Turning broken sales and chains into completions

As with finance broking, there can be many frustrations that come with being an estate agent – I perhaps don’t need to tell the readership of Estate Agent Today of the many ways in which a purchase completion can go awry as no doubt you’ve been through them all, probably too many times to mention. 

All in all, I can imagine there is no greater frustration in the job to have lined up all the metaphorical ducks in a row with an individual transaction, or part of a lengthy chain, only to have it fall apart for reasons beyond your control.

Recent research from Which? – not always the agent’s friend I admit – revealed just how many transactions can go wrong after the offer has been accepted and the reasons why a completion was not reached. 

In surveying 2,000 recent purchasers, a not insubstantial 28% said their offer had been accepted on a property only for that purchase to fall through. The reasons behind this make for interesting reading and of those 28%:

- 27% said the seller had pulled out after deciding not to sell.
- 21% said they’d pulled out themselves.
- 21% said they found somewhere else to buy.
- 21% were gazumped.
- 15% decided they didn’t like the property enough to buy it themselves.
- 13% said the seller pulled out because the process was too long.
- 4% said there was a disagreement with the seller and they couldn’t resolve it.

What is perhaps interesting is that a fairly high proportion of potential purchasers make the decision themselves, whether that be finding another property or deciding after all that it’s not the right one for them. Disappointing obviously for both agent and vendor client but part and parcel of the job, and one that you can’t do much about.

Where the frustration is ramped up, and this is also true for brokers working with clients, is around the areas where you feel the deal didn’t have to fall apart. 

Funding the property purchase is obviously a key component in all this, especially when we have clients who might feel they are able to make an offer, based on a misunderstanding of their financial situation, only to have that notion disavowed quite quickly.

Of course, agents will be looking for transparency and clarity from the purchaser, in terms of how they are going to fund their purchase and the finance they have in place in order to do this, but I can guarantee that there can always be a spanner in the works when, for example, a property is unable to be sold and the purchaser is counting on this in order to be able to complete their purchase.

Typically, and historically, this has been an area where bridging finance has been utilised in order to enable the purchase to continue, and to ensure that whole chains of property sales are able to go ahead. 

You’ll notice from the Which? research that 13% said the seller pulled out because the process was too long and I would imagine you can count on this including many instances where the potential purchaser was simply unable to sell their property within the required timescale.

Now, rather than allowing the transaction to collapse, agents may be able to utilise bridging finance brokers who – as long as the client is willing and able – can secure the short-term loan they need to ensure they purchase the property plus allowing them to buy the necessary time in order to sell their existing home. 

As we know, the client has to be clear about what they are getting themselves into in terms of the additional cost of such finance but the speed with which it can be organised, often within days, means that where transactions could be on the verge of collapse, another option might be available. 

It’s important to recognise that this won’t work every time but where it does we could potentially save a chain of many transactions, not just the immediate one in which the client takes the bridging finance. 

For agents, this could be a god-send, especially where they have multiple clients involved within such a chain. Key measures and criteria must be met, including of course affordability, plus the need to ensure the client has a discernable and achievable exit strategy for their bridging loan – but with all this secured then we can turn a broken sale and chain into a functioning fully completed entity. 

*Jonathan Caplan is Director of First 4 Bridging