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House Chain Collapsed? All Is Not Lost if You Use an Auction!

Has your house chain collapsed? You’re not alone. As many as 1 in 3 property chains fall apart – and sometimes at the very last minute before you were due to exchange contracts. We know how upsetting and frustrating this can be, particularly when your plans, or subsequent property purchase, are dependent on completing your sale within a finite time frame.

The positive is that there are solutions out there, and an auction may be the ideal option. Let’s look at why house chains frequently collapse, what you can do next, and ways to manage the stress of finding out your plans have been derailed.

cost to sell a house at auction

Why Do House Chains Break?

House chains are common and mean that each person in the chain needs to sell their home to finance the purchase of the next. This collective of buyers is typical where the homeowners are each selling a residential home to buy their new property.

The issue is that, depending on the size and complexity of the chain, any problem at any part can create a domino effect on all the other buyers and sellers. While there are countless reasons a buyer or seller could back out, decide not to move, or simply change their mind, the most common examples include:

  • Financing issues: if a buyer has a mortgage agreement in principle but is turned down following a final application or cannot access the funding they need.
  • Gazumping: a seller has agreed to an offer, and the buyer is waiting to move forward, but the seller withdraws the agreement because they have received a higher proposal.
  • Survey problems: structural surveys might flag issues such as subsidence, invasive plant species or other repair work, which means a buyer wants to reduce their offer or does not wish to proceed.
  • Life events: where buyers or sellers in a chain experience a significant change in circumstances such as redundancy, divorce or bereavement, this may impact their plans.

If you have house buyers insurance, you may be able to recover any costs you have already paid if the chain breaks due to gazumping – this cover can extend to surveys, conveyancing and mortgage application costs. However, the bigger picture is that you may find your plans completely stalled or be unable to move into your dream home altogether.

Managing a Collapsed House Chain

There are several ways to respond to the news that your property chain has fallen through, but much depends on how serious the problem is and whether it is recoverable. Some sellers might, for example, be happy to negotiate on price to avoid delays.

Buyers could potentially decide to withdraw their offer in favour of looking for an alternative home or a property that is chain-free to avoid exposure to the same level of stress again.

Alternatively, you could put your home back on the market if your original buyer is not still invested in completing the transaction or simply wait for as long as is necessary for another seller in the chain to find a replacement buyer.

While these are all possible responses, the unavoidable difficulty is that it could take several months for things to get moving, which could have a detrimental impact on your ability to secure the property you are hoping to buy. It could also mean other plans related to your finances are disrupted if you are selling as part of a separation or have alternative investment, expenditure or debt repayment plans linked to the funds arising from the sale.


Is a Property Auction a Good Way to Recover From a Collapsed Chain?

Selling a house at auction could be the solution to your collapsed chain issues. There are three primary reasons an auction may be an excellent solution:

  • Timings: auctions take place over one to three days, and once the auctioneer’s hammer falls, the final highest bid is confirmed. Buyers pay an immediate deposit and the balance normally within 20 working days – meaning your house is sold and the funds received in around one month.
  • Certainty: while there is never a 100% guarantee, around 80% of auction properties sell straight away, concluding the sale as above. Even if a property does not reach the reserve, an auctioneer will be able to assist with post-auction offers or negotiations on your behalf or advise on the best next steps to complete a successful sale.
  • Price control: Before your property is listed in an auction, the auctioneer will discuss your reserve and guide price. The outcome is that there is zero potential for your house to sell for anything underneath the reserve you have set.

The speed of an auction makes it a great alternative for sellers who have found themselves in the middle of a collapsed house chain – which may take several months to restore or may have fallen apart completely with no way to get the original sale back on track.

With professional marketing and support from a skilled property auctioneer, many sellers find they achieve well in excess of their reserve price and have the assurance that their home will sell quickly to enable them to move ahead with their plans.

How Does a House Auction Work?

Auctioneers have years of experience managing property auctions, which follow a defined pattern. The first step is to speak to an experienced auctioneer and get a free appraisal. Get in touch with Clive Emson here. 

Legal packs collate all the important information to ensure bidders are confident in the offer they’d like to submit or can lodge a maximum price with the auctioneer to enter proxy bids on their behalf.

Your reserve price is the minimum you are prepared to accept, and the guide price included in the particulars provides buyers with an indication of what the auctioneer expects the property to be marketed at – or may act as a starting point for bidding where there is a great deal of interest.

When the auction concludes, contracts are immediately exchanged and the funds are transferred as we explained above, and you are free to move ahead with your plans, unencumbered by property chains and without further delay.

Related Reading: How does a property auction work? 

For more information about selling a home quickly at auction, setting a competitive reserve price, or the suitability of your property for sale at auction, please contact the experts at Clive Emson – get a free appraisal today. 

About the Author

Sam Kinloch

Sam Kinloch

Director & Senior Auction Appraiser

Sam’s career in the dizzy world of property auctions began when he hung up his chainsaw and headed in from the forest. Joining the team in 2003 Sam now sits on the Board of Directors and has been instrumental in the adoption of online auction services.
Out of the office you can find him flying around the velodrome or sipping coffee at a local café.

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