A property chain involves a number of property owners being ‘linked together’ in terms of buying and selling each other’s property. This typically starts from something like a first-time buyer’s one bedroom flat, all the way through to a large four-bedroom family detached home.
The property owners are linked in the sense that purchasing the property you want to buy can only happen if you sell your own to the person who is looking to buy it. At the same time, your purchase may also be dependent on whether or not that property’s sellers manage to buy the home they want. And so it goes on. In other words, a chain can be anything from three property owners up to five and beyond.
Why a property chain gets broken
The chain is broken when one of the property owners finds they simply can’t go through with their purchase. This could be because he or she has been made redundant, so their mortgage offer has been withdrawn, they’ve split up as a couple or perhaps they have changed their mind about buying the house because they have seen something else they prefer instead.
No prizes for guessing who pulls out most frequently. Nine times out of 10, it is always the first-time buyer. Their refusal or inability to purchase can cause all the purchases and sales in the chain to fall through. In fact, it’s estimated that around one in three property chains in the UK fall through on a regular basis. This means additional marketing costs for everyone involved, not to mention disappointment and exasperation at having to go through the whole house selling thing again. At this stage, many people just give up the idea of selling and moving, in fact.
Our chain breaking leads strategy can however, help save a chain from breaking, and at the same time, gain an investor a tidy profit. So how does it work? Read on…
How a chain-breaking (saving) strategy works
As a property investor, it is assumed you will have spent a lot of time cultivating estate agent contacts in your local area. One of the reasons being is that this is how you will learn about broken chains. A tip-off from an estate agent can allow you to step in and save the chain. How? Because you offer to buy the property at the bottom – provided every seller reduces their price by a set amount e.g. £5,000 or £10,000. If all three owners in the chain reduce by £10,000, then you’ll have saved £30,000 on the price of the bottom (i.e. first time buyer flat) and bagged yourself a Below Market Value property. At the same time, everyone in the chain gets to move on and buy the property they have spent the past few months dreaming of owning.
Not only does a property investor’s chain break strategy reduce the stress of all the property owners involved in a chain, but it can also save those owners time in finding a new property, and they won’t lose that much money when you consider what it would cost them in terms of having to remarket their property and pay additional solicitor’s bills.
Author
Chris Kirkwood
