Chain breakers may be solution for supply and demand issues 

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chain breakers

Being stuck in a housing chain that isn’t moving forwards can be stressful, and if any part of the chain collapses it can ultimately result in you not purchasing your dream home, taking you back to the beginning of your search.

Many buyers know about the option of part-exchange, but some developers offer chain breakers whereby they buy the home where there is a broken link in the chain to speed up the process. Andrea Fawell, Sales and Marketing Director at Kebbell explains.

According to data from 32% of property sales fell through before completion between January and March of this year. Not many months go by when we haven’t seen the miserable situation for our purchasers when they are part of a collapsed chain.  Whilst chain breakers aren’t new, they aren’t always an option that buyers are aware of and not all developers offer them.

So what is a chain breaker?

A chain breaker is where a developer offers to buy the home where there is a broken link in the chain for a mutually agreeable price, subject to three valuations. Developers can also offer chain breakers right from the beginning of the purchase process when the buyer is aware they are part of a long chain and want to avoid the risk of waiting for the chain to collapse.

What criteria need to be met?

Chain breakers use the same criteria as a part exchange. Firstly the top of the chain has to involve buying a property from the developer involved and the chain break property has to be less expensive than the Kebbell property in this example, ideally around 50% of the property price.  We look at whether the broken chain property is going to be readily saleable because developers don’t want it as an asset and will want to sell it within 6-12 weeks to see the profit on the new home they are selling.

How does it work?

The property is valued by three agents, normally one nominated by the developer, one by the property owner and an agreed third party. The agents are asked to value the property at a price that will mean it can be sold in 6-12 weeks which is the optimum time for people to move into their new build home. The developer will purchase that property in exactly the same way as any normal purchaser would including conveyancing, surveys, stamp duty obligations, searches and contracts.  Everybody exchanges and completes contracts simultaneously. After completion the developer pays any estate agents fees when it is sold on by them.

Read more of the latest developments in our new edition

Media contact

Editor, Showhome Magazine
Tel: +44 (0) 1622 823 920

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