If you’re interested in buying and selling property, then you’ll probably have encountered the term ‘property chain’. Let’s take a look at what a property chain is, and try to dispel some of the confusion surrounding them.
How does a Property Chain Work?
A property chain is a succession of properties being sold on. Each member in the chain will buy a property and sell it to the next member, thus creating a domino effect. If you’re buying a house that’s in a chain, then you’ll be vulnerable to knock-on effects from problems occurring further down the chain.
As well as the individuals selling the houses, there will be agents, legal teams, surveyors, and lenders attached to each purchase. At any point, miscommunication between these parties can delay the sale going through. In some cases, a sale might fall through altogether – causing the chain to break entirely.
How to Break a Property Chain
There are several reasons a chain might collapse.
- A buyer or seller might get cold feet and back out.
- A change of circumstances might make the sale impossible. Married couples might get divorced; sellers might fall ill; buyers might win the lottery and elect to buy a different property instead.
- A prospective buyer might offer more than their lender is willing to provide.
- A legal firm might take too long to process the paperwork.
- Problems with the property might arise following a survey.
Of course, these events have direct consequences as well as knock-on consequences for those further along the chain. If you think that any of them are likely to happen to you, then consider rectifying the situation before entering the chain.
How to Speed Up a Property Chain
Obviously, it’s beneficial for all involved if a property chain moves along as speedily as possible. Unfortunately, this is often beyond the control of any individual party in the chain – after all, things like illness and human error are inevitable.
The best thing you can do to give yourself a good chance of avoiding delay is to work with a skilled group of professionals. If your estate agent and conveyancing team know what they’re doing, then you’ll minimise the likelihood of error on your end – though that still doesn’t guarantee that other purchasers in the chain will make good hiring decisions.
You’ll also want to keep in close contact with your agent and the other parties in the transaction. This will help you to identify small errors and ensure that they don’t get in the way of the purchase. The most time-consuming part of any purchase is probably the pre-exchange period where contracts are reviewed. If you’re copied into relevant emails, then you’ll be able to avoid the unnerving silence when things are furiously moving into action behind the scenes – and you’ll be able to see straight away when things aren’t going to plan.
It’s worth getting a full home buyer’s survey rather than a mere valuation report. The former is designed to highlight any defects in the property; the latter is performed strictly to protect the mortgage lender rather than the buyer.
Another option is to avoid chains altogether. Let’s consider how we might do that!
How to Avoid a Property Chain
The simplest way to avoid a property chain is to buy a house where there isn’t a chain – such as a brand new or unoccupied one. There are many reasons a property might be unoccupied: it might have served as a second home that’s no longer required, or the former owner might have died. Whatever the reason, the result is the same from your perspective: no upward chain. This might limit your options, but it’ll guarantee you avoid the stress of contending with a chain.
In the case of a new build, you might be able to part-exchange your existing home with the developer, and so secure a speedier transaction. Developers won’t do this out of the kindness of their hearts, however, and so you can usually expect a slightly reduced price for your property. With that said, it doesn’t hurt to ask!
You can avoid the chain by selling without buying a new property to move in to. If you’re wealthy enough to own multiple residences, or you’re willing to downgrade to the extent that you avoid the chain, then this might be an option. For most of us, however, selling a home requires finding somewhere else to live. In this instance, it might be worth selling up and moving into a rented accommodation while you find a new home to move into. This might involve some additional upheaval – but the stress of moving several times in a short while might still be less than that incurred by a slow-moving chain. There’s a risk involved here, though – as you might not be able to find a new home quickly, and you might therefore end up trapped.
Of course, even in this instance you’ll still need to worry about would-be buyers shuffling their feet before committing to a purchase. If you have several offers available, then choose a buyer that isn’t in a chain themselves. First-time buyers will fall into this category.
If you’d like to get things moving as quickly as possible, you might agree a date with the seller when they’ll have moved out whether they have anywhere to stay or not. Sellers will often prefer to rent rather than risk the deal – and so applying some pressure can often get the machinery of trade moving faster!
Property chains can be a tremendous source of irritation, but with the right guidance they’re easily dealt with. If you should find yourself in a broken chain, and you need to get rid of your home quickly, then why not get in touch with Principal Homebuyers? We’ve the expertise necessary to guide you through the process.