When it comes to property sales, expediency is always a plus; a faster sale benefits all involved parties, including the buyer, the seller, and the estate agent. Ideally, a property sale should take about two to three months from the moment the buyer and seller agree to a price till the moment the new owner gets to move into their new home.
Unfortunately, property sales have been slowing down for the past 18 months, and this trend seems to be going strong in the near future. It’s worth looking into the reasons behind this sluggishness as well as a few possible remedies that can help expedite matters.
Reasons for a Slow Sale Process
1. Chain selling:
Chain selling is one of the main reasons why property sales can take longer than need be.
What is chain selling?
In a nutshell, chain selling is when the sale of a single piece of property is tied up to the sale of a piece of property preceding it along with a piece of property succeeding it. In other words, a seller in a chain cannot sell their property unless the next one down the chain does so as well.
Looking at an example might help clear things up:
Let’s assume that there are four individuals, named Greg, Laura, Michael, and Evan. Each one of those individuals would like to sell their current house and buy a new one. So, Greg agrees to sell his house to Laura, who agrees to sell her house to Michael, who, in turn, sells his place to Evan, and Evan sells his house to Greg. Accordingly, each one of those four people is both a seller as well as a buyer, and the money they make from the sale contributes directly to the purchase of their new home. What’s more, the chain here is a circular one, whereas it could be possible that a different chain could be linear, meaning that every seller is also a buyer except for the first and last people in the chain, who perform only one transaction.
With that explained, it is worth knowing that the amount of chain selling happening in the UK has been on the rise while the amount of single property sale, a property purchase where there is a single buyer and a single seller, neither of them have any other obligations to anyone else, has been falling. As a result, it is estimated that out of all the property sales currently taking place in the United Kingdom, 50% of them are part of a chain.
This can be a problem.
So, why do chains slow down the selling process?
To start with, chains are slow and complicated creatures. There are several working parts, and overseeing all of them can be a time-consuming and arduous task.
However, the real problem with chains is that all the sales are linked together, and if one of them falls through, they all fall through. So, this causes everyone in the chain to move at the same speed as the slowest member. Moreover, should any member need to delay their purchase or sale, this will hold up the entire group. Consequently, all it takes is for each member to delay by only a few days, and the entire chain will stall by the aggregate of these few days, which could add up to a few months. Nevertheless, it is possible that, after all this time and effort, a single member of the chain might change their mind or come up short, forcing all the other members to either wait for someone new to come into the chain or look for new properties themselves.
What is conveyancing?
When property is bought or sold in the UK, it is a conveyancer’s job to make sure that the transfer of ownership from the seller to the buyer is done correctly and that all the legal and statutory processes are carried out. Ergo, a conveyancer has to prepare, execute, and verify all the necessary legal documents, hence protecting their clients’ rights and interests.
So, why does conveyancing slow down the process?
Regrettably, conveyancing is a complicated process that can require a conveyancer to look over hundreds of important points, and the process becomes more involved if the property is being leased or if the buyer is getting a mortgage. To make matters worse, conveyancers can get swamped with all the work they get, and if they are not prepared for it, they will have to push a buyer’s job till they are finished with what’s on their plate.
3. Lack of investment:
Be it by the estate agent or the conveyancer, a lack of investment in the latest technology and the best talent can hinder a sales process. After all, a conveyancer who can’t streamline their work is bound to drown beneath all the jobs they end up taking. Similarly, an agent that can’t keep the entire chain in perspective is bound to lose a sale because a problem popped up somewhere along the chain, a problem that could have been solved had it been tackled early on.
4. Mortgage lenders:
Dealing with mortgage lenders can be problematic. For starters, if they are offering an advantageous deal, then they will be swamped with clients, making them busy to get in touch with. Also, any mortgage application has to go through several stages, getting checked by a number of departments, all of which happens before the mortgage lender makes out an offer. Furthermore, the whole process will get slowed down more should there be any queries pertaining to the application.
What is a survey?
In order to check the state of the property, it is customary to perform a survey of sorts. Also, mortgage lenders have to appraise the property, which is known as a mortgage valuation, so as to make sure that there is no discrepancy between the value of the home and the amount they are lending.
So, why do surveys slow down the process?
First of all, surveys can take a while to organise, finish, and write up. Additionally, it is possible that the survey will indicate certain problems with the property, problems that need to be dealt with and that will take time to resolve. If such problems are found, specialists might have to be brought in, stretching out the time-span of the sale.
6. Gifted deposits:
What are gifted deposits:
More often than not, first-time house buyers tend to get a little help from their parents, which comes in the form of a cash gift labelled as a “gifted deposit.” Hence, this cash gift needs to be accompanied by a letter from the parents confirming that the cash is a gift and that it does not give them any legal claim to the property being bought.
So, why does a gifted deposit slow down the process?
Obviously, a mortgage lender will have to perform a few checks of their own so as to ensure that the money given is legitimate and to rule out any instances of money laundering. These checks can take some time. Moreover, many lenders are uncomfortable with gifted deposits as it symbolises that buyer hasn’t saved all the money themselves. Thus, lenders have to spend more time making sure that the buyer can afford to repay their debts and to maintain the property for the foreseeable future.
7. Leasehold property:
What is leasehold property?
When buying a property, a buyer can opt for one of two options: owning the property from the get-go or leasing it. When the property becomes owned, the buyer becomes the freeholder. Conversely, in the case of leasing, the buyer becomes the leaseholder, and their lease tends to last for a long time, 80 years or longer.
So, why do leases slow down the process?
The problem with leasehold properties is that it involves an extra party into the equation: the current freeholder, a.k.a. the landlord. The addition of this extra element complicates matters and means more work for the conveyancer, who will have to look into the current freeholder as well as any previous leaseholders.
How to Speed up the Sales Process
Fortunately, there is a lot that can be done with the aim of facilitating a property sale, and most of it lies with the estate agent.
1. Always keeping the big picture in mind:
Given that a large majority of sales happen within a chain, Agents should keep an eye out for their entire chain rather than maintaining a myopic view of things and focusing only on their sale. This will help them solve any problems that might come up along the chain before it starts affecting their sale. For example, an agent who keeps an eye out for the rest of the listings in their chain will be able to notice when the status of one of those properties changes unexpectedly and act accordingly.
While looking out for the entire chain is what a good agent does, what a great agent does is to analyse their chain and try to spot potential weak points early on, plenty of which can be easily remedied. This anticipatory act can make all the difference between a sale that goes through on time and a sale that gets stuck in limbo.
The good news is that there is plenty of technology out there that can help today’s agents look out for their chain and keep their eyes on all the integral points.
2. Letting experts do what they are paid to do:
As mentioned earlier, conveyancing is a tough job that can take some time. Consequently, some estate agents keep calling and checking up on the conveyancer in the hopes of speeding up the process. However, this never works; the conveyance wants to get the job over and done with just as much as the estate agent does. Therefore, hassling someone who is already toiling under a large workload doesn’t help anyone.
Alternatively, a better solution for agents would be to check up on the conveyance online, hence being aware of any new updates yet not interfering. Moreover, this will allow the agents to keep both the buyers and the sellers up to date on how the transfer of property is going on. Finally, should things start to stall unnaturally, the agent might choose to step in at this point.
3. Empowering the customer:
When it’s all said and done, the people with the greatest impetus to see this whole thing over and done with as fast as possible are the buyer and the seller. Therefore, agents must strive to teach their customers all they need to know about the process and what needs to be done to see it through. Not only should agents teach customers about the process, but they also should educate them with regards to the parts that could be problematic or that could hinder the sale.
All of this should make intuitive sense as it helps foster trust between the agent and their customers. Over and above, buyers and sellers alike tend to have little knowledge concerning the property market, which is why they become all the more grateful when someone takes the time to explain the intricacies of property transfer and purchase.
It’s not enough to teach the customers about how property sales happen; it is also important to keep them updated as the process moves forward. It helps keep their minds at ease and lets them feel involved. More importantly, it makes satisfied customers out of them, customers who will be happy to come back for repeat business.
Even though there are plenty of obstacles that agents need to tackle in order to make sure that their clients have a smooth sale, the good news is that agents today have more tools to help them overcome these problems than ever before. Technology makes it easier to monitor the chain as well as the progression of the sales process itself.