This Week in Chain Land – Are We Falling Faster?

This week in chain land we’re looking at the current trends and behaviours around fall throughs. For estate agents, guiding clients through the intricate process of buying or selling a property is both rewarding and challenging. However, one of the most frustrating setbacks is a fall-through, which has a considerable impact on all parties within the chain, and those working on their behalf. 

A fall-through can be a significant disappointment for estate agents, who invest time, effort, and resources into nurturing a transaction to completion. They can also be costly and based on the average property price of £426,927 according to TwentyEA, and an average 1% commission of £4,269, cost UK estate agents approximately £358,000,000 in delayed or lost fees annually.  

Falling Faster 

Looking at the transactional data for the first half of 2023 compared to the same period in 2022, the good news for agents is that fall throughs are decreasing, as the average fall through rate from January to June this year is only 16%, compared to an eye wateringly high 33% for 2022. 

Across both years, ViewMyChain has observed that the point at which a transaction is most likely to collapse is during the first thirty days, and in most cases prior to the buyer investing in ordering searches or other costly conveyancing fees. This equates to 97% of all fall throughs from January to June 30th this year, and 90% during January to June 30, 2022.  

There has, however been a shift across the two years from 5% of fall throughs happening at the funding and 5% at the enquiries stage of the transaction to 2% and 1% this year respectively, resulting in an even greater percentage occurring early in the transaction. With most fall throughs during the first 30 days simply a result of the buyer changing their mind, this trend points to a change in buyer behaviour, leading potential buyers to exercise greater caution before entering the market. 

Following no less than 14 consecutive Bank of England base rate increases which have impacted mortgage rates and the products available, together with considerable press attention on the matter, buyers are both cautious and educated to the challenges of obtaining and maintaining a suitable and affordable mortgage to finance their purchase. This indicates that would-be buyers are taking the necessary steps including obtaining an agreement in principle to ensure their purchase is affordable prior to making an offer. 

Another significant factor contributing to initial transaction failures is when the seller agrees to a higher offer from a different potential buyer after already accepting the original offer. With a slowdown in property market activity, sellers are also adopting a more cautious approach, becoming more inclined to stick with their initial buyer. This trend subsequently leads to a reduction in the occurrence of transaction failures due to gazumping.  

Chain Visibility and Communication 

It is more important now than ever to nurture and progress those transactions which do surpass the initial stages of the conveyancing process. A lack of communication on progress or delays may cause uncertainty and can result in a fall through at any milestone in the transaction, so regular communication and managing expectations across the chain are key to preventing this. 

The Department for Levelling Up, Housing and Communities, along with the Home Buying and Selling Group and other leading industry bodies agree that better visibility across the chain and improved communication between stakeholders are key to achieving faster completions and minimising fall throughs. 

Whilst an estate agent can’t do much to influence a buyer or seller who has simply changed their mind, with clear oversight of delays or potential issues within the chain, they can help to resolve some of the other potential causes of fall throughs.  

Harnessing data from trusted partners across the property industry, ViewMyChain gives agents and sales progressors full visibility of the latest progress for every property and milestone in the chain, and automatically alerts them to potential delays, issues, or a fall through within the chain. 

This transparency, coupled with data-driven insight enables sales progressors to prioritise cases, and to proactively resolve issues and manage concerns and expectations for buyers, sellers, and other stakeholders across the chain, helping to significantly reduce the number of fall throughs. With greater visibility, improved communication and closer management of the sales progression process, the average agent using ViewMyChain can recoup around £54,000 annually in savings from reduced fall throughs, in addition to achieving significant time and efficiency savings. 

ViewMyChain is also a powerful tool for negotiators, helping ensure that sellers get their deal off to the best start using the Offer Checker functionality to assess the status, circumstances and chain for each offer received. 

Book a demo with our team to find out more about how ViewMyChain can help your estate agency.