Selling a house can be a daunting task and we often talk to customers whose house sales have fallen through. In this article we’ll go over some of the most common reasons why house sales fall through and how you can avoid them if possible.
Why do house sales fall through?
A house sale going through can depend on a complex mix of factors but some of the most common issues people find themselves facing are:
Rejection of mortgage application
One of the most common sticking factors is one party not being able to get the necessary mortgage approved before a sale can go through. Mortgage approval is an interesting situation in that it can only be applied for once the buyer has had an offer accepted on a property. The lender is providing the money to buy a specific property.
Getting a mortgage in principle can help a buyer to get a house sale to go through a bit easier. You will need to provide a lender information about your current financial situation as well as some address details for them to perform a light credit check.
The mortgage in principle is not an official document that guarantees that a mortgage will be provided but rather an indication of the amount of money a lender can borrow, subject to proper financial checks of the buyer.
Why do mortgages fall through?
A change in circumstances can affect a mortgage application. If the applicants financial situation changes it could make the mortgage less affordable and could make the lender review the available options.
The property market could also change which as we’ve seen over the last few years can push interest rates up, increase mortgage rates and reduce the number of available mortgage products.
Low mortgage valuation
A low mortgage valuation can cause a lender to deny a mortgage application. When an application is submitted the lender will need to confirm that the property they are lending money for is worth the valuation. The lender will have a property valuation conducted on their behalf, but if the valuation comes back lower than the estate agents figure the bank may not wish to lend the full amount needed by the buyer.
The buyer will be in the position where they can’t buy the property they want or they may attempt to renegotiate the asking price to closer match the lenders valuation.
A property survey can put the brakes on a house purchase if it finds any unexpected issues with the structure of the building. A down valuation occurs when the surveyor comes back with a price that’s less than the purchase price agreed by buyer and seller. A mortgage lender will then not be prepared to provide the same offer for a property that’s worth less.
A property survey is different to a valuation. A survey is recommended for prospective buyers as it will assess the condition of the property for them so that they are made aware of any issues that could affect them. In Scotland a survey is carried out on behalf of the home owner so that multiple surveys aren’t needlessly being carried out by prospective buyers. In England and Wales each buyer will need to arrange their own survey.
To avoid the scenario of a low valuation sinking your mortgage application try to get an idea of the value of the properties in your chosen location. By looking at previous sold properties and the prices of current properties for sale you’ll be able to get an idea of whether a particular price is too high for the area. You could also opt to gather some valuations from different estate agents.
Buyer chain collapsing
We’re often asked the question, why do house sales fall through? The buyer chain collapsing is one of the most common answers. When someone decides to buy a new home, it often involves a chain of events that can link several sales together. This chain is formed when each sale is dependent on the successful completion of the previous one. This means that if one link in the chain fails, it can cause the entire chain to break, leading to what is known as a “buyer chain collapse.”
A buyer chain collapse can happen for many reasons, but delays in the completion process are one of the most common causes. For example, if one buyer is waiting for their current property to sell before they can complete the purchase of a new one, any delay in the sale of their property can have a knock-on effect on the entire chain.
Chains falling through happens often and the reason for that can be down to a mortgage being refused at any point throughout the chain or buyers pulling out somewhere further down the line.
Cold feet from the buyer
Buying a house can present the obvious financial obstacles for buyers but can also mean an upheaval or change that a buyer might not be ready for. House sellers will often get a bit anxious the closer a sale comes to completing, with stories of buyers pulling out up front in their minds. And while it’s true that buyers do sometimes pull out of sales the reason can be down to a number of things. There’s not a lot you can do to avoid another party pulling out but being patient and ensuring your estate agent has an open dialogue with the buyer are important factors.
House title issues
If there are any discrepancies or inconsistencies with the title deeds, this can cause significant delays or cause a house sale to fall through entirely. These could include missing deeds, unclear property boundaries, or disputes over ownership. This is really down to the seller to ensure that there are no issues before going ahead with putting their property on the market.
Planning permissions and building regulations
If any building work has been carried out on the property, the seller must be able to provide proof that it complies with building regulations and that any necessary planning permissions were obtained. If not, this could delay or prevent the sale.
Market conditions
Changes in market conditions, such as fluctuations in interest rates or a shift from a seller’s market to a buyer’s market, can impact the success of a sale. The UK property market is very familiar with this situation as interest rates saw significant growth in 2022 and 2023. The cost of mortgages increased due to interest rates making mortgage payments more expensive and put pressure on buyers to be able to afford them.
Conclusion
While there is no guarantee that a house sale will be seamless, being aware of the common reasons why house sales fall through can help you navigate potential obstacles. By preparing your home, setting a realistic price, and maintaining open communication with all parties involved, you can increase your chances of a successful sale.
Selling to FastBuy Properties
If you are looking to sell a property we can help. We provide a fast house buying service which can be completed just 7 days after an agreement has been reached. We buy property all over Scotland in any condition and we would be happy to provide a fast free offer to buy your property.
