If you are buying or selling a property, it is important to understand how property chains work and what that means for you. Here, we will explain everything you need to know about property chains.
When you receive an offer, the first thing your agent should do, is explain the position of your potential buyer and how they will be financing the property purchase. Examples of this are:
- A cash buyer. This means the full offer amount is readily available in your buyer’s bank account and no not need mortgage funds. Your agent would ask to see proof of these funds.
- A buyer with a mortgage and no property to sell (including first time buyers). Your agent would obtain their mortgage agreement in principle and proof of their deposit funds.
- A buyer with a property to sell (with or without a mortgage). Your agent would ask for proof of their mortgage agreement in principle and this is when a chain check is carried out.
A chain check is carried out by your estate agent, when taking an offer from a potential buyer with a property to sell. Your agent should always do this BEFORE putting an offer forward to you, so you can make an informed decision based on all the information required. This is done by calling the potential buyers estate agent. That estate agent would pass on the details of the lower chain, including names, address, and position, of all the buyers included in this chain. It may be that there is only one other property in the transaction, there could be five, which is why it is so important for the agents to obtain as much detail as possible. Here is an example of a property chain.
Mr and Mrs Smith (buying with funds from house sale and a mortgage -147 Anne Street, Kendal- Sold via Estate agent 1 to;
Mr & Mrs Jones – 16 London Road- (buying 147 Anne Street with cash from their house sale. Sold via Estate Agent 2 to;
First Time Buyers (buying with a mortgage)
What does this mean for me?
The chain should be explained to you, as the seller, along with your offer so you are fully aware of the details of the transaction. If you decided to accept an offer, your agent will keep in touch with the other estate agents in the chain to ensure that all parties are working together to progress the sales process. Your agent should be doing this weekly, making sure that necessary surveys and searches are satisfactory down the chain so you can confidently proceed with the same. If these checks are being carried out and your agent is pro-actively chasing your sale, then this should not hinder your property sale although do remember, in England, any buyer or seller can withdraw prior to exchange of contracts so a longer chain can increase the risk of a sale fall through, given that there are more parties to rely on getting the sale to completion.
Agreeing dates and completion
When involved in a property chain, all parties in that chain must agree the same day for completion. The solicitors will pass suggested dates up and down the chain until one date is agreeable to all parties. The only time when this can be avoided, is if one party decides to ‘break the chain’ by either moving into rented or temporary accommodation for different completion dates to take place.
Blog by Paige McNaughton MNAEA & MARLA