Buying, selling and moving home 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?

Top 5 reasons your house sale might fall through

According to research from Which? one in four house sales fell through in 2019. However, since the outbreak of Covid-19 there were 12% more fall throughsin the first year.

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

1 - Mortgage problems

Mortgages can be a big stumbling block for homesellers. 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 job security or income, 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.

More issues can arise if the buyer’s mortgage lender values the property at less than what was offered in the mortgage agreement in principle. If this happens, the buyer will be unable to get the funds they require to purchase the house from you. As a result, they will be forced to either renegotiate the price with you, 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

Property chains are a string of transactions that are linked when selling and buying property. For instance, a 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’s no way to salvage the transaction. 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.

There are many reasons why a chain could break. Mortgage issues, which we’ve already looked at, are sadly a common one.

3 - Issues identified by surveys or conveyancing

There are a variety of surveys and legal inspections that need to take place during property transactions. 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). The legal practicalities of property transactions take time — waits for documentation arriving, slow local authority searches or unresponsive legal representatives can cause weeks of delays. During this conveyancing process, parties may lose patience or start to look elsewhere, causing issues with the chain, or causing the sale to fall through completely.

4 - Due to Gazumping

Gazumping 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, gazumping is fairly common.

As a buyer, there's not a lot you can do, despite how inconvenient the situation is. You could approach the seller with a better offer (if possible), or provide reasons as to why your purchase is better for them. You may be able to accommodate particular dates, or carry other benefits like no property chain. However, it’s best not to overstretch yourself financially. Your mortgage lender could nip this in the bud during their valuation, and cause the sale to fall through anyway.

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5 - Due to Gazundering

Another equally weird phrase to get your head around is gazundering. This is when a buyer offers less money to a seller than they previously promised at the last stage of the transaction. For example, if the buyer’s lender values the property at less than what the buyer offered, the buyer may try to gazunder the seller as they are unable to pay what was originally 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 a potential buyer is still in the market to buy.

How do you stop a house sale falling through?

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 or cause issues with the home loan. Buyers should also seek out a Mortgage Agreement in Principle (AIP) from lenders before making any offers. As indications of how much buyers are allowed to borrow, AIPs allow you to view properties within an appropriate price range.

Homesellers 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, to ensure that finances are in place before going ahead with a sale.

It may also be worth carrying out surveys on your property before putting it on the market. Any issues with old properties can be addressed before a buyer discovers them.

Although chains rely on conveyancers to keep things moving, both buyers and sellers should chase their legal representatives regularly to find out the status of the transaction and ensure they’ve provided all the documentation necessary to keep the process running smoothly. If you are ‘chain-free’ (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 seller in the transaction.

What to do if your house sale falls through

If your sale falls through, it’s normal to feel vulnerable or insecure about your future. Remember, property transactions can fall through for a bunch of reasons, many of which are often out of your control.

If you find yourself in this unlucky situation, here’s some steps to consider.

1. Use a different estate agent who specialises in your local area or home type. Our free GetAgent Comparison Tool analyses the performance of local agents to help you choose the best for your needs.

2. Sell your home privately. Some people decide to sell their homes without the involvement of agents. This would require the seller to have relevant connections of their own and enough free time to market the property. 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. Without these key skills however, this method can prove both expensive and exhausting.

3. Finding a cash buying company can be handy when you need a quick sale for relocation, but they’re particularly useful when a house sale falls through. However, you may have to sacrifice a large percentage of the profit for the convenience. Selling with a top-performing local estate agent will nearly always get you the most for your home.

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What are your legal rights when it comes to a sale falling through?

Unlike other countries, offers are not legally binding in the UK. A sale is only guaranteed once you have exchanged contracts, or as in Scotland, where the missives are concluded (sale conditions are negotiated between parties). So if your sale or purchase falls through before the exchange of contracts, there’s little you can do legally, apart from figure out your next move.

What if a sale has fallen through multiple times?

If buyers have dropped out and your sale has fallen through multiple times, it might be time for you to review what you are offering as a seller. Here are three things you should do:

• 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 and solicitors 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 work upfront, before you put your house up for sale.