How to Manage Your Property Chain

by James Powell

How to Manage Your Property Chain

You've found your perfect home. But what if there's a break in your property chain and everything stalls? Here's how to keep your purchase on track.

Understanding Property Chains: A property chain involves a series of linked transactions where each sale depends on the previous one. It typically starts with a first-time buyer and ends with someone selling their home. The chain must progress synchronously, meaning any delay or issue at one point can halt the entire process.

Challenges in a Property Chain:

  • Slowest Link: The chain can only move as quickly as the slowest transaction.
  • Domino Effect: A problem in one sale can cause the entire chain to collapse, impacting all parties involved.

Impact of Chains on First-Time Buyers: Even first-time buyers, who have no properties to sell, can be affected by delays or issues in the onward chain – the sequence of buyers and sellers that follows their transaction.

Avoiding a Property Chain:

  • Sell Before You Buy: Consider selling your current home and renting temporarily to avoid being part of a chain.
  • Find a Chain-Free Seller: Look for sellers who are not dependent on buying another property, such as those selling second homes or new-build homes directly from developers.
  • Buy at Auction: Auctions offer chain-free properties, though they may require significant renovations.

Common Causes of Chain Breaks:

  • Mortgage Issues: A buyer fails to secure a mortgage.
  • Change of Mind: A seller withdraws their property from the market.
  • Financial Instability: A party faces redundancy or financial difficulties.
  • Survey Problems: A survey reveals costly repairs, causing a buyer to pull out.
  • Gazumping: A seller accepts a higher offer from another buyer at the last minute.
  • Gazundering: A buyer reduces their offer at the last minute, forcing the seller to decline.

Protecting Yourself: Consider home buyer’s protection insurance to cover costs if a purchase falls through, but read the terms and conditions carefully.

Steps to Keep a Property Chain Moving:

  1. Keep Communicating:
    • Stay in regular contact with your solicitor, estate agent, and mortgage broker.
    • Push for regular progress updates and respond promptly to information requests.
    • Building good relationships with all parties increases the chance of holding the chain together.
  1. Be Organised:
    • Have your finances in place and work with experienced professionals like a conveyancer and mortgage broker.
    • Keep a record of all correspondence and documents to ensure smooth communication and quick resolution of issues.
  1. Get Involved:
    • If someone in the chain pulls out due to financial issues, negotiate with all parties to agree to a lower sale price. This can sometimes keep the chain intact.
  1. Ask Your Seller to Rent:
    • If your seller is stuck because they lost the home they wanted to buy, suggest they rent temporarily. This allows your purchase to proceed and puts them in a stronger position for their next purchase.
    • Offer to cover a few months' rent as an incentive if you're keen on their property.

Conclusion: Managing a property chain requires proactive communication, organisation, and sometimes creative problem-solving. By staying on top of the process and being prepared for potential issues, you can minimize the risk of a chain collapse and successfully complete your home purchase.

Source: Zoopla

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