Imagine that you have just put an offer in on your dream house. Before you know it, you’re thinking about how long it will be until you can move in, and then a bombshell hits – the Estate Agent informs you that there is a “Property Chain”.
What is a property chain?
Firstly, do not panic. Property chain transactions are extremely common, more so than chain-free properties. This means that your seller is selling their property and using the proceeds from the sale to buy another property. The second seller might also be buying another property from a third seller who in turn is buying their next, which forms a “chain”. Theoretically this chain could continue indefinitely. Luckily for you, that’s not the case.
What is the risk?
The nature of a property chain is that it is uncertain as many parties are involved and each transaction is dependent on the others. If one party’s transaction falls through, it will cause a domino effect, resulting in a delay or the collapse of the entire property chain. The level of uncertainty depends on the length of the chain. Normally, the longer it is, the more uncertain it is.
Of course, if you have a good estate agent and the right solicitor, the length of the chain does not matter as much, as it can be coordinated and managed effectively.
How can you manage the risk?
- Find out as much as you can about the chain. Questions to ask the estate agent: has the seller found their next property? How many parties are involved in the chain? What stage is the chain at? What is the expected timeframe to completion?
- Have a back-up plan if you have to wait. Can you or anyone in the chain “break” the chain? Can someone move in with family or find alternative accommodation to enable the sale/ purchase? Typically, this will be discussed via the agents and solicitors in the chain.
- Choose the right solicitor who has experience in dealing with a chain transaction and can assist in mitigating the risks associated. A good solicitor is important here to progress the matter and keep pushing at the right times!
Ultimately, only you can decide whether you are willing to wait for your dream home. Factor in delays and set your expectations. You should also bear in mind that not all property sales and purchases are successful.
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