One in three house sales fall through
One in three, the current national average for house sales that fall through are pretty steep odds. Northfields Estates explores why in many areas of the country so many sales are not making it through to completion. And what to do to prevent fall throughs.
The Top Three Reasons House Sales are Falling Through
1. The abolition of Home Information Packs
2. Sellers pulling out after failing to achieve their ideal price
3. Nervous buyers pulling out
Abolition of Home Information Packs
When the Coalition government abolished Home Information Packs (HIPs) everyone celebrated thinking that it would increase the numbers of new properties coming to the market. In Ealing, the average HIP was costing home sellers an average of £250 -£299 to purchase the packs which were necessary just to market a home for sale. However, HIPs could cost the owner up to £500 up front before the first viewing was even held.
As predicted, a certain number of new sellers came to the market when HIPs were done away with. Many of these sellers had placed their property on the market purely for speculative purposes, to see how much their property could achieve in this market.
Since the up-front cost of selling a home has dropped by £250 - £500, it is less of a financial burden for sellers to pull out of a transaction. This means less serious sellers can put property on the market to “test the waters”. If their property fails to achieve the sale price they were hoping for they can simply withdraw the property without losing the money invested in a HIP.
Sellers Pulling Out of the Transaction
The lowered financial cost of pulling out of a sale has meant that many sellers disappointed with the price their property has attracted quite simply pull the plug on the sale rather than reduce their expectations. Sellers pulling out after failing to get the price they wanted contribute to 29% of transactions being abandoned
The Guardian reported that “The 29% of abandoned transactions were chiefly the result of sellers withdrawing properties from the market (39% of the sales that fell through).”
Nervous Buyers
With economic uncertainty continuing and driven by fears over job security and nervousness about house prices and interest rates, buyers turning tail and running is another of the top reasons for house sales falling through. According to the Guardian “Buyers pulling out of the purchase is the second most common reason (23%) for abandoned sales”.
The Good News
Many fewer house sales have come undone due to a failure to secure a mortgage. Only one in 10 sales fell through in 2011because of a lack of mortgage finance. That figure has halved since 2009, when the figure was 15%. The main reason for this change is that more house hunters are aware that they need to secure a mortgage before even going to view a property.
Other pitfalls that can sound the death knell for house sales have also dropped. Chains collapsing as the reason for failed transactions have dropped to 9% of failed sales, unfavourable surveys has dropped to 8% and sellers withdrawing properties for sale and deciding to rent them instead has dropped to just 6%.
Changing perspectives
So much of what causes property transactions to fail is down to people’s expectations. Right now, many sellers are not forced to sell (and therefore are not forced to buy), so are quite simply sitting tight until they feel they are more likely to achieve the asking price they want.
Preventing Fall Throughs
Of course, not everyone has the luxury of waiting until the price is right to move. Expanding families, the need to be near good schools or relocation for work might mean that selling and buying your home is a must. If you have a desperate need to move nothing can be more demoralising than a sale that falls through. So how do you prevent fall throughs?
With such high levels of failed property sales, it will be necessary for estate agents to stay on top of the situation, doing everything in their power to support and hasten the process to keep the transaction from breaking down. However not all estate agents are created alike. Northfields has a dedicated sales progressor whose sole focus is seeing a sale through to completion will have far more success than other agents. Therefore, it would be a wise move for sellers and buyers to choose an agent with a dedicated sales progressor. A good sales progressor should have a sound knowledge of the process and good relationships with solicitors, surveyors and buyers. If the agent you are using doesn’t have a dedicated sales progressor, don’t use them.
To find out how Northfields can help you to see your property sale through from valuation to completion, call our sales team on 0208 840 6666 or e-mail us at sales@northfields.co.uk
