You may see statements on property particulars like "no chain" or "no onward chain", what does that mean?
What is a chain in relation to property?
A property chain is a line of buyers and sellers who are all simultaneously involved in linked property transactions. For example, Mr & Mrs Jones are first time buyers who buy a flat from Mr Smith. Mr Smith then goes on to buy a two bedroom cottage from the Walker family. The Walker Family then go on to buy a larger family home from Mrs Little who wants to downsize and so buys a smaller house from Mr Singh. Let's imagine that for whatever reason the Walker family can't get a mortgage, the entire chain is affected or 'breaks' and all the transactions are either held up or in the worst case scenario fail completely.
Do broken chains happen often?
Unfortunately, yes. Broken chains have become more commonplace since the onset of the credit crunch as the mortgage lending criteria has tightened and down-valuing by surveyors is common.
What could break a chain?
If finance is not available, the chain will break… for instance if someone is refused a mortgage. If the property is down-valued, the buyer will not be offered the full amount in their mortgage to purchase the home at the agreed sale price and may be unable to raise the funds for the difference. Also, the buyer may just withdraw their offer or the vendor may decide not to sell after all. Furthermore, the results of the property survey can turn a good deal sour if previously unknown problems with the property become apparent and the buyer decides to withdraw from the sale rather than re-negotiate.
How could I avoid getting caught in a chain?
You could avoid chains from the start by finding out the status of the people you are dealing with. Is the property being sold with no chain? Are others in the chain cash buyers, negating the possibility that loss of finance could break the chain. You should also make sure that you have all your finance in place. You should have your mortgage offer in place before you start making offers, but in reality this can be difficult.
As a seller you should make your home as attractive as possible, and be aware of when to lower the asking price. A good estate agent will keep you advised as to when lowering your price is necessary. Keeping communication flowing between all parties lessens the chances of a chain collapsing. Choosing an estate agent with a dedicated sales progressor, like Northfields has, will ensure that you have someone monitoring the chain on your behalf on a regular basis and to help you deal with any problems should they arise.
How could I protect myself if a chain did break?
When a chain breaks it can be frustrating and time consuming, but you can limit the financial damage in a few ways. You will still have to pay for the costs of a survey should the deal be scuppered so make sure you have a little extra money set aside for this eventuality. Choose to sell your property through a no sale, no fee estate agent, like Northfields, so you don't lose money on estate agent's fees. Likewise, instruct a conveyancing solicitor who works on a no sale, no fee basis so that you don't lose legal costs.
Call Northfields now on 0208 840 6666 and we can recommend a no sale, no fee solicitor to give you peace of mind should the worst happen and your chain breaks.
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