Why Do House Sales Fall Through (and What to Do)?

Why Do House Sales Fall Through (and What to Do)?

The number of house sales that fall through in the UK changes month by month, but in recent years, the failure rate has fluctuated between 20% and 50%. That means that whenever you choose to sell your property, there is between a one in five and a one in two chance that the transaction will not reach completion.

So, what are the most common reasons why house sales fall through, and if it happens to you, what can you do about it?

The Top 7 Reasons Why a UK House Sale Falls Through

  • Property Chain Problems

A property chain is created when multiple house sales rely on one another. Chains are very common in the UK. Apart from first-time and cash buyers, most people can only buy a new home when they have sold their current one.

So, what’s the problem? It only takes one transaction to fall through or experience delays for a ripple effect to be felt along the chain. When one house sale fails, others are likely to follow, a bit like falling dominoes. If you lose your buyer due to property chain problems, you may be unable to purchase your dream home, resulting in another failed sale.

 

Check out our blog, “How to Find a Chain-Free Buyer For Your Property”.

 

  • Unexpected Survey Results

Home surveys are not a legal requirement, but most buyers will opt to have one before proceeding with their purchase. Buying a house is a huge investment, and your buyer will want to be sure that your home is worth what they have agreed to pay for it.

Surveys often reveal minor niggles that can be easily fixed or dealt with over time. However, if the need for major works is identified or the property is found to be structurally unsound, there is a risk of the sale falling through. The buyer may try to renegotiate the sale price to cover the cost of the work required, but for some, the prospect of lengthy, expensive and disruptive renovation work will be too much, and they will withdraw from the sale. 

  • A Failed Mortgage Application

Unless you’re lucky enough to receive an offer from a cash house buyer, your buyer will need to secure a mortgage to purchase your home. If you’re selling via an estate agent, they should qualify all offers by checking that the buyer has the funds to go through with the purchase. You can do this by requesting that interested parties provide an agreement in principle (AIP) to back up their offer. While an AIP is not a guarantee of a formal mortgage offer, it gives a good idea of how much the buyer can borrow.

However, not all estate agents will complete this important step in the selling process, and even if they do, a mortgage application can still fail even when the buyer has been given an AIP for the same amount. This can happen for several reasons. For example, the market is volatile, and during the time that has elapsed between the lender approving the AIP and receiving a mortgage application, their lending criteria has changed. If your buyer cannot raise funds they need to honour the agreed price, and you’re unable or unwilling to reduce the price, the sale will fail.

If your buyer has pulled out due to difficulties securing the mortgage they need, sell your house fast for cash to House Buyer Bureau and keep your plans moving forward.

  • Gazumping and Gazundering

Gazumping occurs when a seller accepts an offer but then rejects it in favour of a higher offer that comes in subsequently. This may also happen if there are significant delays on the buyer’s side and the seller loses patience so they go with a new offer.

Gazundering occurs when the seller accepts an offer, and the buyer subsequently reduces their offer. This is a strategy that unscrupulous buyers often use to force the seller into accepting a lower sale price because they need a quick house sale.

While frustrating for whoever is on the receiving end, neither gazumping nor gazundering is illegal. If this happens to you, there is no recourse to action, and you will have to foot the bill of any losses you incur. House sales are agreed “subject to contract” (STC), which means that neither party is committed to the sale until contracts have been signed and exchanged.

  • A Change of Heart

Emotions play a big part in the decision to buy — or not to buy — a new home. One of the most common reasons for a property sale to fall through is that the buyer has a change of heart.

This may be that after the excitement of viewing and offering, the buyer has time to reflect on what the property offers them and decides it’s not suited to their lifestyle or that the mortgage they need would stretch them too much financially. Sometimes the buyer finds another property they prefer after making an offer on a different one. And life events, such as  job loss or relationship breakdown can also negatively impact a buyer’s ability to purchase a house. 

Whatever the reason, if the buyer is no longer interested in buying your house or can no longer do so, there is little the seller can do but restart the process of marketing their home and looking for a new buyer.

  • A Down Valuation

If you accept an offer on your home and the buyer’s mortgage surveyor subsequently values the property for less, this is called a down valuation. For example, you accept an offer of £250,000, but the surveyor’s valuation is £240,000.

Down valuations have increased over the past year or two due to soaring demand for properties from buyers. Many sellers have been tempted to bump up their asking prices, and buyers have been willingly offering over the odds to beat off fierce competition. But, just because your buyer is willing to pay more than your home is worth does not mean that their mortgage provider will be prepared to loan them the amount they need to buy. The mortgage company will base their loan offer on the property’s market value, as determined by its surveyor. A down valuation often means a shortfall between the loan offer and the amount the buyer needs to proceed with the purchase. Problems arise if your buyer does not have the means to make up for this shortfall and has to withdraw from the sale. They may try to renegotiate the sale price first.

  • Estate Agent Issues

If you’re using an estate agent to market and sell your home, be sure to check in with them regularly and request updates on how they’re progressing with the sale. Many dedicated, experienced and hard-working estate agents deliver exceptional customer service and pull out all the stops to sell the properties on their books. But some agents will take on more clients than they can handle and not give their full attention to selling your home. Successful estate agents are proactive and work hard to create and build on selling opportunities.

If your agent fails to chase up the necessary paperwork to complete the sale or has poor negotiating skills, this could result in a failed house sale.

 

You don’t have to use an estate agent to sell your house. Read our guide, “How to Sell My House Without An Estate Agent”.


  • Delays in the Conveyancing Process

At the peak of the house-buying frenzy that began after the first lockdown ended in May 2021, conveyancers struggled to keep up with demand. All house sales were frozen between March and May 2021, which created a backlog of transactions.

While buyer demand remains high, the backlog has been largely cleared. However, there are many potential causes of delays in the conveyancing process to be aware of. For example, if the seller is slow to instruct a solicitor or conveyancer, there is a lack of planning permission for changes made to the property or if other parties in the chain are working to different timescales. 

If serious delays arise, your buyer may lose patience and pull out of the sale.

What to Do if Your House Sale Falls Through

If you are unlucky enough to lose your buyer for any of the reasons listed above, what’s the best way to manage the situation? 

  • Wait for Another Buyer

If your property is in demand, put it back on the market. You shouldn’t have too long to wait for another buyer who is eager to make an acceptable offer.

If the market is slow or your property is hard to sell — perhaps it is a non-standard construction, or you have noisy neighbours — this is still an option, but be prepared to wait. It could take some time for you to find a new buyer. 

  • Renegotiate

You might be able to save the sale by negotiating a lower sale price. This will depend on why the buyer has withdrawn from the sale. If it is due to problems highlighted in the survey or a down valuation, dropping the price could prevent the buyer from walking away.

You might be reluctant to accept a lower offer, but a failed sale can cost a significant amount in lost legal fees and other costs, plus you will have to go through the process again when you find a new buyer. If you need to sell your house fast, agreeing to a lower sale price might be the most practical and cost-effective option.

  • Reach out to Buyers

If you turned down other offers in favour of selling to the buyer who has now pulled out of the purchase, or you know that there were other interested parties, ask your estate agent to contact them and offer a viewing. If any of these potential buyers are still keen to buy your home, this will be a much quicker route to a sale than putting your property back on the market and hoping for the best.

  • Consider Alternative Ways to Sell Your House

Selling on-market with an estate agent is not the only way to sell your property. If your buyer withdraws from the sale and you’re in a hurry, or perhaps you don’t want to go through the process of property viewings and meetings with estate agents again, explore alternative routes to sale.

Once the preserve of investors and developers, property auctions have soared in popularity in recent years, especially modern (online) auctions. The buyer must complete the sale within 28 days of a traditional auction and 56 days of a modern auction. However, auction house fees can be high, and there is no sale guarantee.

If you need a quick house sale and are prepared to accept a slightly below market value price, selling to a cash house buying company will give you a guaranteed sale for cash in as little as seven days. And you might be surprised by how little difference there is between a traditional sale for your home’s full market value and a sale to a “we buy any house” company when it comes to profit. If you sell to House Buyer Bureau, there are no estate agents or legal fees to pay, and you won’t have to shell out for expensive home improvements to make your property market-ready. 

 

Check out our handy price comparison table and learn more about what we pay.

 

House sales can fall through for many reasons, and if it happens to you, it can be frustrating, disruptive and expensive. If you’re selling a house to buy another one, you could also run the risk of losing the dream home you’re waiting to buy.

House Buyer Bureau has bought hundreds of houses since 2011. We help our customers sell their houses fast and stay on track with their plans. If your buyer pulls out and you need a quick cash house sale, contact us for a free, no-obligation cash offer. 

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