Why Buyers fail to Complete after Exchange of Contracts

Every property transaction journey begins with a simple goal: transferring ownership from one party to another. However, in the labyrinthine process of UK property transactions, one particular stage has proven notoriously challenging - the post-exchange completion. On rare occasions, a buyer may walk away from the deal even after exchanging contracts. Considering the substantial 10% deposit typically at stake, these situations are quite significant. So, what might compel a buyer to take such a drastic step?

1) Property Chain Collapse: Perhaps the most common reason for post-exchange failure is the collapse of the buyer's own property sale. Property chains are delicate; if a link breaks, the entire chain can unravel. If the buyer was depending on the funds from their own sale to finance the purchase, they may be forced to pull out of the deal.

2) Withdrawal of Mortgage or Credit: Mortgage approval is a pivotal piece of the property buying puzzle. Should a bank or financial institution withdraw a previously approved mortgage or credit line, it leaves the buyer in a precarious situation, unable to complete the transaction.

3) Personal Crisis: Life is unpredictable. A sudden personal crisis, such as death, severe illness, or accident, can derail a buyer's plans. Such situations can result in the unfortunate withdrawal from a property transaction post-exchange.

4) Legal Troubles: Criminal charges, fraud, or imprisonment can unexpectedly thwart a buyer's property purchase plans. Legal troubles often bring financial uncertainty, making it unfeasible for the buyer to go ahead with the purchase.

5) Employment Instability: A buyer's job situation can significantly impact their ability to complete a property purchase. Job loss, withdrawal of a job offer, or other unexpected changes in employment can seriously hamper a buyer's financial circumstances.

6) Market Volatility: The property market, much like any other market, is subject to fluctuations. A sudden fall in property prices, a rise in borrowing costs, or significant currency fluctuations (particularly relevant for foreign buyers) can lead to second thoughts. In these cases, buyers might choose to forfeit their deposit in anticipation of a larger financial loss.

The reasons above highlight the perils of the post-exchange stage in property transactions. While these scenarios are not commonplace, they do occur (our research indicates hundreds of times a year nationwide), highlighting the necessity for sellers to safeguard their interests in the property market. ClozeSure is designed to address these issues and provide security to sellers and is instrumental in restoring balance and confidence, ultimately enabling a smoother, more predictable property transaction process.