Trading up (chain in practice)

Meadow1013

Hi All,

we want to trade up and were hoping to buy and then sell our own property. However with the current prices it looks like the only option is to buy and sell at the same time. Can you share your experience of buying and being in chain? What does closing both transactions at the same time look like in practice? Do we have to be ready to move on the day of signing contracts? Can the seller pull out last minute after our property is sold, i.e. is there any risk for us becoming homeless at this stage? Any insights much appreciated.

southofthelee

Comment below applies to high-demand urban / sub-urban areas

In the current market it's extremely difficult to make this type of chain work.

The seller of the property you want (let's call them Party A) will want a quick an easy sale. More than likely it's an estate sale, or they are trading up themselves or they are an investor selling up.

The buyer of the property you are selling (let's call them Party B) will want a quick an easy purchase. They are probably taking out a mortgage (AIP lasts for 6 months) and might be currently renting.

Getting the close dates for Party A + Party B to synchronise is hugely challenging. Plus you will be competing against cash buyers which Party A will naturally favour.

My advice based on 1st hand experience is get you home ready to put on the market, talk to 3 different auctioneers. Get your paperwork for mortgage approval ready. Talk to family / friends about the possibility of you staying with them / a property they control in the short term if you have to close without having secured a new property.

The bottom line - is that if you wait for your ideal property to come on the market and only then put yours up from sale then you likely to lose any bidding war.

kevgaa

Chains can work and regularly do. No sale is guaranteed until the contracts are signed and funds draw down (all contracts these days have a Claus subject to funds drawdown)

As stated above you need to put yourself in the shoes of the seller and like yourself they want an easy sale and the reality of that today is sellers will often go with underbidders who are not in a chain as it’s easier.

The options open to yourself are

1). buy and sell at similar times and hope you find a property and have your bid accepted.

2). Take a risk and sell your property in advance, this strengthens your position when you find a house you want. The disadvantage is you will need alternative accommodation while searching for your new home.

Best of luck, for reference I completed a 3 house chain move earlier this year. On the flip side we had friends who kept getting rejected despite being the highest bidder so in the end they went with option 2 and moved into their new house 2 months after their own sale closed.

Meadow1013

Thanks for your replies. Selling our property first is really not an option for us. We are looking for a specific type of house in a specific area and these do not come to market very often. We could be waiting for months. On the other hand our house is extremely saleable (spoke to the agent already). Bidding wars, vendor changing mind last minute - we've been there. We are not under pressure so would be reluctant to sell without having signed contract on a new house.

I was thinking that we could have contract signed by the seller of the house we are buying before signing the contract on the house I was selling (if this makes sense). I really wouldn't like to loose our property and end up with no house in the process. I was hoping this was possible - assuming we find a vendor not in chain who is willing to wait a bit. I would love to hear from people who went through the process.

Claw Hammer

Your bargaining position will be weaker as you will be bidding without a sale agreed on your own house. You might find a vendor willing to wait on your sale but most likely such a vendor would exact a price. The sale of your own house could fall through for any number of reasons, even with contracts signed. If you market your own house to the point where your purchaser has signed a contract and then you go around looking for a house you might have lost your purchaser by the time you find a house. If you only start marketing after you have bid successfully on a house, you are asking your vendor to take a leap in the dark.

KLF

https://www.boards.ie/discussion/comment/120899468#Comment_120899468

In a similar position with my fiance and learning as we go. In regard to ending up with no house, your solicitor will prevent that. If you do find your new property and all goes well you would sign both contracts, to buy and sell at the same time. The issue is that your buyer might start getting impatient if you keep delaying until your house purchase is ready to go. Of course, no one can force you to sell so they may just have to pull the plug if they can't wait and then you find someone who is willing to wait.

southofthelee

https://www.boards.ie/discussion/comment/120899468#Comment_120899468

Assuming that you are also bidding on a desirable property, then your bid will not be deemed credible by the vendor's auctioneer.

Why would a vendor essentially double their close time by waiting for you to close?

herbalplants

https://www.boards.ie/discussion/comment/120899825#Comment_120899825

I so agree with above post.

Why would the vendor of your highly desireable purchase wait for you? You did mention that houses you like don't come often on the market.

Meadow1013

https://www.boards.ie/discussion/comment/120899879#Comment_120899879

These houses wouldn't be very popular due to size+location+price. It seems to be common practice, as I enquired about two houses in the recent months and this was the case. Sellers were waiting for the buyers to finalise their sales. Ads were still active on daft at vendor request. I guess this was in case the sale fell through - potential buyers could still register their interest.

Eddie2008

Exploring this at the moment in a high demand area. Experience so far is that some solicitors simply don't want to handle it - just don't want the extra work. I am not getting that from EA's though, imagine how busier they would be if the mechanisms available to solicitors were used to allow for chains that protected both seller and buyer... It would be a more functioning market. They can and do work, but solicitor's and EA's need to support them and stop scaring off the sellers to the idea.

Once advantage in the current market is that people trading up may have much lower LTV's than FTB's and less impacted by interested rates. They will require less funds for furniture etc, as they will already own. And so can bid a higher offer that can be taken advantage of. This is the tack I'm taking. Cash buyers will always be more attractive obviously.

Eddie2008

I did speak with one solicitor. He had recently sold his house, rented and bought a new one with a young family. He said the whole experience was so stressful that he would never recommend that process again. It is too much and too risky to expect a trader upper to do this - in his opinion this approach has to stop.

From now on, he will work on the chain method instead.