Are you in the process of purchasing your new home? At Boxall Brown & Jones, we know that the collapse of a property sale can have a far greater effect than just disappointment or irritation – it can cost the parties involved thousands.
Today, we will be sharing some tips on how to keep your transaction steady.
But first, let’s crunch the numbers…
According to statistics by YouGov, a staggering 300,000 transactions collapse each year. Almost a third of sales collapse because of the buyer’s finances not being in order and one in five ends due to a sale elsewhere in the chain breaking down.
Another common cause is gazundering. This is where a buyer lowers their offer immediately before the exchange of contracts, forcing the seller to choose between a no-sale or accept less money.
In total, 69% of collapsed sales are because of the buyer pulling out of the sale.
According to industry research, the average cost of each collapsed transaction is £2,727 and 12% of victims end up losing more than £5,000.
A study was completed on 2,056 fallen victims who were over the age of 18 and had previously sold at least one property. It was identified that 16% of the sellers had a sale of their property fall through because the buyer had pulled out of the deal.
When asked what reasons were given, 17% said that they did not know. But of the rest of the group, 24% said the buyer could not raise the funds, 19% blamed disagreements over price, 16% said the buyer simply chose to buy a different property, 9% said the buyer’s own sale fell through, and 8% blamed a problem identified by the survey.
Around 14% said they had fallen prey to gazundering and ended up selling their home for less than the amount that was initially agreed. The average difference in price was £8,500. For those whose deals collapsed, the average sum lost because of the buyer pulling out was £1,945.
So, what can you do?
Familiarise yourself with the transaction process, particularly in areas with proven pitfalls. Boxall Brown & Jones have plenty of guides in this area, download your free step-by-step guide here.
Sell before you buy. Research shows that 20% of sales fall through because of a transaction going wrong somewhere else in the chain. If you sell your property before looking to buy another one, it puts you in a stronger position when offers are made and will likely raise the chances of your sale going ahead without problems.
Be clear on your finances. Make sure you know what your budget is. Find out from a mortgage broker how much you can borrow and have a mortgage agreement in principle by the time you make an offer. As in most situations, good preparation is helpful. Make sure you find a solicitor as a matter of first importance as the registration process can take time.
Keep the transaction up to speed. The longer a transaction takes to reach the legally binding stage of exchanging contracts the more there is of things going wrong, such as gazumping or gazundering.
Regular phone communication with estate agents and solicitors will ensure that the sale is not going off the boil.
Find a good surveyor.
You may wish to consider a ‘pre-sale’ contract. Some solicitors offer a binding contract that locks buyers and sellers into transactions from the minute an offer is agreed. Buyers get a two-week period to ensure they are satisfied with the property; within which time they can back out of the deal if issues arise.
*The content provided in this blog post is purely for information purposes only. Independent and professional advice should be taken before buying, selling, letting or renting a property.*