How detrimental is the chain?

Northern_Line

hi all,

long time lurker, new poster. I was hoping to get some advice from people who are a bit more experienced than this in the buying and selling process.

me and my partner are currently trying to buy a property in a very overheated city located in South Yorkshire. It is my first time trying to sell and buy.

we found a buyer for our place within a few days. However, we’ve had no luck in getting offers accepted by on other properties. We are on average bidding between 5-10% over. To be honest, we’ve not found anywhere we love enough to go beyond that.

I recently asked for some feedback from an EA after another doomed best and final offer. She was really helpful and pointed out not only that there were 4 higher bids, but 3 of them were chain free.

what I’m keen to know is how much being in a chain is putting of sellers?

 Our buyer is in a chain of 4, which seems big but I sort of assumed a chain needs to be at least 3 long. We are able and willing to up our offers if we find the right home, but I’m just concerned it’s a waste of time as we would still lose out due to being in a chain.

we’re now actively considering breaking our chain and going to move in with relatives for a bit, but ideally I’d like to link the sale and purchase due to the pain of updating addresses etc and the potential impact on the mortgage application. I sort of assumed chains were common given lost buyers have a property to sell. Yet there seems to be all these mysterious chain free (and cash!) buyers knocking around in large numbers.

thanks. 

[Deleted User]

Its certainly detrimental, but to what extent depends on the other members of the chain and the urgency of your vendor. 

A chain of four, plus you and then plus your vendor, is pretty hefty.

Northern_Line

Thanks zx81. I think our buyer is part of that 4, so plus us the total chain is 5, which I imagine is still fairly long when it comes to chains.

We’re trying to develop some solutions to get around this, besides selling and moving in with relatives. We are in a position where we can buy without needing the sale to go through. However, if our property gets down valued (which seems to be happening a lot at the minute) we would need our property equity to overpay.

The other option seems to be finding a place to buy where the vendor has no onward chain as at least then we have reassurances that the buck stops with them.

The final and least desirable option would be just offering silly money so that even if we are up against chain free buyers, our final offer is overwhelmingly attractive. That would strike me as awful financial management all for the sake of not wanting to live with the in-laws for a few months!

NinjaTune

A chain of 5 would put me off to be honest.  

When I sold there was a chain of 4 below me.  I'd already agreed to break the chain to progress the sale as the chain had already been formed for quite a while.  Being at the bottom of the chain for my onward purchase was very useful as otherwise it would have been a chain of 8 including me.  Far too many chances of things going mammaries up with a chain of that size.  My purchase ended up being delayed due to issues with the lease so I'd probably have lost my sale and had to start over again.

I stayed with a friend and had to put my stuff into storage for 4 months which wasn't ideal but I got a 50% discount for the first 3 months and then managed to negotiate a 4th month at 50%.  I moved everything I didn't need into storage with the help of friends once we'd exchanged (2 weeks prior to completion).   On the day of completion I just needed to pack what was left (not much!) into a friend's van and take that to storage. I did pay a removal firm to move everything from storage to my new property just for the sake of convenience.

Northern_Line

NinjaTune said:

A chain of 5 would put me off to be honest.  

When I sold there was a chain of 4 below me.  I'd already agreed to break the chain to progress the sale as the chain had already been formed for quite a while.  Being at the bottom of the chain for my onward purchase was very useful as otherwise it would have been a chain of 8 including me.  Far too many chances of things going mammaries up with a chain of that size.  My purchase ended up being delayed due to issues with the lease so I'd probably have lost my sale and had to start over again.

I stayed with a friend and had to put my stuff into storage for 4 months which wasn't ideal but I got a 50% discount for the first 3 months and then managed to negotiate a 4th month at 50%.  I moved everything I didn't need into storage with the help of friends once we'd exchanged (2 weeks prior to completion).   On the day of completion I just needed to pack what was left (not much!) into a friend's van and take that to storage. I did pay a removal firm to move everything from storage to my new property just for the sake of convenience.

That’s really helpful. I think we’re likely going to have to break the chain from our end to put us in an attractive position. The only other option is we might still have a chance if we buy somewhere with no onward chain, but we probably won’t have any luck trying to join another chain. I guess it might be time for us to pause viewings on paces to buy? 

Part of me wishes we tried to find a cash or chain free buyer, but selling a flat isn’t that straightforward these days so I’d rather not ditch our buyer. 

We’re also still in a position that we can borrow what we need without selling given we have other savings. However, if we put in a high bid that gets down valued we aren’t able to make up the difference. Which in the current market seems unlikely. 

Given the state of the market, the SDLT winding down and furlough coming to an end, maybe it might actually work out better looking in September once chain free. I’m not prepared to put money on the market getting cooler though given it’s been irrational for some time.

fishfingerbutties

A lot of people took the same risk previously as the market was heating, expecting it to cool off again (and hasn't). So many FTBs coming into the market is one thing, but also lots of people in rentals who had sold to break their own chains desparately trying to get back on the property market. It's like one massive bun fight.

And a chain of 5 or more at the moment isn't that unusual - everyone wants that elusive chain free place, and is clinging on to whatever property they've actually managed to be successful at getting offer accepted. 

It's all bonkers.

Northern_Line

fishfingerbutties said:

A lot of people took the same risk previously as the market was heating, expecting it to cool off again (and hasn't). So many FTBs coming into the market is one thing, but also lots of people in rentals who had sold to break their own chains desparately trying to get back on the property market. It's like one massive bun fight.

And a chain of 5 or more at the moment isn't that unusual - everyone wants that elusive chain free place, and is clinging on to whatever property they've actually managed to be successful at getting offer accepted. 

It's all bonkers.

Good to know at least that a chain of 5 isn’t that absurd.

You’re completely right about it being bonkers. I remember when I first bought thinking it would never again be so difficult and stressful. How naive! I’m starting to wonder if it ever gets easier. It doesn’t really seem like a functioning housing market should feel more like a raffle than a transaction, but I guess the UK’s housing market is what it is. 

eidand

Being in a chain or not is the difference between having your offer accepted or not.

A vendor would prefer no chain buyers as it makes things quicker and less prone to issues. However that doesn't mean that a no chain person can get away with offering silly prices. No, but if the choice is same kind of offer and chain or no chain buyer, then the no chain will most likely win.

ele_91

We ended up having to break our chain, since October we have attempted to buy 4 houses and all have fallen through. When the last house fell through the sellers took it off the market close to exchange and we felt we had to complete on our sale as we wanted to keep our buyer. We have moved in with family and we are much more attractive when viewing now. We recently viewed 6 houses over a weekend, offered on 4 and had 3 offers accepted, two of those due to our position of no chain. The house we have gone for had 3 other offers, some up to £30k more but the estate agent advised the seller to choose us due to our ability to move quickly. I would advise doing so if you can and if you are committed to moving, not least because it also makes the process much less stressful. 

firsttimesellerldn

We had an offer accepted on a house last month and were told one of the reasons was because we were chain free and nearly completed in our sale. We’re now in temporary rented (plus some house sitting) and hoping the purchase goes through relatively swiftly - it is currently chain free. It’s a risk though, and I’m aware there will be lots of others out there in a similar position waiting to snap properties up. If it doesn’t work out would you be comfortable renting for a few months or more? 

Northern_Line

Thanks all. All very helpful. 

It seems that in a scenario where we and a no chain buyer are offering similar prices, we’ll lose every time.

In a case where we offer a fair bit more and a chain free buyer offers less, it’s going to be down to individual factors including how much the seller values money over speed and security of the transaction completing quickly.

We are prepared to stay with relatives for six months and could potentially rent after that if we need too, so at the very least we’re flexible. We didn’t have any no chain buyers and wanted to lock in a price above asking quick, so we are where we are.  

It seems like we don’t need to necessarily abandon or house search right now, but just accept we will struggle to compete against no chain buyers, with a lot of them knocking around.

we’re actually exploring a different housing market this week in a different part of the country. Maybe it’s better their, but I’m not holding my breath!