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Yesterday, I was invited to BBC Radio Derby to talk about the darker side of selling your property and the two words that every home seller dreads – the “Fall Through”.
After having a great discussion with Radio Presenter, Sally Pepper, it became clear that whilst this can be an emotionally devastating and physically draining event during a property transaction, there are lots of unanswered questions about the subject.
So, in this article, we’ll be taking a look at the most common reasons for a sale falling through and how you can put yourself in the best possible position to avoid it happening to you.
For those of you wondering what a “Fall Through” actually is, it basically means that once a buyer and seller agree a price on a property and instruct Solicitors to proceed with progressing the transaction through to exchange and completion, one side decides that they no longer want to go ahead and the sale is no more.
Regardless of which side pulls out, it can be a heart wrenching affair and often leave aspirations of finally moving in to the dream home you spent so long looking for in tatters, but usually only temporarily.
Sellers are left to put their property back on the market, keen to find a new buyer as quickly as possible.
Buyers are also back to square one, having to go back on the hunt for new suitable properties, arrange viewings etc. and go through the whole process of finding their perfect match all over again.
National statistics show that around 31% of property transactions fall through before they reach the legally binding stage of exchange and completion.
That’s an alarming statistic for anyone that is thinking of selling or already has a sale going through given that you have a one in three chance of things not going your way.
However, as with mot businesses, there are very good estate agents who will typically have a much lower percentage of sales fall through.
And there are also agents who are not so good, who tend to have a much higher rate of fall throughs.
So, what do we find to be the main reasons:
On average, it now takes 14-16 weeks from the point of the sale being instructed to reach exchange and completion.
This is nearly double the length of time it took back in the boom of 2006/07 when you would expect an average of around 8-10 weeks.
The conveyancing process relies on so many different sources of information and service providers working in collaboration that a hold up from either one can have a drastic impact on how long things take.
Searches have to be ordered from local authorities (which can take weeks), surveys from the lenders have to be instructed, arranged, completed and reported, mortgage offers have to be provided, replies to enquiries have to be completed etc. etc. All of this takes time.
What we’ve also found is that since the property market crashed in 2008, many conveyancers have left the industry to start a career in other fields as there just wasn’t enough work available with such a huge reduction in property sales.
As property transactions have steadily increased, many practices have not been as quick to invest in recruiting the right amount of people due to a fear of history repeating itself and the fact that there’s just not enough people in this line of work anymore.
Your typical conveyancer will now have a much higher caseload compared to the good ol’ days which leads to less time being spent on each case and a longer transaction.
Buyers and Sellers who are slow to respond to requests for information or take weeks to complete and send back paperwork also have a major impact on the time it takes for things to progress.
No matter how good your estate agent or Solicitor are, there’s not a lot they can do if the delay is down to you not completing forms or replying to enquiries promptly.
Ultimately, the general rule of thumb is that the longer a property takes to reach exchange and completion, the more chance there is of it falling through.
It’s in your best interests to make sure everything moves as quickly as possible and we’ll be talking more about how to do that shortly.
As I write this, there has been a national increase in down valuations.
What this means for property sellers is that it’s vital your property is marketed at an asking price that can be backed up by evidence of historical sales and Land Registry data.
If your buyer is using a mortgage to purchase your property, their lender will want to make sure that they have safe-guarded their loan.
Should worst come to worst and the property gets repossessed, the lender has to make sure that they don’t lose out by getting less back for the property than what they loaned on it.
That’s why they’ll send out a surveyor who will take a look at the property, analyse the local sales and report back to the lender on whether it is worth the price that has been agreed.
More often than not, there are no problems and the lender is happy to proceed and award the mortgage offer.
If the property is down valued, after some negotiations and expert advice from your agent, there is usually a new deal put together and the sale progresses.
However, if the buyer and seller cannot come to an arrangement, the property ends up going back on the market to start the process again.
Your property might be visited by a surveyor who is not entirely familiar with the area and whilst you might have numerous buyers, all wanting to pay the full asking price – if the surveyor can’t find the evidence to suggest that it’s worth the price you’ve achieved, you might find yourself on the wrong side of the valuation.
It very much depends on the luck of the draw with the mortgage survey as what one surveyor might be happy to sign off, another might come to the conclusion that your property is not worth the price.
Some movers may decide to carry out a home-buyers report which takes an in-depth look into the condition of the property.
Once produced, these reports can be incredibly daunting for a buyer, even if the house is in great condition, as they go into a lot of detail.
But, sometimes there are issues highlighted which could be quite expensive to fix.
Structural issues, subsidence, drainage works etc. are all things that the Sellers may have been blissfully unaware of – but these repairs are going to have to be paid for by someone.
Who is prepared to pay for what is again aided by some expert negotiation and more often than not, a solution can be arranged between both parties.
However, if neither side are prepared to budge, once again it means the property going back on the market and the hunt to find a new buyer is back on.
Sometimes, life just gets in the way of us all and there are certain events that can have a big impact on someone’s motivation to buy or sell.
Let’s say for example, midway through the process either side finds themselves unemployed.
Despite still wanting to move, if that person no longer has a job and can simply no longer afford to continue, there’s not really a lot that can be done to rescue that situation.
The same goes for the very rare occasion where there may be a close death in the family of either side.
This of course can have an impact on the transaction and whilst totally heart breaking for whoever loses out with the sale or purchase, it’s one that I think most people could understand.
Perhaps one of the most frustrating reasons for a sale to fall through is that after a number of weeks into the conveyancing process, it’s discovered that the buyer cannot actually afford the property.
Whilst there is no way that an agent can 100% guarantee that a buyer is going to get their mortgage, there are certainly checks and processes that can be put in place to give as much assurance as possible that the buyer is financially able to proceed.
We’ll talk more about that with the solutions we’re about to look into.
So, what can you do to give yourself and your sale the best chance of reaching completion and finally picking up your brand-new keys!?
I have four suggestions;
We all want the best price for our property and it’s incredibly tempting when an agent tells you that they can get “more”.
However, if they can’t show you clear evidence as to why the property should be on the market for that price, you’ll be playing a risky game in which you’re the one who will likely lose out.
After all the efforts, emotion and time that goes into finding a buyer and instructing a sale, the last thing you want to do is put yourself at risk of being down valued and having to start that process all over again.
The old adage that a “property is worth what a buyer is prepared to pay for it” is no longer true.
It needs to be adjusted to “a property is worth what a buyer is prepared to pay for it AND the surveyor for the lender agrees with….”
There’s a common myth nowadays that all it takes to sell a property is to get your property on Rightmove and wait for the buyers to come rushing.
If that were the case, it wouldn’t be true that only 50% of properties that come to market across the UK will sell.
There’s so much more to it, but that’s not what this article is about.
However, we firmly believe that selling a property is a game of two halves and both are equally important.
The first half is everything that we put in to find a great buyer at a great price and securing a sale.
The second half is everything that goes on once the sale has been agreed and this is where we find many agents fall short.
If you choose an agent that doesn’t place a huge emphasis on doing everything possible to ensure that the property reaches the final conclusion AFTER that initial marketing period, you might find yourself regretting the initial attraction of cheap/up-front fees later on down the line when it is too late to do anything about it.
This goes for cash buyers and those purchasing with a mortgage too.
Like we mentioned earlier, we can never 100% guarantee that a buyer is going to be able to afford a property but we can do a number of checks to make sure that we’re happy we’ve done everything possible to check they’re financially viable.
Before instructing the sale to Solicitors, your agent should have seen, at the least, a mortgage in principle or agreement in principle provided by the purchaser’s mortgage broker or lender. They should have also seen proof (bank account statements etc.) of funds for the deposit they will be using to secure the mortgage and if they’re purchasing with cash, the full amount.
Even better, if the agent has their own in-house advisor – has the buyer spoken to them to confirm whether they are happy they’re in a position to proceed.
By no means does this mean that the buyer should be expected to take up the agent’s services, but as a Seller, the more assurances you can get that your buyer has the funds available, the better.
If your agent hasn’t done these checks, they are most certainly not acting in your best interests and instructing a sale to a buyer who has not been financially qualified is incredibly risky.
Surprise surprise, I’m going to recommend not going with the cheapest option.
But it’s never been truer.
Leaving the sale of your most valuable asset and one of the most expensive transactions you will ever make to the cheapest bidder is a strategy that rarely results in a fairy tale ending.
Your choice of conveyancer may not just be the difference between the time it takes to exchange and complete, but whether you actually get there or not.
Paying a bit more for a Solicitor or conveyancer who have the resources to progress your sale quickly, are problem solvers and don’t just give up at the first hurdle, keep you updated and communicate regularly with your agent so that they can keep everything together is an investment that will repay you many times over.
So, now you know what the most common reasons are for fall throughs and what you can do to avoid them.
What I’d like to do now is reveal some of how we work at Hannells to minimise the risk of fall throughs with a view to providing a bit more of an insight into just how important the after-sales process is.
The first thing to note is that we have six sales branches around Derby and we’ve been the top selling estate agency for almost 15 years.
I don’t tell you this to boast, I tell you to highlight a point that if one of our sales falls through, it most likely effects one, two or even three other sales that we have going through with other branches.
The plus side for the customer is that it means we can keep much greater control over the progression of multiple people who are involved in the chain.
What it means for Hannells is that each potential fall through we save is worth inherently more than it would be to most other agents in the area.
The services and strategies we have introduced because of this mean that we can say with confidence that we truly believe you have a far greater chance of successfully completing on your sale with Hannells than any of our competitors.
Each of our branches has their own in-house Sales Progressor. It’s an incredibly important role because this person’s sole responsibility is to pro-actively progress their properties through to exchange and completion.
All day, they’ll be talking to estate agents, mortgage brokers, Solicitors etc. up and down the chain to keep things moving as best they can.
We look for great problem solvers who are determined to do whatever it takes to get each property across the line so you can be sure that if there is a problem that crops up along the way, they will exhaust all options instead of just giving up.
After all, resilience (which we define as focusing on solutions, not problems) is one of our core company values and the Sales Progression team is where you can see this in full effect each and every day.
We also work very closely with our main conveyancing partner Flint Bishop.
Hannells and Flint Bishop meet regularly to discuss ways of making the conveyancing process quicker and invest a lot of time, energy and money into making the whole process faster and simpler for everyone involved.
Our relationship means that communication, a crucial component of a successful sale, is not an issue – receiving updates promptly when we need them and being notified quickly of any potential problems.
These are just a few of the things we’ve introduced at Hannells to ensure that our customers receive a moving experience from start to finish and I hope that it goes someway to highlighting how what goes on after the sale is agreed is just important as what goes on before.
To all of you who are in the process of getting your house in the market, or have already committed to the process I hope you have found this information useful!
I would like to wish you the best of luck and sincerely hope that you achieve your moving goals!
To find out more about the services we offer at Hannells, why not get in touch with your local branch to arrange a free valuation.
You can book by completing our short online form HERE
Or you can find the contact details to our Derby network of branches HERE
Hannells – A Moving Experience…