A recent study suggests that the cost of property deals collapsing is £607 million a year. There are concerns this figure will be significantly higher in 2021, due to the heightened demand for property transactions right now, and the risk of buyers missing out on the stamp duty holiday.
At Thomas Morris, we aim to provide the best standard of service and support to property buyers. We know the most common risks, and we will do what we can to help you avoid these problems.
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.
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.
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.
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.
There are many fees and costs which cannot be reimbursed when property deals collapse. Examples of these fees include mortgage fees, survey costs and conveyancing fees. It is not uncommon for buyers to lose out on a significant sum of money.
Due to the significant levels of demand in the property market, if the 1 in 4 ratio continues throughout 2021, there could be as many as 225,000 property deals collapsing this year.
It must be acknowledged some buyers will collapsing their property deal if they don’t obtain the stamp duty holiday, so this is something to focus on.
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 Thomas Morris, we know the heightened demand from buyers in relation to the stamp duty holiday caused a lot of issues for the administrative side of property deals”, said Thomas Morris Royston Branch Robert Arnold. “We are keen to provide you with as much support and guidance as we can. Whatever you want to achieve with your property deal, we are here to assist you as best we can, so please get in touch.”
If you are looking for help with any matter of the property market, it is best to speak to property professionals. You can book a sales or rental valuation appointment directly on line at a time and date of your choice by clicking here or alternatively or you can phone our Royston branch on 01763 243331.