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  1. Blog
  2. House Sale Fallen Through? What to do and why it happens
House selling tips
14 January 2022

House Sale Fallen Through? What to do and why it happens

Sam Edwards
Writer

Buying, selling and moving homes can be a stressful process, even without the setbacks that a failed offer can create. So what do you do when your house sale or purchase falls through unexpectedly? You may be unsure of your rights, the next steps or where you stand in the chain — so keep reading to find out all you need to know about a sale falling through.

Top 5 reasons your house sale might fall through

According to research from Which? one in four house sales fell through in 2019. The market has been buoyant since the pandemic, and with the increased prices and busy market, there were 12% more fall throughs in 2020.

Here are some of the most common reasons that sales or purchases might slip through the fingers of the parties involved.

1 - Mortgage problems

There are a couple of reasons that the house sale may fall through when it comes to finances. First of all, a buyer’s offer could expire by the time they make an offer. If there is a change in their circumstances, such as their job security or income level, then they may not be able to get the full loan amount they were promised by the lender, leading to a problem in the mortgage process.

If your buyer’s mortgage lender has valued the property at less than they have offered in your mortgage agreement in priciple, then they will be unable to get the funds they require to purchase the house from you. The buyer will then have to renegotiate the price with you, try to find the rest of the cash from elsewhere, or find a new lender who values the home at a higher price (although lenders are unlikely to vary massively).

2 - A break in the chain

The property chain is a string of transactions that are linked when selling and buying property, such as the house sale that has to be completed before a buyer can buy your home. Just one sale falling through can affect the whole chain, or even break it if there is no way to salvage a sale or purchase.

A broken chain could be a result of mortgage issues or any of the following reasons we’re about to look at. Though your link in the chain may be ready, if another transaction in the chain has fallen through, your sale or purchase can be rendered impossible.

3 - Issues identified by surveys or conveyancing

When selling and buying a property, there are a variety of surveys and legal inspections that need to take place. Home surveys can uncover a range of structural or cosmetic issues, which could cause a buyer to renegotiate their offer (especially if the issue raised will cost them a lot of money to solve). A property survey is key so both parties are aware of these issues.

The legal practicalities of property transactions can take time — waits for documentation arriving, slow local authority searches or unresponsive legal representatives can create weeks of delays. During this conveyancing process, parties may lose patience or start to look elsewhere, causing issues with the chain or causing a sale to fall through completely.

4 - Due to Gazumping

This unusual phrase is when a seller accepts a higher offer after they’ve already agreed to a buyer. Accepting an offer is not legally binding, and in sought after areas or competitive markets, this can be common if the seller receives a higher offer later in the process before contracts are exchanged.

As a buyer, there's not a lot you can do, as inconvenient and rude as the situation is. You could approach the seller with a better offer (if possible) or reasons why your purchase is better for them (you can accommodate dates or have other benefits to offer such as no chain), but do not be tempted to overstretch yourself financially, or else your mortgage lender could nip this in the bud during valuation, and cause the sale to fall through anyway.

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5 - Due to Gazundering

This next, equally weird phrase, is when a buyer offers less money to a seller than they previously promised. For example, if the mortgage lender involved values the property at less than the buyer offered, then the buyer may have to gazunder the seller as they won’t be able to pay what was agreed.

Again, while this is a very annoying situation, the offer is not legally binding. As a seller, you can reject their new offer, or work with them to make up the difference. You can then put the house back on the open market or accept another offer if that potential buyer is still in the market to buy.

How do you stop a house sale falling through?

There are some ways you can prevent a sale from falling through from happening, that are within your power.

To avoid a fall through with a mortgage lender, as a buyer you should research sale prices in the area before making your offer so that your valuation won’t be dramatically different and cause issues with the home loan. Buyers should also seek out a Mortgage Agreement in Principle (AIP) from lenders before making offers so that they view properties within an appropriate price range and have some guidance from the banks about how much they will be allowed to borrow.

Sellers can seek valuations from several estate agents before listing the property so that the value is realistic and achievable. Sellers should also try to gain confirmation of funds from potential buyers so that they have evidence finances are in place before going ahead with a sale. It can be wise to carry out surveys on the property before you put it on the market so that any issues with old properties can be addressed before a buyer pulls out (as is already the case in Scotland).

Although chains rely on conveyancers to keep it moving, both buyers and sellers should be sure to chase their legal representatives regularly to find out the status of the transaction and ensure they have provided all documentation and signatures necessary to keep the process running smoothly. If you are ‘chain-free’ (ie: a first-time buyer, a cash buyer, or a non-forward sale) then you can also use this as leverage or as a benefit to the beneficiary in the transaction.

What to do if a house sale falls through

After a sale falls through it’s usual to feel a little vulnerability or insecurity about the sale. Here are a few methods to consider when taking those next steps:

  1. Use a different estate agent, who specialises in your local area or home type. You can research their performance to choose the best for your needs.
  2. Sell your home privately. It has become increasingly more popular to sell a home without the involvement of agents, but this requires the seller to garner interest and have the relevant connections on their own. However, if you know someone who would be interested in purchasing your home, or even doing a house swap, you can take the sale into your own hands.
  3. Finding a property buying company can be handy when you need a quick sale for relocation for example, but they’re particularly useful when a house sale falls through. Finding a new buyer on the open market can be time consuming, but using a property buying firm means you can sell your house in as little as seven days without the involvement of solicitors or agents — but you may sacrifice a little on the price for the convenience.
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Unlike in other countries, offers are not legally binding in the UK. A sale is only guaranteed once you have exchanged contracts or in Scotland, the missives are concluded (sale conditions are negotiated between parties). So if your sale or purchase falls through before this exchange of contracts, there’s little legally you can do, apart from figure out your next move to get the house sold. Nationwide recently found that failed property transactions ended up costing the parties involved £2,700.

What if a sale has fallen through multiple times?

If buyers have dropped out multiple times, it might be time for you to review what you are offering as a seller:

  • Improve the conditions of the house, as buyers may be scared of the costs involved in correcting survey issues or structural damage.
  • Ensure pricing is accurate, or else mortgage lenders may be hesitant to give out loans for the property if you’re asking for too much,
  • Ask for proof of finances early so funds are verified and available for the sale to complete, and communicate regularly with the entire chain if possible, to keep things moving forward.

Do solicitors or estate agents charge when a house sale falls through?

Many estate agents or solicitors will work on a no sale no fee basis, so if the sale falls through you will not pay their fees. However, you may be required to pay for any costs for third parties that the estate agent or solicitor had incurred (such as for search fees, identify checks, or for conveyancing costs, depending on how far the sale had gone).

You can ask about these costs and how they will work upfront, before you put your house up for sale, or if you’ve had a sale fall through in the past, to understand what you’ll be charged.

FAQs

Can you sue if a sale falls through?

You will only be able to take legal action for financial loss if contracts have already been exchanged.

Can a seller pull out of a sale?

Sellers can withdraw from a sale or reject offers up until the exchange of contracts.

Can a buyer pull out of a sale?

A buyer can amend their offer, or withdraw the offer completely and pull out of a sale, as long as the exchange of contracts has not happened yet.

How many sales fall through in the UK?

On average 1 in 4 house sales fall through.

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