Fall throughs: Estate agents lost an estimated £1.27 billion last year.
With the announcement in the last few minutes from the Bank of England that interest rates are to rise from 4.5% to 5%, it's entirely possible that more property sales may fall through.
We believe ever property transaction should be protected and secured.
Forgive the click bait title, we wanted to grab your attention and explain why this is a post you will want to read
With every house sale fall through, a cost is incurred. Whilst we do all we can to not let that happen, unfortunately, sometimes it does. With estate agents losing an estimated £1.27 billion last year, we wanted to look at it in more detail, to help you understand why and how you can minimise the risk to your sale.
Boom and Bang!
Whilst there is no doubt that the housing market post Covid was a boom time, with houses receiving multiple offers, many over asking, house prices selling and many agents finding that properties they were listing were selling with very little effort involved. But with this Boom in the industry, another statistic began to rise, the amount of sales that were collapsing, or the fall through rate as we refer to it in the industry.
Why? This is due to a number of reasons. Some are reasonable (yet still annoying) Such as significant issues arising in the survey, buyers unable to secure funding, illness or a major change in circumstances. However, many were not reasonable. Many buyers and sellers simply change their minds! Buyers feeling pressured by the competition in the market made offers higher than they were comfortable with, or on properties they weren’t totally sure about. Some sellers agreed an offer with one party, only to switch to someone else who made a higher offer part way through.
Then there was the issue with the sheer volume of sales that were going through, this caused delays in the conveyancing process, poor communication and frustration, which sometimes ended in the painful decision to pull out of the sale all together.
Chain Reaction
A sale falling through can the whole chain. The initial sale that fell through will try agree a new sale, whilst those further up and down the chain have to sit and wait for this to happen. This can cause more frustration, and in the worst cases other buyers and sellers feel the stress isn’t worth it and pull out themselves, possibly causing the whole chain to collapse. This doesn’t only affect buyers and sellers, it effects everyone involved. The mortgage brokers, lenders, removal companies, conveyancers, solicitors and of course the estate agent, they are all out of pocket.
Of course during the boom of the last couple of years, where buyers out numbered properties available to buy, finding a new buyer was relatively straight forward, and didn’t cause too much of a delay. However, in 2023 demand has dropped and prices are settling to a more normal level, finding a new buyer after a sale has fallen through is not quite as straight forward. The agents and sellers need to be much more proactive.
The financial impact
Harrisons of all agents know that losing a house due to fall through affects all parties involved. From the agent to the buyer, to the seller, and all services in between, it is not ideal, and it had an impact on three in 10 property sales last year. Costing UK estate agents well over £1 billion¹.
Unbelievably, the compiled properties is an extortionate 315,652 sales falling through in 2022.
The table below shows that the average fee lost from agents alone equated to over £4,000, with both buyers losing over £2,000 and buyers losing over £1,500 per fall through.
When added together, the estimation of conveyancers losing money totalled £706.7 million, with sellers coming in not much lower at £533 million.
Collectively – that is a great deal of money.
Category Estimated fall throughs 2022* Average fee lost per transaction £ Estimated total cost of fall throughs (2022)
Agent 315,652 £4,034** £1,273,445,322
Conveyancer – buying 315,652 £2,239 £706,744,828
Conveyancer – selling 315,652 £1,690 £533,451,880
*Based on 31% of all transactions falling through before completion and applied to sales volume
**Based on average fee of 1.42% to the average 2022 house price of £284,108
We understand the stress
Not only are we agents, but we ourselves are homeowners. We know the stress behind selling, we know the stress behind buying, but we are most acutely attuned to the stress that it collectively brings to a couple or family who are wanting everything to go as planned, without any party pulling out.
The simplest of purchases can still stall and take time, and people can become impatient, worried, or distracted from their original dream of moving because it isn;t going as quickly as they’d like.
With surveys being carried out and revealing costly issues, or a plain old change of circumstance can sometimes be enough to halt the sale, or prevent it entirely.
It only takes one link to break the chain, but what if something could be in place whereby the costs were considered through a contract between parties before this all commenced?
What Harrisons can do for you
With a third of all sales falling through last year, at this figure rising currently, it’s interesting to note that only 13% of all of our sales agreed at Harrisons fell through last year, and this is because we recommend reservation agreements on all sales.
Whilst not all fall throughs can be prevented, they can be significantly lowered with the help of our Reservation Agreements, our results reflect this. We plan on creating a fresh wave of awareness on how this particularly works for you as our customer when it comes to either buying a property, or selling yours with us directly.
Our aim is to lower the costs incurred by sales fall throughs. Each property only sells with several people attached to it, making it complete, but if there is no promise of commitment behind it, then it can be left to collapse. That is costly for all – and we are doing our best to prevent it where possible.
If you would like to hear more about what Harrisons does to prevent sales fall through, please give us a call today on 01795 474848.