How to keep your property transaction on track
More than 800 property transactions collapse every day. A failed house purchase or sale can have huge repercussions both financially and practically. So, how can you keep your property transaction on track?
February 19, 2019 | post last updated on July 31st, 2019
Here at the Homeowners Alliance we know how painful a collapsed property transaction can be. Our research has found that 51% of sellers lost an average of £2,700 when a sale fell through, with a further 12% losing more than £5,000.
The majority of property transactions (69%) collapse due to the buyer with reasons including them changing their mind/finding a different property accounting for 39% of failures and their finances not being in order making up a fifth of abandoned purchases.
The seller can cause problems too though – especially if they are also a buyer as broken chains are responsible for 20% of collapsed sales.
The Homeowners Alliance has long campaigned for the house buying process to be reformed to reduce the number of collapsed transactions – it’s a whopping 300,000 a year, according to our annual survey. Now the government has finally listed, and reservation agreements are on their way. These legally binding documents will mean both buyers and sellers commit to a proceeding with a transaction and pay a deposit to cover the other sides costs if they have to pull out.
But nothing happens quickly with the government so it could be months or even years before reservation agreements actually arrive. In the meantime, here are our eight tips to get you from an offer to completion successfully:
1. Understand the process
If you understand the house purchase process, you’ll be in a much stronger position to make sure everything goes according to plan. Read our step-by-step guide to buying a home or our step-by-step guide to selling a home. Then start preparing yourself for the process. Remember, information is power!
2. Speed is key
The faster you can get your transaction to exchange the better. From that point the deal is legally binding so get their quick. The quicker the process is the less chance there is for a buyer to get cold feet or for any gazundering or gazumping to take place.
3. Be prepared
“One reason that buying and selling a house is right up there with bereavement and divorce for fun and excitement is that people don’t prepare properly,” says buying agent Henry Pryor.
“The less work that conveyancers and mortgage intermediaries have to do the quicker they can get to the point at which contracts can be exchanged and the commitment becomes formal and legally binding,” says Pryor.
If you are selling a property this means getting all your paperwork together – deeds, planning permissions, guarantees etc. Here is a round-up of the essential documents you need.
4. Consider selling before you buy
Nobody wants to become part of a house chain. Our research found that sales falling through further up the chain contributed for 20% of collapsed sales. Avoid the problem by selling your current property before you start shopping for a new one. You will put yourself in a much stronger position when it is time to make an offer and increase the chances that your eventual purchase will go according to plan.
5. Get your finances in order
Sit down and do your sums to make sure you know exactly what your budget is. Find out how much you can afford to borrow then speak to a mortgage broker to start the mortgage process. Ideally, you want to have a mortgage agreement in principle when you make an offer.
6. Choose your solicitor now
Choose your solicitor or conveyancer as soon as you can. Getting registered with them takes time so you should try to get this done before you put your house on the market or make an offer. Read our guide on how to find the right solicitor.
7. Line up a surveyor
A good building surveyor can be in high demand so do your research and find a good surveyor in your local area and give them advance notice that you may need them.
Finally, pick up the phone and check in with your solicitor and the estate agent regularly to make sure you know what is going on and if anything is needed from you. Getting a weekly update will also make sure everyone is working on your transaction and things continue to move forward.