoid property chain issues

Choose a chain-free property

One of the most effective ways of avoiding property chain issues is by searching for chain-free properties where the previous owners have already moved out or are not reliant on purchasing another property. Chain-free properties can proceed more smoothly without the uncertainty of a property chain.

Sell your property first

If you’re already a homeowner and you’re looking to buy a new property, it could be a good idea to sell your existing home before committing to a new purchase. This approach can eliminate the need for a chain altogether, making the buying process run much more smoothly.

Find a chain-free buyer

Choosing a chain-free buyer means that you are dealing with someone who is not reliant on selling another property before completing the purchase of yours. By doing this, the possibility of delays and other issues resulting from a broken link in the chain can be significantly reduced.

Related: How to negotiate with a buyer

Get your finances in order

You should carefully evaluate your financial status before committing to buying a property in order to reduce the danger of chain issues arising. One way to reduce the likelihood of running into financial problems is by making sure you have all the required paperwork sorted out in advance and you pay the deposit before the due date.

Speak to a mortgage broker

Use an experienced estate agent

Estate agents can use their valuable knowledge of the housing market to identify and tackle potential chain issues before they become major obstacles. They can suggest sellers who are not already caught in a broken chain and find chain-free buyers who are interested in your property.

Further reading…

For more advice, contact your local Whitegates branch today

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