Lost Buyer? What to Do When Your Buyer Pulls Out of a House Sale Before Exchange

Losing a buyer is never a great feeling, especially if your dream home is on the line. It can feel like all is lost and that you’ve wasted the last 4-5 months of your life - but don’t panic! There are options to quickly replace your buyer , keeping your onward chain intact: have you considered a property auction? 

Whilst accepting an offer to purchase your property feels like the end of the process, the unfortunate truth is that buyers can pull out of the transaction at any stage before you exchange contracts. Because no contract has been signed, there are few ramifications, causing untold stress for sellers. This is one of the pitfalls of buying and selling property in the UK!

Let's look at some of the many options available, from listing your home in a land and property auction to reducing the risk of a buyer dropping out and deciding whether to relist the property.

For more information about listing your property for sale or expediting a sale transaction following a broken chain, please get in touch with the property auctioneers at Clive Emson Land and Property Auctioneers at your convenience. If you’re thinking about selling your property via auction, get a free appraisal here. 

Why Do So Many Buyers Drop Out of Property Sales?

If you have lost a buyer, you may not be able to proceed with your own property purchase. You can feel stuck in limbo, with the only apparent option to go back to the drawing board and start marketing the property from scratch – potentially delaying your plans by months. The worst part is the amount of money you’ve spent getting to this point. So why do buyers drop out?

Before you exchange contracts, an agreed sale price for your property is simply a non-binding verbal agreement. Buyers may sometimes make an offer with the expectation they may back out if they find another property, but more often than not, there is a valid reason.

As many as 20% to 30% of sales fail to get past the exchange, with some of the common reasons include:

• Having a mortgage application rejected. Buyers normally have an agreement in principle before they make an offer, but they can still be turned down for mortgage financing, meaning they don't have the funds to move on.
• Unsatisfactory survey results can create an issue where undisclosed problems impact the price a buyer is willing to pay. Examples might include dampness, asbestos, subsidence, or issues with the roof condition.
• Finding another property, potentially one that has just come onto the market while waiting to exchange contracts.

In other scenarios, a buyer can threaten to drop out as a negotiating tactic. They may have been advised that the agreed price is too high or simply decided that they want to revise their original offer to proceed with the transaction.

So what Can You Do if a Property Buyer Drops Out?

Here are your options:

• Find out the exact reason: Buyers don't necessarily have a legal obligation to explain themselves. Still, it can be helpful to get an idea about what has triggered the decision or how their circumstances have changed since they agreed on the purchase price.If your buyer has given a reason, it may be possible to recover the sale by negotiating or offering to repair or address any issues that have prompted them to withdraw their offer.
• Re-negotiate with the existing buyer: You can either reduce the agreed selling price or cover the costs of the work themselves if a structural or decorative issue has come to light before the contracts exchange. This means you may receive a lower price for your property - you’ll need to weigh up whether this is worth it in the long run.
• Wait it out: It may be that a buyer has backed out of the sale because another part of the property chain has fallen through. You might decide to wait it out with the assurance that you have a buyer lined up once they find a new buyer, although this is not always advisable since there is still no guarantee the buyer will proceed with exchanging contracts.
• Relist the property: Relisting the property via your estate agent is an obvious action if you’re not in a rush to sell your property. However, we know that your dream home may be at stake and that you may be looking for a faster way to sell. We suggest that you consult your agent before making any final decisions because they could potentially have another buyer ready to go.
• Consider a property auction if you are keen to complete the sale as quickly as possible and don't have the time to wait for a new buyer. Did you know that an auctioneer can work with your existing estate agent to sell your property within 20 days? You will achieve a better price at auction (usually around 85-95% of the market value) than with a cash house-buying company. Read more about online property auctions here.
• Sell to a cash house buying company: A cash house buying company, also known as a cash home buyer or a real estate investment company, specialises in purchasing properties directly from homeowners using cash. These companies typically buy houses in any condition and are popular with those looking for a quick sale. You’ll be able to sell your home quickly and conveniently but you’re likely to receive a significantly lower offer compared to the open market value of the property. This is because these companies take on the risks and expenses associated with repairs, marketing, and holding costs.

Why Sell your property via auction when your buyer pulls out?

Many buyers find themselves in the challenging position of needing a fast sale, meaning they cannot buy their intended property or are faced with lengthy delays while they attempt to recover the sale or find a replacement buyer.

Listing a property for sale at auction can be the ideal solution, with the assurances that up to 80% of properties sell straight away in the first auction they are listed in. Sellers agree on a reserve price with the auctioneer based on their experience, previous sale values achieved, and interest in the lot.

The benefit is that once a property sells, the funds are transferred in as little as 20 days, taking a fraction of the time to complete than the average private treaty sale and offering a swift resolution in the interests of the seller and the onward chain. If you’ve lost your buyer, an auction will allow you to benefit from:

• A Quick sale: Property auctions provide a fast-selling process, typically taking place within a fixed timeframe, which can be advantageous for sellers who have lost their buyer and need to sell their property promptly. Related reading: How to sell your property quickly via auction.

• Wide exposure: Auctions attract a diverse range of potential buyers, including investors, developers, and individuals seeking unique opportunities. This increased exposure can lead to competitive bidding and potentially higher sale prices.

• Binding contracts: The last thing you want is for the buyer to drop out again. When the hammer falls at an auction, the buyer is legally obligated to proceed with the purchase. This minimises the risk of buyers backing out or renegotiating the deal, providing sellers with more certainty.

Property auctions are beneficial for sellers facing time-sensitive situations, such as financial difficulties, divorce, or relocation, as they provide a swift method to sell the property and resolve their circumstances. You can read more about selling your property via auction here. 

Reducing the Potential of a Second Failed Property Sale

There are several ways to reduce the risk of a buyer pulling out of the transaction for a second time, particularly where your other plans are dependent on the funds from the sale.

• Selling via auction - As discussed, a property auction is a legally binding transaction - the buyer is very unlikely to pull out of the sale. The perfect buyer is paying cash, ready to move forward and has had full access to an independent survey to make informed decisions.
• Verifying the authenticity of a potential buyer and assessing their circumstances can be useful. For example, a buyer involved in a complex chain is more likely to drop out than a cash buyer or professional landlord.
• Maintaining positive communications, where a buyer can raise any concerns necessary before they feel the need to pull out of the purchase altogether.
• Aiming for offers from purchasers with fewer buyers and sellers within a chain may be beneficial, although it can be difficult to state this as a prerequisite since chains are common throughout residential property sales.

However you proceed, know that all is not lost and that you do have options despite how it may seem at the time.

For more information about listing your property for sale or expediting a sale transaction following a broken chain, please get in touch with the property auctioneers at Clive Emson Land and Property Auctioneers at your convenience. If you’re thinking about selling your property via auction, get a free appraisal here.