Phil Spencer: Holding a property chain together is a skill – this is how I do it
I am not going to sugar-coat it for you – the reason I wanted to write about property chains is because they can be a real problem.
They are unpredictable, difficult, complicated, but usually unavoidable. Unless you are a first-time buyer or a cash buyer, the likelihood is that you will be part of a property chain.
It is not a comfortable place to be where you are at the mercy of other peoples’ decision making and efficiency.
My first bit of advice is to find out as much information as you can about the other people in your chain; it will help you build a realistic timeline and increase your chance of success.
This isn’t necessarily an easy task. You can’t go around ringing up other peoples’ solicitors, however, your agent can.
Keeping a property deal together is a real skill. Around a third of agreed house sales fall through and a big part of that is keeping tabs on a chain. A good estate agent will check each link on a weekly or fortnightly basis. In a similar vein, by enlisting the help of a buying agent you will be able to use their contacts to get more information on what’s going on.
However, when ringing around, the agent needs to do more than just “check” the status of proceedings. This is what many of them do, but it’s more about them asking the right questions and thinking creatively to help sort things out where there are delays or obstructions.
Good questions include, what needs to happen next in order to progress a transaction? What information remains outstanding? Has the survey been instructed, been completed, is it satisfactory, has the bank accepted the valuation?
If you possibly can, it is far better to start the whole process with energy and momentum and then keep it moving. It is very hard to try to inject speed into a deal after it has been idle for a period of time.
In the future, this will get easier with the help of technology. There are projects in the pipeline to provide real-time data on property transactions that will save you the hassle of going door to door to find out what’s going on.
But until then, you’ll need to rely on good old fashioned picking up the phone and being a bit nosey.
There are also smaller signs to look out for: is one of the parties taking longer than usual to submit their fixtures and fittings form or is there one you haven’t heard anything from? In this instance no news is not good news, it is often a warning sign.
However beware, if you take this approach, the other parties will want to know your information too. That’s fine, I would encourage you to share as much as possible to keep the information channels open.
I would also urge generosity of spirit. Buying a home is not a process most of us are familiar with and conveyancing is a complicated process. It is easy to let things slip so try and be patient with the other people in your chain.
I would also advise against putting set deadlines in place, more often than not they end in disappointment. In my experience, ongoing open communication is a much better approach.
Even with this approach, there can be unavoidable bottlenecks. Solicitors take on too much work or surveys reveal issues that need to be remedied before sales can go ahead.
Inevitably, these mean delays but often there is little anyone can do about them. As such, you should give yourself as much time as possible when moving.
This isn’t always achievable but if you can get in months ahead of a new job or a new school, then all the better. The last thing you want is to be caught short if something falls through and you’re left in the lurch.
Make sure you have all of your ducks in a row. Get your documents together ahead of time, be responsive and helpful, and give realistic timeframes. No one is well served by false hope.
There are three key stages to moving: finding the right house, agreeing the right price, and then overseeing the whole transaction. An awful lot of people celebrate after the first two, but actually the third stage is just as important.
And if you crack open the champagne too early, take your eye off the ball and sit back, then you’re increasing your chances of things going wrong. So keep the champagne on ice.
That said, there are instances where I think you need to be cautious about joining a chain.
If it were me, I would seriously question how much I wanted the property if I was joining a chain of five or more, as so much can go wrong. And if it does go wrong, you’ve spent thousands on your survey, your solicitors, and you’ve emotionally bought into the house. That’s really hard.
I once saw a long chain held together in the face of disaster. The top transaction was an incredibly expensive house and the bottom of the chain was a one-bed flat, and then the chain collapsed because the buyer for the flat fell through right on the eve of the exchange.
Wonderfully, the guy at the top said, “stuff it, I’ll buy the bottom flat” and put the chain back together. That is of course rare but illustrates the lengths people will go to in order to keep a chain together.
If simply holding the chain together isn’t an option for you (I doubt it is for most), another solution is selling and then renting before you buy. It gives you more flexibility on your timings, which will be attractive to those you sell to and buy from.
The other benefit is that you get to “try before you buy” a new area and then come back to the market better informed and in theory under less pressure.
Bear in mind any changes in the market while you’re renting. It could go either way, but I have seen people rent for a year and then they can’t afford what they could have done because they have spent the deposit on rent or interest rates have gone up.
The other option is to get a bridging loan to help you buy a property before yours sells. However, these loans aren’t cheap, so think carefully before going down that route no matter how attractive being a cash buyer makes you.
Chains are without a doubt one of the most stressful parts of buying a home but, despite all my warnings, it is worth it if it is for a home you love.
The best you can do is be open and honest with the other parties in the chain and be efficient as possible with getting your side sorted.