What Happens if a House Sale Falls Through?
It's the moment every buyer dreads, you've found the property, made the offer, instructed your solicitor and started planning your move. Then suddenly the sale collapses. Months of effort, hundreds or even thousands of pounds in fees, all gone.
It's more common than you might think, roughly one in three property purchases in the UK fall through before completion. Knowing why this happens, what it costs, and what your options are can help you prepare for the possibility and recover quickly if it happens to you.
Why do house sales fall through?
There are several common reasons a sale collapses before exchange e.g.
the buyer's mortgage application is declined or down valued
the survey reveals significant issues that the seller refuses to address
the buyer pulls out due to a change in circumstances such as a job loss or relationship change
the seller decides not to sell after all, or accepts a higher offer from another buyer (gazumping)
a party further up or down the chain pulls out, causing the whole chain to collapse
Until contracts are exchanged, neither party is legally committed to the transaction. This means either side can walk away without legal consequence, however much money has already been spent.
What does a fallen-through sale actually cost you?
If you're the buyer and the sale falls through, you typically lose any costs you've incurred up to that point. These can include conveyancing fees for searches and legal work already carried out, mortgage application or arrangement fees, survey costs which can range from a few hundred to over a thousand pounds, and any indemnity insurance premiums. In total this can easily run to £1,500 to £3,000 or more, depending on how far through the process you were.
You won't recover these costs from the seller unless they've explicitly agreed to a reservation agreement, which is rare in the UK.
What to do immediately if your sale falls through
The first thing to do is find out exactly why, if it's a chain collapse you may be able to wait while the chain rebuilds. If the seller has changed their mind there's usually nothing to be done. If the issue is with the property itself, such as something the survey flagged, you may have grounds to renegotiate or walk away with your eyes open.
Speak to your solicitor about what costs are unavoidable and what might be salvageable, some searches can be transferred to a new property if you find one quickly. Mortgage offers can sometimes be transferred too, but this depends on your lender.
It's also worth asking your estate agent if any other properties in the area meet your criteria, acting quickly can save you from having to start the entire process from scratch.
How to reduce the risk of a sale falling through
While you can never eliminate the risk entirely, there are things you can do to improve your chances. Asking the right questions before making an offer is the most important. Find out how long the seller has been on the market, why they're selling, whether they're in a chain, and how committed they are to the move. Our guide to making an offer on a house covers questions to ask at offer stage.
Choosing a responsive solicitor matters too, slow conveyancing is one of the biggest causes of sales falling through. The longer the process drags on, the more chance there is of someone losing patience or circumstances changing. Our guide to the conveyancing process covers what your solicitor should be doing at each stage.
If you're particularly concerned about gazumping, you can ask the seller to take the property off the market once your offer is accepted, and to commit to a timeline for exchange. While this isn't legally binding, it does reduce the risk.
Looking ahead
If your sale has fallen through, it's tempting to feel like you've lost everything. But you've also gained information, you now know more about what to look for, what questions to ask, and how the process works. Many buyers go on to find a better property the second time around, often more quickly because of what they learned from the first attempt.
The Home Truths Guide includes 100+ essential questions to ask at every stage of buying a home in the UK, designed to help you reduce the risk of things going wrong and recover quickly if they do.
Image by Parker Coffman on Unsplash