A survey by consumer watchdog Which? found that almost three out of ten house sales fall through. With so much time and effort invested in each sale, it's bizarre that so many fail.
So why do so many house sales fall through?
House sales fall through for many reasons, including a poor survey, financial issues, a break in the chain or simply the buyer or seller changing their mind. In England and Wales, you are not legally committed to the sale until contracts have been exchanged, so there is nothing to stop the sale falling through before this.
In this article we will take a look at:
- Why do so many home sales fail?
- Why do buyers pull out of house sales?
- Why do sellers pull out of house sales?
- How to put your transaction back on track
1. Why do so many house sales fall through?
A property is by far the biggest sale or purchase most people will ever make in their lives, so it is no surprise that many are extra cautious when it comes to making their final decision.
A wide range of factors will come in to play in making that decision, including practical issues, financial matters and often personal factors too.
Home sales don’t always fail because the buyer pulls out - but buyers do cause the majority of fall-throughs. In fact, failed sales are split roughly three to one between buyers and sellers.
- 73% of home sale failures down to the buyer pulling the plug,
- While the seller ends the sale 27% of the time.
So, what causes each group to change their mind?
1.1. Why do buyers pull out of house sales?
Buying a home is a huge commitment. For one, it usually involves a mortgage for a hefty sum, which is going to be paid back over a lengthy period. But it's also where you're going to spend a good chunk of your life.
No wonder so many buyers second-guess themselves and end up changing their mind.
Buyers have to be sure that the property is right for them before they proceed. But even after an offer has been made, buyers may change their mind for a number of reasons.
Based on our experience, these include:
- Poor survey results. The survey could reveal structural or other problems with the property that the buyer is not prepared to take on, even if the price is reduced to compensate.
- Problems with searches. Local authority searches may reveal issues with the location such as future building works, or new infrastructure projects that will change the value of the property. Coal searches could reveal nearby coal mining works, but which affect the buyer’s chance of getting a mortgage.
- Financial issues. Changes to the mortgage rules by the Bank of England in 2017 have made it harder to get a mortgage. From time to time, issues with the economy can lead to more job losses too. If the buyer can’t finance the purchase then they can’t proceed.
- Change of circumstances. Divorce, unexpected pregnancy, career changes, loss or illness of a family member and many other personal reasons can mean a buyer is no longer able to move as planned.
- Finding somewhere better. Many buyers will continue to look at properties even after making an offer – especially if the purchase starts to stall. If they find something better, they may pull out of the original sale.
- Chain issues. A buyer may be keen to go ahead with the sale, but they may have problems selling their own home and be unable to proceed.
It doesn't help that the due diligence comes after a sale has been agreed. In other words, the first thing you do is agree the price, and then you look into what you're actually buying.
If anything unexpected comes up, you're free to withdraw. And because people are free to withdraw, they'll pull out for any reason at all - even if they simply change their mind.
1.2. Why do sellers pull out of house sales?
Even after they have accepted an offer, the seller is still legally allowed to pull out of the sale of their property. It is their home and they do not have to sell it if they don’t want to.
Sellers may change their mind for many different reasons, including:
- Gazumping. Sellers may receive a better offer from another buyer. This is known as gazumping, and while it may not be ethical to accept a higher offer after they have already accepted one, it is not illegal. They have the right to get the best possible price for their property.
- Gazundering. If the buyer tries to reduce their offer at the last minute to force a better deal, the seller may pull out of the transaction altogether.
- Survey problems. The buyer may not be willing to come down in price or make repairs to their property in response to a poor survey and decide to call off the sale instead.
- Change of circumstances. As with buyers, a wide variety of personal issues can make a seller change their mind about selling.
- Chain issues. If the seller’s own house purchase falls through, then they may no longer be able to move and so cannot sell their existing home.
- Tired of waiting. If a property sale is taking too long, the seller may pull out in order to find a better buyer who can move sooner. According to Which? this happens in around 13% of cases.
2. How to save your property sale after a fall-through
In many cases, a failed property sale is irretrievable. If the buyer has found a better property, or the seller has received a better offer, then the sale will fail.
Unfortunately, the people this tends to hit the hardest are home sellers who have an onward purchase. If a seller loses their buyer, they won't be able to buy the property they've got their hearts set on.
Fortunately, there is a solution. It just comes at a bit of a cost.
2.1. Selling to a cash house buying company
If your property sale has fallen through but you really need to get a deal done, then you could consider selling your home fast to a cash house buying company.
You may not get as much as you would on the open market, but the price will be guaranteed and the sale will be swift. It may be worth considering this option if it means you still get to buy your dream home.
Home buying services can also be useful if the seller is looking to pull out because the process is taking too long. With house buying company, you can get an offer in just 24 hours and a sale in as little as two weeks.
The downside is the price you'll achieve. You should expect to sell for around 85% of your previous sale price. (Although the company will cover all your fees, and you won't have an estate agent to pay).
It can make sense for some sellers, and you may be able to spread the reduced price across other parties in the chain. They'll also be keen to avoid the chain collapsing, so may be willing to take a reduced price to hold everything together.
Read more about it here:
Recommended: What's the fastest way to sell your house?
By Matthew Cooper, Founder of Home Selling Expert