If you are thinking of buying your first home or investing in property in the future then it’s important to familiarise yourself with the different aspects of buying a property. In this blog we will cover property chains and everything you need to know before entering one.
What is a Property Chain?
This method of buying and selling properties is called a chain because of how it links a group of property owners and buyers in one single buying and selling process, forming a chain of individuals who are reliant on the individuals in the next stage of the property buying process to successfully buy or sell a property.
This way of buying and selling properties is not without risk and is more complicated because if something goes wrong at any stage of the chain process it can bring down the whole chain and the buying and selling process can completely fall through for everyone in the chain.
Here is an example of how a property chain looks:
Buyer – This individual could be moving out of rented accommodation and buying their first property, making up the first link of the chain.
Seller/Buyer – This individual is selling their property and buying a different one and makes up the second link of the chain.
Seller – This individual could be selling their home as they are moving in with family or assisted accommodation and make up the last link in the chain in this example.
Some property chain links can involve more people or be more complicated than our example above.
Some property chains aren’t successful for a number of reasons which may lead to disappointment or loss of investment for individuals further down the chain. Here are some common reasons for a break in a property chain:
- An individual changes their mind about buying or selling
- Financing issues
- Rejected mortgage applications
- Legal issues
- The process takes too long due to paperwork or structural problems
- Property disputes
- A seller sells the home to someone outside the chain with a higher offer
The best way to ensure a chain is successful is by everyone involved having mortgage applications, paperwork and valuations completed and in place ahead of time, constant communication and acting quickly in the process to avoid delays.
We hope our guide has been useful if you are thinking about entering a property chain. If you would like more help and advice around property chains or buying and selling a property, our experts are on hand here.