Selling your home is stressful enough when things go right. But as many as a third of all UK property deals collapse after having an offer accepted, putting would be buyers back at the start of their property search, and sellers back on the market.
It is frustrating and expensive. Property buyers lose an average of £2,899 in solicitor and surveyor fees when a sale fails according to research from bridging firm Market Financial Solutions.
If you are trying to sell in London, the picture is even worse. The proportion of deals that fall through in the capital is an astonishing 61%.
It can feel as though you have not sold until the money is in your bank account.
What goes wrong?
Several things can cause a sale to collapse. A breakdown in a long property chain seems to be the most common reason. Delays in getting a mortgage through, or even a lender withdrawing an offer can cause problems.
Other common reasons include unsatisfactory survey results or legal searches throwing up problems.
Of course, you also have people who simply change their minds, either because they decide they can’t face any more of the hassle of moving or find another property they like better.
Sellers pull out of sales too, sometimes because they have a better offer, the unethical but not uncommon practice of gazumping. The counterpart is gazundering, when a buyer waits until the last minute to reduce their offer, confident that the seller is too far along their own property deals to call their bluff.
The legal position
Despite the costs involved for both parties, there is little you can do to prevent a sale collapsing, or to reclaim cash you have already spent. There are no laws in England and Wales (Scotland is rather different) against buyers or sellers pulling out of an agreed sale. This means sales can fall through, and with no enforceable contract, buyers are open to the risk of being gazumped and sellers to being gazundered. Until both parties exchange contracts, the home seller has no legal obligation to sell and the buyer has no obligation to buy.
Once contracts are exchanged, it is still possible for a sale to fall through, but whoever it is that withdraws leaves themselves open to proceedings for breach of contract, which can become expensive.
The Government is aware of the problem, and recently promised to ‘encourage’ the use of voluntary reservation agreements to help crack down on gazumping, in addition to a raft of new rules to crack down on ‘rogue’ estate agents.
The Ministry of Housing said it aims to carry out research on reservation agreements with the aim of trialing them by the end of the year.
What can you do?
Until the way we buy and sell property changes, there is little you can do to safeguard yourself.
One possible solution is a specially written contract that locks buyers and sellers into completing property transactions from the minute an offer is agreed.
Once the agreement is made, buyers get a two week period when they can back out of the deal if legitimate issues with the property arise.
After this, the contract becomes fully binding and breaking it could result in hefty legal costs. It could provide a solution and speed up the sales process, but both sides need to agree to it, and it could make an already difficult transaction even more complicated.
Get some help
Whatever stage your home buying or selling has reached, some expert advice could be key to making things go smoothly and helping you make the most of your money. Simply call us at Continuum.
Your home may be at risk if you do not keep up repayments on a mortgage or other loan secured on it.
thisismoney.co.uk – Should you take out insurance against being gazumped? – 27th February 2017
thisismoney.co.uk – The cost of a collapsed property sale has hit nearly £3,000, but what makes buyers pull out and can you stop it? – 26th May 2018
yourmoney.com – Why a third of all property deals fall through – 24th May 2018