They say that moving home is one of the most stressful experiences in life, and that’s the case even when everything goes like clockwork. Should the whole selling process collapse, the stress can be damaging to your health as well as your finances. New research conducted by the HomeOwners Alliance and IMMO has found that the cost of a property sale falling through is £2,727 - with this money essentially wasted on marketing fees and legal costs.
The study by HomeOwners Alliance and IMMO found that nearly 300,000 property sales fall through each year in the UK, which means sellers are spending a collective total of £818 million a year on property sales which never lead to a completed transaction.
According to the research, just under a third of all collapsed sales were the result of buyers’ finances not being in order, while one in five of collapsed sales fell through due to another collapsed sale further up the property chain. However, the biggest reason for property sale collapses was simply because a buyer changed their mind and decided not to complete the transaction. Other reasons why sales fall through included: buyers pulling out after having a survey, issues arising during conveyancing results, and gazundering.
The increasing number of property sales in England and Wales collapsing, and the spiralling costs as a result, have led to calls for both buyers and sellers to be forced to pay a non-refundable deposit when an offer is accepted. Furthermore, around 80% of all UK adults want to see buyers forced to show proof of funds before being able to put in an offer to buy a property.
In England and Wales, there are no laws against buyers or sellers pulling out of a purchase up until the exchange of contracts, which means many sellers can face the situation where their buyers pull out right at the last minute and purchase another property, or drop their offer at the last minute (gazundering), forcing the seller to either lose the sale completely (and suffer the costs associated with such an act), or agree to sell at the lower price!
The UK Government has recently promised to encourage the use of voluntary reservation agreements in conveyancing in order to try and tackle the growing problem of gazumping, but no actual laws are set to come into force in the near future.
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