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16 Jan 2020

Five reasons house sales fall through and how to avoid them

New research shows a quarter of sales collapsed before completion in 2019

A quarter of prospective home sales fell through in 2019, with mortgage issues, broken chains and gazumping among the main reasons for deals collapsing.

Research by the property buying company Quick Move Now claims that a quarter of transactions fell through between an offer being accepted and completion in 2019.

This percentage is the lowest recorded since 2013, but it still marks a frustrating and expensive problem for both buyers and sellers.

Here, we take a look at five of the main reasons for deals falling through and what you can do to avoid them.

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1. Mortgage problems

Mortgage problems can easily scupper a property purchase. They generally come in the following two forms.

Down valuations

Mortgage lenders sometimes value a property at less than the buyer has agreed to pay. This is known as a down valuation.

Down valuations mean buyers face the prospect of either renegotiating the price with the seller or finding the extra cash to make up the shortfall from elsewhere.

How to avoid:

  • Buyers should carefully research recent sale prices in the area before making an offer, and not let their head rule their heart. It's possible to appeal a down valuation or apply again with a different lender, but it's vital to make sure you're not overpaying, especially in a slow market.
  • Sellers should seek valuations from several estate agents before listing the property and be realistic about its value.

Mortgage offers falling through

Deals can sometimes collapse due to the buyer's mortgage offer expiring or a change in circumstances meaning they can no longer borrow as much as they require.

How to avoid:

  • Buyers should secure a mortgage agreement in principle, which will generally be valid for six months. Don't get this until you're ready to start viewing homes with an intention to buy. Avoid any major financial changes (such as switching jobs) in the run-up to buying a house.
  • Sellers should ensure the buyer can provide evidence that finance is in place before accepting their offer.

2. A break in the chain

A property chain is when a string of transactions are linked together, and just one sale collapsing can result in the whole chain breaking and leaving many people out of pocket.

Chains can break for a whole host of reasons, such as changes in circumstances, mortgage offers falling through or a problem with one of the properties.

How to avoid:

It's up to estate agents and conveyancers to keep the chain moving, but you may find that you need to chase them up on a regular basis.

Ultimately, you can only control your own part of the chain, so make sure you choose a good conveyancer, provide key documents when required and answer any queries promptly.

As a buyer, you should consider the likelihood of a long chain before making an offer on a property, and ask yourself whether the home is worth the frustration and possible heartache.

You can also use your 'chain free' status as a selling point if there are several bidders.

3. Problems found in a home survey

Home surveys can uncover a whole range of problems with a property, from smaller cosmetic issues to major structural ones.

If a home survey finds a major issue, the buyer may look to renegotiate the price or pull out of the deal completely.

How to avoid:

  • Buyers should always seek a suitable home survey, which can prevent any nasty surprises in the long run. You can find out about the different types of survey in our full guide.
  • Sellers should consider having a survey done on their home before putting it on the market, especially if it's an old or unusual property, or is in need of renovation, and take action to fix anything that could put buyers off.

4. Gazumping

Gazumping is when the seller accepts a higher offer from someone else after they've already agreed to sell to you.

This is most common in very competitive markets and highly sought-after areas.

As a buyer, there's not a lot you can do once you've been gazumped, as the sale isn't official until the contracts have been exchanged.

You might wish to approach the seller with reasons to go ahead with your purchase, but the key thing is to not overstretch yourself financially in an attempt to win back the property.

How to avoid:

There are some steps you can take to minimise the likelihood of being gazumped.

  • You can ask for the property to be taken off the market as a condition of your offer, but the seller doesn't have to agree to this. It's also possible to set up a formal agreement through your conveyancer, although this is uncommon.
  • Ensure the seller is fully confident that you'll go through with the purchase by emphasising why you're a trustworthy buyer. If you have a big deposit, a mortgage agreement in principle or are chain-free, make sure the seller knows this when you make the offer.

5. Conveyancing delays

Delays in the conveyancing process can result in buyers losing patience and sales falling through.

The legal practicalities of buying a house can take some time - either due to delays in documentation arriving, slow local authority searches or an unresponsive conveyancer elsewhere in the chain.

How to avoid:

Conveyancers often face criticism from buyers and sellers, but some issues are out of their hands.

The best way to get ahead of the game is to instruct a conveyancer earlier in the process.

Sellers should consider finding a conveyancer when they put the property on the market (rather than after they accept an offer), which will allow longer to get the particulars in order.

Likewise, buyers should instruct a conveyancer as soon as they start making offers.

How long does it take to buy a house?

How long it takes to buy a house depends on a whole host of circumstances.

We asked 1,205 recent home movers about their experiences as part of our 2019 home buyer's survey.

25% of buyers said the gap between having their offer accepted and completion was between two and three months, while 23% said it took between three and four months.

Overall, the average amount of time the process took was just under three-and-a-half months.

Gap between offer acceptance and completionPercentage of buyers
Up to one month4%
1-2 months18%
2-3 months25%
3-4 months23%
4-5 months9%
5-6 months8%
6-8 months5%

Source: Which? home buyer's survey. Conducted in January 2019, based on 1,205 responses.

Could reservation agreements be the answer?

The government is seeking to reduce the number of transactions that fall through and cut the time it takes to buy a home.

It's currently considering testing a new 'reservation agreement' system, which could require both the buyer and seller to put down a lump sum (perhaps of £500 or £1,000) when the offer is accepted.

If the buyer or seller then pulls out without a good reason, the money will be released to mitigate the losses faced by the other party.

The system could be trialled on a limited basis as early as this spring, although no date has been formally announced.