The number of house sales falling through pre-completion during the first quarter of 2018 reached its highest level for this time of year for a decade, it is claimed.
Quick Move Now - a quick buy firm, which has monitored fall-throughs for many years - says the fall-through rate from January 1 to the end of March hit 38.8 per cent.
In the first quarter of 2008 the figure was 35.9 per cent but in most years since then the proportion was in the low 20 per cent range: however, in the first three months of 2017 the rate rose to 34.9 per cent and now this year has hit 38.8.
The figures come just two days after the government released its latest proposals which, it claims, will lead to simpler, faster and more reliable sales and purchases. However, its measures do not address directly the problem of fall throughs.
“Although we can attribute some changes in the fall through rate to the usual seasonal peaks and troughs, ongoing Brexit uncertainty and strict lending criteria are certainly contributing to increased market caution and fewer successful property sales” explains Danny Luke, Quick Move Now's managing director.
“Shortage of supply also remains an issue in many areas. This means those that are keen to move, or have no choice, find themselves in a very challenging market.”
Of the property sales that were unsuccessful, Quick Move Now says 46 per cent were attributed to the buyer changing their mind or the seller feeling that the sale was not progressing quickly enough.
A further 23 per cent fell through because either the buyer or seller wanted to renegotiate after the initial deal had been agreed, and more than one in 10 of the sales that fell through did so because the property survey highlighted issues that caused the buyer to pull out of the sale.
Strict lending criteria since MMR is also playing a role, with 11.5 per cent of sales that fell through doing so because the buyer was unable to secure sufficient funding from their mortgage provider.
The remaining eight per cent of failed house sales were the victim of a collapsed property chain.
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Gracious - a truly headline grabbing statistic for this wet Tuesday.
Nearly 40% fall through rate?
Even the most doom laden out there must question this figure.
What is the source of the data?
Keeping sales together is partly about relationships and communication, if sellers use online agents such as Purple Bricks then those relationships are not developed and small issues become big enough for clients to pull out of purchases and sales.
I always question these type of stats. Ive been in the game 10 years and never had a quarterly fall through rate that high. Working in Shoreditch for Winkworth arguably one of the most competitive markets there is, our fall through rate is around 20% which is admittedly slightly higher than normal. There is some truth in there being more caution with buyers and the prolonged uncertainty over Brexit but to have a 40% fall through rate i would question what vetting is being prior to agreeing these sales. Here you must provide proof of an agreement in principle, proof of cash deposit, put your solicitor in funds and have your mortgage valuation booked in before we take a property officially off the market. If that is done to all i doubt the fall through rates would be so high!
What constitutes a fall through? An initial sale can fall through and perhaps even its replacement but if the third sale completes then the property has successfully sold despite two earlier fall throughs and the agent gets paid.
If you've only ever sold one property but it only sells on the third attempt, then the fall through rate is 66% - ouch!
Currently working to +/- 25% fall through rate and have been for two years. That is despite all too frequently doing the work of lazy agents - I nevermind, as I know who's going to be getting the re-sale!
46% of all fall-throughs being attributed to slow sales progression is alarmingly high however we all know that poor communication jeopardizes a buyer’s position.
PropTech companies, such as tmgroup, are rising to the challenge by helping agents and their customers by developing technology that connects the transactional parties together. Key features such as the mio app fast becoming the customers’ choice to see the progress of their home move and to send and receive messages with their agent at their convenience.
The success of this is already being seen in the pilot of our mio solution, which has not only helped estate agents to win more business, but has helped to raise the bar in terms of sales progression and customer engagement throughout the transaction.
Not sure the validity of these stats, you have to involve agents or buyers and sellers directly to get the stats and I don't know any agent who has been involved ?
I think online agents with poor or zero sales progression has impacted a lot of chains , something a few years ago thst wasn't a factor
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