Be Wary Of The Cost Of Collapsed Property Deals
Given the level of activity in the housing market of late, it shouldn’t be a shock that the amount of money in collapsed deals has risen. Going forward, with the stamp duty holiday deadline still looming, there is a genuine concern that the number of collapsed deals will increase.
A recent study offers evidence that the cost of property deals breaking down is £607 million each year. This is a significant figure, but projections are that 2021 figures will be even higher.
At Prestige & Village, we know the issues which impact property deals, and we will do everything we can to minimise your risk and exposure. In the current climate, there are some issues that cannot be managed, but we are on hand to help you make informed decisions and to mitigate risks as best you can.
Common issues that arise that lead to collapsed property deals
The following issues are ones that property buyers and vendors should familiarise themselves with the common issues that lead to collapsed property deals.
Broken chains cause delays to break down
If you know anything about the property market, you know the risks associated with property deals. In many cases, there is no issue with the buyer or seller directly, but because another deal that is connected to theirs collapses, the deal falls through.
Conveyancing delays are an issue
Buying a home is a legal matter, and there is a lot of work involved in ensuring the deal can conclude. If a delay occurs, some buyers lose patience or decide that they don’t want the deal to continue. Therefore, conveyancing delays are often a key factor in deals collapsing.
Problems found in the survey
One of the reasons buyers arrange a property survey when purchasing a home is to make sure the property is in good condition. If a survey reveals a problem, the buyer has to think about whether they should conclude the deal. In some cases, the buyer will proceed, and they might look to arrange a discount.
However, there will be times when the buyer decides to walk away from the property deal.
An issue with the mortgage
If a mortgage offer expires before the buyer is able to conclude the deal or the mortgage offer is altered because of a change in buyer circumstances, it is not uncommon for a deal to collapse. It might also be that the mortgage lender values the property at a level lower than the buyer has agreed to pay for the property, and this can also lead to the sale collapsing.
Silas J. Lees MRICS, WiggyWam CEO, says: “Agents don’t get paid until a sale completes, so these fall-through statistics hide within them a vast unseen cost for agents. Aborted sales can be disastrous to the agent pipeline and in meeting monthly overheads. For buyers and sellers, the risk of a transaction falling through, together with the associated abortive costs, is a major obstacle which stops many from moving in the first place. For agents, it is probably their biggest frustration, especially when the deal is so close to exchanging contracts.”
Silas continued by saying; “There needs to be a push in the market; a move towards more transparent and efficient processes. It’s the only way for fall-through rates to significantly drop.”
At Prestige & Village, we care about our community, and supporting others. We aim to provide you with as much help and assistance as we can. If you have any property or housing questions, please feel free to contact us today.Back to blog