You’ve found your dream home and your offer has been accepted. But you can’t sit back and relax yet. There is a risk the deal could fall through. But why do house sales fall through? At what stage? And how can you keep your move on track?
Why do house sales fall through?
Buying or selling a home is a lengthy process with a number of different people and professionals involved. This means there are lots of things that can go wrong and cause a sale to fall through.
But why do house sales fall through exactly? The most common reasons are:
The buyer changes their mind
The seller gets a higher offer – known as gazumping
The buyer can’t get a mortgage
Conveyancing delays
A bad survey
The buyer can’t sell their own property –a broken chain
The buyer drops their offer at the last minute – known as gazundering
The reasons are often influenced by the conditions of the housing market and wider economy at the time. With the current cost of living crisis alongside record high house prices you can see why buyers might reflect and reconsider part way through the process.
How often do house sales fall through?
Nearly 3 in 10 (28.8%) residential property sales fell through before completion in 2024, according to Quick Move Now.
The data suggests that there is continued buyer caution. The main reasons for sales falling through include the buyer changing their mind, pulling out after the survey, or unsuccessfully attempting to renegotiate a lower purchase price after the sale had been agreed.
And when we look back at previous years data, it looks like things are getting worse. Our YouGov study of Home Selling Pain Points back in 2018 found that at that time, only one in five transactions failed to go through to completion.
Will I lose money if my sale falls through?
In all likelihood, yes you will be out of pocket if your house sale falls through. How much you’ll lose depends on where you are in the process. As time goes on, the losses can increase.
Our research found that the average seller experiencing a failed transaction ended up £2,727 out of pocket, and one in ten surveyed incurred more than £5,000 in costs.
If the transaction falls through, the buyer will have to absorb the costs associated with local searches, mortgage arrangement fees and getting a survey. Both parties will need to pay their conveyancer for all the work done to date, unless they have a ‘no sale, no fee’ conveyancing agreement.
As a buyer, the best way to protect yourself from losing money in the event of a failed transaction is by taking out Home Buyers Protection Insurance. You can do this when you have an offer accepted on a property and must have taken out a policy before you appoint a conveyancer. This insurance will enable you to claim back some of your conveyancing fees, survey costs and mortgage fees if your purchase falls through.
How to avoid your house sale falling through
Now we know why house sales fall through, let’s explore why they happen and what you can do to avoid it happening to you.
1. The buyer changes their mind
Buying a house takes about four months, but you could find several months pass between an offer being accepted and keys changing hands. The longer it takes to exchange contracts, the more opportunity there is for things to go wrong. People can change their mind or find a better offer.
What can I do to avoid this?
2. Gazumping
Gazumping is when another party makes a higher offer on the house you are in the process of buying and has that offer accepted, thus setting you back to square one.
What can I do to avoid this?
Again – keep things progressing towards exchange of contracts. Once contracts are exchanged, the agreement is legally binding
Ask for the property to be taken off the market once your offer is accepted. This reduces it’s exposure to new potential buyers
For more tips read our guide to gazumping.
If another buyer comes in with a much higher offer than you, there’s very little you can do to stop the seller accepting it. But you can insure yourself against this happening by taking out home buyer protection insurance
3. Mortgage problems
Mortgage problems can vary. For example, offers can expire before the purchase has managed to complete or a change in circumstances may mean the buyer can no longer borrow as much as they need.
Buyers usually have a mortgage agreement in principle before making an offer. This is the best form of reassurance buyers can give that they have the money in place, but it isn’t a guarantee.
What can I do to avoid this?
Sellers should ensure their buyer has a mortgage agreement in principle in place.
Once your offer has been accepted, buyers should get their mortgage in principle turned into a formal mortgage offer asap.
Buyers should avoid any major financial changes ahead of or while moving house e.g. changing jobs or contract type, as this could impact your borrowing power.
Use a mortgage broker. They can help you find the best deal and improve your chances of having your application approved.
Down valuations may be another factor at play for buyers trying to get a mortgage. Your lender will want to carry out a mortgage valuation survey. A down valuation is when your mortgage lender believes the property is worth less than your offer price.
What can I do to avoid this?
Before making an offer, carefully research the sold prices of similar properties. You’ll want to make sure you’re not over paying.
In the event of a down valuation you can either ask the seller to lower their price or raise extra funds to boost your deposit.
4. Conveyancing delays
Conveyancing delays often happen where both parties are not as responsive as they should be. Delays also occur in more complex cases, such as if the purchase is part of a divorce case, probate, or a leasehold property.
What can I do to avoid this?
Buyers and sellers should instruct a conveyancer early on and give them as much information and paperwork possible.
When choosing a solicitor don’t just focus on the fees. It is important to use a firm with a good reputation who will help make your house purchase a smooth process.
5. A bad survey report
Another common reason for a house sale falling through is if the survey highlights problems with the condition of the property.
What can I do to avoid this?
Sellers should try to be objective when preparing their house for sale. If you’re looking for a quick sale at full asking price, make sure the condition of your property is top notch. Otherwise, don’t be surprised when the survey identifies problems and becomes a source of delay.
Buyers should make sure they get a house survey that gives them the level of detail they are looking for. If the property is in need of repair, you can get quotes for works and use these to renegotiate your offer.
6. The housing chain breaks
If you are a buyer but first have to wait until the seller buys their next home, you’re in a property chain. If just one person drops out, then the whole property chain can collapse, and you and everyone else in that chain can be back to square one.
What can I do to avoid this?
Think twice before entering a transaction with a long chain
Having a good estate agent and conveyancer should help keep the chain moving
Sellers could hold out for a chain free buyer: a first time buyer or cash buyer for example
As a seller you could break the chain by moving in with family, or rented.
7. Gazundering
‘Gazundering’ is a practice whereby a buyer lowers their offer at the last minute, just before contracts are exchanged.
What can I do?
Be realistic about your asking price. If you set your house price way above what it should be there is much more chance of a buyer lowering their offer.
Move quickly! The quicker you can get to exchange of contracts the better.
Have a second, interested buyer in reserve. If you are concerned your buyer might deploy this underhand tactic, then it may be worth asking your estate agent to keep in touch with other prospective buyers.
Work out your finances. If you’re in a chain, chances are you’ll not want gazundering to scupper your move. See if you can absorb a reduction in price and still move.
Article From HomeOwners Alliance
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