What is a property chain and how does it work?

A property chain is a sequence of property sales that must all happen at the same time. For instance, you’re in a chain if you are buying from someone who also needs to buy a property, and so on. A property chain is created when these transactions all depend on each other.

If you’re buying a property, then there’s a good chance you’ll find yourself in a chain. You might have people above you (that need to buy a property before they can sell to you) or people below you (who are buying your property and might also have someone buying their property).

Long chains are, well, less than ideal. They can be stressful, time-consuming and there’s a chance that the sale could fall through… but this mostly depends on one question.

How many people are in a property chain?

Your estate agent will usually tell you how many people are in the chain.

At some point in the process, the chain will ‘close’. This usually happens when a first-time buyer enters at the bottom of the chain (because they don’t have a property to sell), or someone at the top of the chain is selling without that sale being dependant on another purchase. The chain could end due to:

For example, let’s say that you’re a first-time buyer and you are currently living in a rental property. You’re buying from a nice couple who want to move to a bigger house. They’re buying from a family moving to a different part of the country, and they are buying a house that is currently empty.

There are four ‘links’ in this chain: you, the young couple, the family, and the person selling the empty house.  

However, property chains can collapse.

And the longer the chain, the more chance of this happening. It only takes one person to change their mind or not go ahead with their promise. In some cases, this can put a stop to all of the transactions within that chain. The most common reasons for this happening are:

Lastly, there’s the possible issue of ‘gazundering’ (when a buyer reduces their offer late in the day) and ‘gazumping’ (when a seller accepts a late offer that is higher). These terms might sound amusing to say, but they can put a serious spanner in the works.

Communication is key

The best way to avoid unnecessary headaches is to communicate regularly throughout the whole process. This is where a good estate agent and solicitor can make all the difference, as it’s their job to keep things on track. But there are also a few things that you can do to help keep up the momentum.

Final thoughts

You’ll have a few more steps to go through before completion – from getting mortgages agreed in principle to shaking hands on an offer, doing legal searches, finalising mortgages and exchanging contracts. But there’s every reason to feel optimistic, we’ve known some long chains complete without issue, and shorter chains fall through. The best advice is to keep your fingers crossed and keep communication open. If you’re considering buying or selling a property in East London, email info@keatons.com and we’ll talk you through the process.

See our full list of property advice articles in our Knowledge Centre.

About Keatons

Keatons has been based in East London for over 20 years and has since expanded to the north and south of the city. We have an outstanding Trust Pilot rating from customers and we are known for helping sellers and landlords achieve the best possible market price for their property. To find out more, visit www.keatons.com.

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