It's estimated that around one in three house sales fall through in the UK.
This can happen at any stage of the process, from the initial offer right up until exchange of contracts. A house sale can even fall through after exchange, but this is much less likely as it is expensive and legally complicated.
House sales can fall through for a number of reasons, and in this article we will look at the most common causes of a house sale failing.
What are the most common reasons why a house sale falls through?
- Buyer changed their mind
- Seller changed their mind
- Buyer unable to secure mortgage
- Buyer or Seller lost patience
- Poor survey result
- Legal issues uncovered
- Buyer tried to renegotiate price (gazundering)
- Seller accepted a higher offer (gazumping)
- Buyer and seller unable to agree on dispute
Seems like a bit of a minefield doesn’t it… no wonder so many house sales fall through. Unfortunately, the longer your house chain gets, the more likely you are to run into issues.
In this article we’ll take a closer look at each of these reasons.
If you’re facing or fearing a broken house chain, there are alternative, chain-free selling methods that can get your house sale back on track. A genuine house buying company can buy your house in as little as 7 days, or a timeframe to suit you. Take our free, 60-second quiz and see if a house buying company is right for you…
1. Buyer changed their mind
An offer to buy a property is not legally binding until contracts are exchanged.
This means that a buyer can change their mind for any reason at any time up to this point.
Buyers may have an unexpected change of circumstances, such as a job loss, a relationship breakdown or an illness that means that they may no longer need or want the home.
Sometimes they simply see a home they like better and decide to buy that instead.
Buyers are not obliged to tell sellers the reason they are pulling out of a sale. They may also be experiencing problems selling their own home and so cannot complete the purchase. Research from Quick Move Now says that 31% of home sales fall throughs are due to a change of heart by buyers.
Of course, it's not just your buyer you have to worry about. If you're at the end of a lengthy chain, there can be several buyers you're actually relying on. "Breaking the chain" is one way of keeping this list of people you're relying on small, giving you a better chance of getting your sale done.
2. Seller changed their mind
In the same way that a buyer can change their mind, sellers may also have a change of heart for all kinds of reasons beyond the buyer’s control.
A house can be withdrawn from sale at any time up to exchange of contracts. If this happens then buyers will lose out on survey fees, search costs and potentially even legal fees… with no way of getting compensation from the seller!
A survey by "Which?" found that in 27% of failed home sales, the seller changed their mind.
3. Buyer unable to secure mortgage
With the housing market so unstable, and the economy still under stress from COVID, mortgage lenders have become very cautious in who they lend to and how much they lend.
Even a buyer with a mortgage agreed in principle may find that they are unable to secure an actual mortgage offer when they find a property and apply.
Lenders may also value the property lower than the sale price that’s been agreed – called a “down valuation”. This leaves the buyer unable to get the full amount they need. This started happening a lot after the first COVID lockdown, and has remained a big constant in the property market since.
Financial and mortgage problems like this account for 15% of home sale fall throughs.
4. Buyer / seller lost patience
The house sale process often takes three months or more, and both buyers and sellers can lose patience if the process drags on for too long.
A slow sale could risk the seller being able to buy the home they want, while buyers may need to move quickly if they have a family on the way, they are moving for work, or they risk their own house sale.
If the sale stalls, it may be quicker to find another buyer or another home.
Slow progress accounts for 13% of property sale failures.
5. Poor survey
Buyers will often pull out of a home sale if the survey contains significant negative information.
Minor issues will not normally be a problem, but structural issues, such as subsidence, or problems with damp, leaks or rot, will generally make buyers think twice. (That's what happened in this case study. But dn't worry - it has a happy ending).
The sale can sometimes be rescued by agreeing a lower price to compensate for the work required. In other cases, a seller may agree to have the work done before completion.
However, many buyers see one problem as a sign that there are probably many more issues hidden away. No one wants to step into a money pit…
Poor surveys cause 11% of home sale fall throughs.
6. Legal issues uncovered
Similar to a poor survey, a poor set of search results could reveal a new road or development nearby can put buyers off.
There is little a seller can do if a new by-pass is set to block their open aspect, or a new school is going to significantly increase noise and traffic levels.
7. Buyer tried to renegotiate price (gazundering)
In a volatile market, buyers will often try their luck by reducing their offer at the last minute, banking on the fact that the sale is so advanced that the seller will have no choice but to accept.
This is called gazundering.
However, a seller is not obliged to accept this lower offer and may pull out of the deal as a result. Gazundering accounts for around 11% of failed home sales in the Quick Move Now survey.
8. Seller accepted a higher offer (gazumping)
Sellers will naturally want to get the best possible price for their home and so they will be open to higher offers, even after they have accepted an offer at the asking price.
A higher offer can mean thousands of pounds more, so even though this is unfair and unethical, it may be hard for the seller to resist.
This is called gazumping, and accounts for at least 5% of failed property sales.
9. Buyer and seller unable to agree on dispute
Few home sales are completely smooth and trouble free.
There will always be a need to negotiate and compromise on everything from who gets the carpets and curtains to who pays for the minor repairs required.
In most cases, the two parties can come to an agreement that keeps the sale on track, but sometimes they simply cannot find common ground and the dispute becomes a deal breaker. “Which?” found that 4% of house sales fell through because of a disagreement.
Flexibility and compromise are key when buying or selling a home. You may not get everything you want, but with a bit of compromise you will get the sale completed.
What should you do if your house sale falls through?
If your sale's fallen through (or if you're worried about chains in general), I can help. I've designed this short, free quiz to help you quickly explore alternative selling methods that can get your house sale back on track.
A genuine house buying company can buy your house in as little as 7 days, or a timeframe to suit you.
Although it is the easiest, most certain and fastest way to sell your house, it's not for everyone. Take our free quiz to find out if a house buying company is right for you.
If a cash house buyer looks like the right fit, I'll introduce you to the company I know and trust on your quiz results page.
Hit the button below to get started and get your house sale back on track...
By Matthew Cooper, Co-Founder of Home Selling Expert