5 reasons a property transaction falls through (and how to navigate it)

May 27th, 2022

There are plenty of reasons why a house sale or purchase can fall through. Generally those reasons fall into five categories.

A chain that breaks

If you’re buying a home which isn’t your first, there’s a chance you’re in a chain. This means several purchases and sales rely on each other to complete. Of course, these transactions are out of your control.

They can be unpredictable, difficult and complicated, and you need to have a good agent and a good solicitor acting for you to help guide you through.

To understand the impact this can have on you, take a look at this very helpful video from the incredibly helpful Phil Spencer (he of Location Location Location fame).

Nervy survey

In most cases, buyers will opt to have a survey on the property to ensure they don’t come across any surprises when they move in.

A poor survey report doesn’t mean the end of the transaction! In many cases, renegotiation can be the answer, and a bit of give and take on both sides will do the trick.

Where a property is found to be structurally questionable, it is highly likely that the buyer will pull out – the deal then collapses and the seller is left to address the issues raised.

Bear in mind that agents cannot then remarket the property without informing new buyers of the issues raised. In the event the issues are addressed, the agent is obliged to disclose those issues and state that they were subsequently addressed.

Money matters

Contrary to popular belief, an agreement in principle doesn’t guarantee that you will be able to obtain finance for a property. It is ‘in principle’ and doesn’t take into account the details relating to that specific property.

There are many reasons why a lender may refuse a buyer a mortgage. These include factors such as a change in their circumstances (job loss, risk of redundancy) or an incorrectly completed application form.

The biggest issue facing buyers and sellers nowadays is ‘downvaluations’ (which many valuers would argue is not an acceptable term)!

With so many properties going to ‘best and final’ offers, buyers are resorting to overbidding. When a valuer then comes to check that the property stacks up for loan security purposes, they can find no evidence to support the price offered.

This results in a ‘downvaluing’ of the property – leaving the buyer short on finance and having no choice but to either find the money from another source or renegotiate.

Alternatively, they will withdraw from the purchase. I advise all my sellers that they must carefully consider gargantuan offers from those requiring a mortgage as this is a very real risk.

Gazumping and gazundering

Gazumping is where a seller initially accepts an offer from a buyer, and then subsequently finds another buyer willing to pay a greater sum.

A buyer can also lower their offer at any stage, usually at the last minute. Both practices are frowned upon (totally immoral), but unbelievably, they are legal up until the exchange of contracts.

Change of heart (or circumstance)

Sometimes it’s simply a case that we humans change our minds. This is one of the most frustrating reasons, especially when you have committed time, energy and money, but there is little you can do about this.  Again, all perfectly legal up until exchange of contracts.

Ultimately so much of the process is out of your control and in almost every instance, you are putting your trust and faith into complete strangers to do what they say they are going to do.  My advice to you would be to work closely with both the agent selling your property and the agent of the property you are buying and, probably most important of all, use a solicitor who has been recommended by a friend, family or trusted advisor.  Look for evidence of their responsiveness and willingness to speak to you the client on the telephone or by email.  And pay attention to the adage, “buy cheap, pay twice”.

If you would like any advice on the house buying and selling process, I’m happy to help.