Buying and selling a property is an exciting but stressful time for homeowners. There is a risk of house sales falling through which is costly.
There are several common reasons why a house sale can fall through in the UK. Mortgage issues, changes in circumstances and issues with the properties themselves can cause the sale to fall through.
It is common in the UK property market with one in three properties falling through, which can impact sellers and buyers financially. From property solicitors fees to survey costs, the implications can be costly for homeowners.
It can also affect whether you can still purchase the new home if you have lost your house sale.
In this article, we look at what to do if your house sale falls through. We will guide you through the next steps to help move forward with the sale. Here is what we discuss in the article:
How to relist a property after a failed sale
We discuss the common reasons for house sales falling through
The legal considerations in this situation
The options to help minimise disruption
We offer trusted property law and house advice
Common Reasons a House Sale Falls Through
Buyer’s Mortgage Issues:
It’s a sad fact that 27% of house sales collapse because the buyers can not secure financing. They are unable to have their mortgage approved and can not move forward with the sale.
This can be down to valuation issues where the property is worth less or more than the original valuation.
Credit problems can also cause a house sale to fall through. A credit check can stop the mortgage lender from agreeing to the mortgage offer.
Also, there can be changes to a buyer’s financial situation which can affect the mortgage financial situation such as changing roles or losing their job.
Gazumping or Gazundering:
When a buyer makes an offer that has been accepted, there is still the possibility that a different buyer will gazump this offer.
Gazumping is when a seller accepts a higher offer after agreeing to sell to another buyer. This can lead to disappointment with the original buyer’s own sale then not going ahead.
There is also the potential if gazundering occurs which is where the buyer offers a lower offer. This can occur anytime before contracts are exchanged. This can cause the sale to fall through if the buyer can not afford to go to this price.
Survey Problems
When a home buyer undertakes a survey on the property they want to purchase, serious issues may be discovered which can cause buyers to pull out. These types of surveys can discover problems such as:
Structural damage
Rising damp or mould
Roof damage
Electrical issues
Heating issues
Drainage problems
Boundary issues
Asbestos
Subsidence
Pest issues
Chain Breakdowns
In some cases of house sale fell through UK, it is often down to a different property in the chain falling through. There could be numerous people buying and selling properties in a chain. These all need to complete for the chain to work.
If another sale or purchase in the chain falls through, this can cause a sale to collapse and affect all parties in the sale.
What to Do When a Sale Falls Through
Understand the Reason:
When a sale falls through, sellers must get a clear explanation about what has occurred. They should speak to their estate agent or solicitor who should know exactly why the sale fell through. They can give you legal advice for failed house sales.
When you know what has caused the sale to fall through, it will be easier to decide on your next steps.
Consider Negotiating:
You may be able to negotiate with the buyer regarding the issue. For instance, if it’s down to a survey problem, you may be able to fix this to reassure them.
If it’s down to a mortgage issue, you may be able to reduce the price if it’s possible to help them secure their mortgage.
Relist the Property
If the sale can not be salvaged, you will likely have to relist the property with the estate agent. They may be able to list it straight away or you can request to revise the marketing materials and photographs to attract new buyers.
Offer Incentives to New Buyers:
You could get a buyer quicker by offering incentives such as fixtures in the home. You could also offer to cover some legal fees which may help to speed up the process to secure that home you want.
Legal Considerations After a Sale Falls Through
Here are some of the legal considerations after a sale falls through:
Contracts
While you may have signed paperwork during the moving process, no party is legally bound until the contracts are exchanged. Therefore, both the seller and the buyer can pull out without penalty before exchange.
Fees
The buyer may have undertaken a survey on the property they want to purchase. It is often required by the mortgage broker. There may be legal fees for the work carried out by the solicitor during the conveyancing process.
In some cases, there may be penalties with the estate agent if a sale falls through. A lot of the estate agents have a no-sale no-fee process.
Re-negotiating with the Buyer:
You may decide to re-negotiate with the original buyer to salvage the sale if they are still keen to purchase the home. There may be additional costs legally if the solicitor needs to revise the contract with any changes to the sale. They will need to make sure it is legally binding.
How to Avoid Future Sales Falling Through
Here are some steps to take on how to avoid house sale falling through:
Conduct a Pre-Sale Survey
A seller should conduct a pre-sale survey which will identify any issues that might cause a house sale to fall through. This will then give the seller the chance to make any repairs in advance. This can then help to make sure that the sale goes through effectively.
Work with Reliable Buyers
Estate agents should work with pre-approved buyers who have a mortgage in principle in place. They should vet the buyers to find out if they are in a chain and how secure their sale is. This will show how serious they are and if they have the finances in place to purchase the home.
Working with these serious buyers will help to reduce the risk of the sale falling through. It can also be helpful if you have multiple buyers.
Maintain Open Communication
Sellers need to stay in touch with their estate agent and solicitor during the moving process. This will keep them informed and help to address any issues as they arise. This will also help to prevent any problems from escalating that can cause the sale to fall through.
Challenges and Risks for Sellers
Here are the challenges that sellers risk when their house sales fall through:
Impact on Market Value
A seller may struggle to obtain a successful sale if the property fails to sell multiple times. Potential buyers may wonder why the sale fell through and this can lead to the market value of the property decreasing.
The seller may achieve less than the property was initially worth which can impact their next property purchase.
Emotional and Financial Stress
When a house sale falls through, it can cause an emotional toll on the seller. It can also cause financial stress, especially if they require the proceeds to purchase their next home.
They are also concerned regarding the money they have already spent on the moving process such as surveys and mortgage advisors.
Best Practices for Sellers
Here are some of the best practices for sellers to help the moving process:
Prepare for Sale early
When you want to go on the market, you should prepare for the process in advance:
You should get any property repairs in order before listing.
Sort your finances and get a mortgage in principle in place.
Choose a solicitor and check their reviews.
Look for properties you would want to purchase.
Sort all legal documents you have had from the original purchase.
This will help you to avoid any delays or unexpected issues.
Engage a Trusted Estate Agent
You should look for an experienced and trustworthy estate agent to help you with the sale. You want a reliable estate agent who can help navigate potential pitfalls during the sale process. You can read about people’s experience with estate agents on sites such as Trustpilot.
Remain Flexible:
Sellers should remain as flexible as possible when it comes to their sale. If particular comprises can save the sale, it is best to be open to negotiate with the buyer. This could lead to the sale completing efficiently.
Legal and Regulatory Considerations
You need to make sure you comply with UK property law when relisting the house. Make sure your property offers UK Property Law Compliance by making sure all marketing materials and contracts are legally sound. Estate agents and conveyancing solicitors should make sure everything is in order with the property.
Buyers and sellers need to understand their rights when withdrawing from a sale. Both parties are legally able to withdraw from a sale before contracts are exchanged. A seller or a buyer can withdraw without any legal repercussions. If contracts have been exchanged, they are legally responsible for proceeding with the sale.
A solicitor can help in the event of a sale falling through. They can make sure any fees are paid and can help with contract issues. They can also help with any disputes between the buyer and seller to make sure it is resolved legally and fairly.
FAQs
What should I do if my house sale falls through?
You should first find out what has caused the house sale to fall through. You may be able to negotiate with the buyer to help resolve the issue. If not, you should consider remarketing your property so the purchase of your new home can take place.
Can I charge the buyer any fees for pulling out of the sale?
There are no legal repercussions if a buyer pulls out of the sale unless contracts have been exchanged. If they have pulled out after exchange, the seller can keep the deposit which is normally 10% and could also claim for damages.
How long should I wait before relisting my property?
You can list your property immediately if contracts were not exchanged. It’s a good time to discuss with the estate agent to make any necessary changes.
Can I negotiate with the original buyer if the sale falls through?
It may be the case you want to wait for the original buyer to source new funding or a new buyer. It is worth discussing time frames in this circumstance before marketing your own home again.
What are my legal rights if a sale falls through due to a chain collapse?
If the chain collapses prior to exchange of contracts, each party is responsible for their own financial implications. If it’s post-contract exchange, you can sue the other party for breach of contract.
Conclusion
It’s a disappointing time when a house sale falls through for both the seller and the purchaser. As we have discussed, there are a number of reasons why a sale can fall through. When this does occur, you need to find out why the house has fallen through to understand the cause.
You can try to work through the issues to help the sale to occur. It might be the case that you need to relist the property and you can take steps to avoid future issues such as choosing a sensible buyer and sorting any issues with the property.
When this does occur, you should take legal advice to help you with any financial implications. Lawhive’s property law experts can offer you advice and legal advice.
They can help you with all aspects of purchasing a new property, including getting back on the market quickly.