More than 300,000 property transactions are falling through every year, in large part, due to buyers pulling out of the deal, costing sellers a total of £400 million latest research has revealed.
The survey exploring the experiences of home sellers conducted by the HomeOwners Alliance and IMMO.co.uk, the UK’s online homebuyer, and polled by YouGov found a massive 20% of sellers have experienced a sale collapse, half (51%) incurred costs averaging £2,727.
Overall, more than two thirds (69%) of the home sales that fell through did so because of buyer related reasons, including the buyer changing his mind/ finding another property (39%) and the buyer’s finances not being in order (28%). Sales falling through further up in a chain accounted for 20% of collapsed sales.
Nearly one in ten sellers (8%) with a failed sale have experienced gazundering; where the buyer lowered their offer just before the exchange of contracts.
Worryingly, the research found uncertainty may actually put people off selling. One in three (34%) homeowners say risks of property chains breaking down and nearly one in five (19%) homeowners say uncertainty regarding the sale price they may get for their property might prevent them from selling.
The research comes after the government announced plans to improve the home buying and selling process with a number of measures, including the introduction of voluntary reservation agreements. These legally binding agreements, advocated by HomeOwners Alliance, would require both buyers and sellers to put down a non-refundable deposit to commit both sides earlier in the process.
Commenting on the findings, Paula Higgins, Chief Executive of HomeOwners Alliance says:
“We often hear about would-be buyers losing their dream homes as a result of sellers accepting higher offers but less is said about sellers forking out thousands in wasted fees only for buyers to change their mind, leaving the seller back at square one”.
“Gazundering and time wasting is a huge problem. The homeselling system is so unreliable it’s deterring homeowners from selling – adding to the ongoing housing shortage crisis as a lack of suitable homes is one of the barriers to people moving up the property ladder. Buyers need to have a little more skin in the game too. An earlier commitment – for example through reservation agreements – would go some way to avoiding these situations.”
Samantha Kempe, Co-Founder of IMMO.co.uk, says: “The current system has created a fundamental power imbalance between the seller and the buyer, with the seller often at the buyer’s mercy during what is often the largest financial decision of their lives. Sellers should be able to proceed with the sale of their property knowing what price they will receive and feeling assured that the sale will go through.”
“At IMMO, we believe in a better way to sell property which allows sellers to maintain the upper hand and avoid the uncertainty, hassle and stress created by the homeselling system.”
Among UK adults, 80% would like to see buyers show proof of funds before being able to put an offer to buy a property. In addition, 65% of UK adults support the idea of a reservation agreement requiring buyers and sellers to put down a non-refundable deposit to commit both sides earlier in the process.