There is nothing more frustrating than a property sale falling through. Understanding why property sales fall through is really important. Let’s look at the reasons why, and how you can minimise this from happening whether you’re a seller or buyer.
Property sales falling through after ‘sold STC’
Recent research on fall-through rates reported that nearly a third of property purchases fall through when the property is marked ‘Sold Subject to Contract’ (SSTC). That’s approximately 25% of all prospective purchases that reach this stage under offer or sold STC status end up falling through
When are property sales most likely to fall through?
Until a property exchanges contracts, it can fall through at any stage. However, there are several stages when a sale can be considered the most vulnerable. In some instances, this is early on, for example, if a buyer cannot secure their mortgage and is forced to withdraw.
If a sale falls through mid-transaction, this could be due to a multitude of reasons, the biggest culprit being things taking too long often due to poor communication.
Why property sales fall through
Sadly there are many reasons this can happen, from finances, and survey results to indecisiveness or poor communication, which are at the top of the list.
Here are our top 8 reasons why a sale might fall through with some suggestions on how to overcome them.
Good communication is key and that’s important for everyone involved – the seller, buyer, and estate agent. Understanding why property sales fall through can often be linked to breakdowns in this vital communication.
If either side is slow to move forward, then this creates uncertainty about commitment or readiness to move.
However, if there are genuine reasons that are causing delays it’s better all-around to be open and honest about them. This helps prevent uncertainty creeping in and creates a more collaborative atmosphere.
There may be a greater willingness to wait when there’s effective communication with regular updates about any hold-ups. When everyone stays in touch and shares information, it makes the whole process a lot easier.
2. Change in financial circumstances
Financial issues can come from several factors, for example, a mortgage rejection or an unexpected change in financial circumstances, like losing your job, a reduction in income, a divorce, or interest rate hikes.
Unexpected changes, unfortunately, do happen and again communication is key here too. Be open and share what you’re trying to do to fix things if you can.
3. Survey results
Understanding why property sales fall through often involves looking at the result of a house survey report. The result of a house survey report can reveal issues with the property and lead to new price negotiations for the property or a buyer withdrawing their offer.
As a homeowner, you are obliged to let your estate agent and therefore buyers know of known problems. Being aware of your obligations before putting the house up for sale on the market can help avoid these pitfalls.
4. Poor communication
There is nothing more frustrating than not knowing. Radio silence when you’re waiting for answers creates frustration and as mentioned above, uncertainty.
Be aware of this throughout the conveyancing process and be responsive at all times if you’re going away or are likely to be unavailable, be sure to let everyone know. This is particularly important if you’re in a property chain.
5. Over-valuing your property
Over-valuing your property can put off potential buyers from even booking a viewing which can ultimately delay the sale of your home.
Look at the local housing market with your estate agent and ask them to back up suggested asking prices before you commit.
Working out how much your home is worth will depend on several local and wider market factors. Your agent should advise you based on this and in some cases, this may mean having to heed advice you don’t always want to hear.
6. Collapsing chains
A key factor in understanding why property sales fall through is the nature of property chains. Property chains often present complexities. If one sale in the chain falls through it can have a domino effect, impacting multiple transactions.
In cases like this, it’s within your interest to micro-manage your purchase (or sale). The first step is to gather as much information as you can relating to your part of the chain and stay on top of communication and progress.
Build a good relationship with your estate agent who will be able to share information on the number of people and properties involved in the chain. A good estate agent will check each link in the chain on a weekly or fortnightly basis.
7. Not using the right agent
As a homeowner selling their house choosing the right estate agent is crucial. An experienced agent not only markets your property effectively but also navigates the complexities of the conveyancing process.
They play a vital role in ensuring smooth communication and addressing potential issues that could cause a sale to fall through.
8. Gazumping and gazundering
Gazumping can be more common when it’s more of a seller’s market, in other words, a competitive market, where there are fewer houses on the market. This situation occurs when a seller accepts a higher offer from a new buyer. Despite already agreeing on a sale, sellers sometimes face complications. While it’s not illegal it’s not good practice.
Gazundering is where a buyer lowers their offer at the very last minute in a transaction chancing that they might be able to get away with it.
Both factors often cause property sales to fall through and should be avoided.
Do estate agents have to tell you why a property sale fell through?
Estate agents, although not obligated to disclose specific details about a property sale falling through, should strive to provide feedback to prevent such incidents from recurring.
What to do if my house sale falls through?
If your property sale falls through, it’s important to regroup, address any specific issues, and explore different options based on your circumstances.
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Last Updated: December 20th, 2023