The pitfalls of buying and selling
by Sarah Modlock
Whether it's your first home or fourteenth, the moment you decide to buy - or sell - your property, fills you with anticipation. Is it too much to ask that things go smoothly? Unfortunately, no matter how careful you are about getting your ducks in row, there could always be someone or something which throws a spanner in the works.
It's impossible to know just how many sales fall through at the crucial moment but estimates put this figure as high as one in every three deals. Buyers may offer more money to keep the deal on track. Conversely, sellers may accept less for the same reason. Add surveys, searches and the joy of dealing with solicitors and it's a wonder anyone moves at all.
Ask anyone what the most stressful experiences in life are and moving house is likely to feature near the top of the list. Research from an independent network of estate agents, Spicerhaart, estimates that around 2% of buyers or sellers are pulling out of a deal compared to only 1% last year and the home information packs promised by the government in 2007 should provide further clarity.
In the meantime, the agents reveal a number of ways homebuyers or sellers can hold a property chain together:
• Avoid the delays - Most chains fall through because the paper work is not done in time. Time can be tight between offers being accepted and contracts being exchanged. Prepare as much as possible, for example contact your solicitor and apply for your mortgage, prior to putting in an offer to avoid the chances of the purchase falling through.
• No more nasty surprises - The government's introduction of Home Information Packs - H.I.Ps, which are set to become mandatory from 2007 will speed up the process of home buying and selling and increase transparency. The packs contain detailed information on a property, which is currently revealed in searches and surveys after an offer has been accepted. Currently the present system falls down since key information required to inform buyers' and sellers' decisions is available only after terms have been negotiated and agreed.
• Be serious - Only accept a serious offer. Does the buyer have a mortgage agreed in principal? A solicitor lined up? Ask to see details. A serious buyer will be prepared and won't hold up the chain.
• Temporary loan - A bridging loan may provide the answer if you are caught in the gap between selling a home and buying another. A bridging loan is normally secured by getting a mortgage on the new property, and taking out a second mortgage on the property being sold. However bridging loans should only be used if you are certain that you can repay it within six months.
• Eliminate the problem - The best way to deal with a chain is to avoid it. When considering an offer from a person, ask about their position. A first-time buyer or someone buying-to-let is in a stronger position to avoid delays than someone already caught in a lengthy chain. Sellers may also consider selling their homes and renting for a short period.
• Strengthen the agreement - If you want to avoid a sale falling through, you can arrange to sign a separate legal agreement with the buyer as part of the legal preparation. These agreements may state that neither side can pull out if contracts are exchanged within a certain time. Making this type of agreement usually involves extra legal fees and or a separate deposit. Your solicitor and/or the estate agent may be able to help you arrange this.
• You are not alone - Use a reputable estate agent. A lot of time is spent chasing solicitors, stamping out dodgy offers from people that have offered on other properties to hedge their bets and liaising with buyers throughout the chain. Estate agents are experienced in dealing with the pitfalls of the market and can help ensure a property chain holds together.
'It is really frustrating when chains break and potential buyers lose their dream home,' says Russell Jervis, managing director of haart. 'Because the market is very price sensitive at the moment we have seen an increase of buyers pulling-out, however there are ways to help hold the chain together. By following our guidelines it may just help avoid any disappointment.'
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