There are few conversations more upsetting for buyers or sellers than those where an estate agent breaks it to them that the other party has pulled out of a sale. Sometimes it’s because of a poor survey, sometimes a better offer, or sometimes – most frustratingly of all – there’s no obvious reason.

And sales collapse more often than you think, at a rate of around 300,000 a year, according to a survey by the HomeOwners Alliance earlier this year.

That’s almost one in three. Failed transactions cost both buyers and sellers. More than half of sellers lost money as a result, at an average of £2,727.


Paula Higgins, co-founder of the Alliance

But those keen to get moving this selling season don’t have to accept the uncertainty that comes with Britain’s antiquated home-buying process – there are ways to avoid the other party pulling the plug, or at least of protecting your finances if they do.

How can Gazeal help?

One way is by using firms, like Gazeal, that offer presale contract pacts, which give potential buyers information and searches much earlier in the process than normal. It also cuts the conveyancing time significantly.

Once an offer is agreed, the company provides a reservation agreement that requires buyers to put down a 1pc deposit. There is a 14-day cooling-off period and the deposit is returned if the buyer’s lender downvalues the property or if there is a problem with its title.

Jane Haggerty, a PA from Rickmansworth, used Gazeal to sell her one-bedroom flat in Watford earlier this year. Initially she agreed a sale the traditional way, but it fell through. She said she panicked at first, before taking the property to a different agent, who recommended a reservation agreement.

She said: “Once we found a purchaser, they paid a 1pc deposit, which meant they were serious buyers and were not going to pull out.”

The reservation agreement – which both buyer and seller pay £250 towards – is only available for chain-free sales at the moment.

The reservation agreement – which both buyer and seller pay £250 towards – is only available for chain-free sales at the moment.

These kinds of agreements are still rare, meaning that not everyone is willing to sign one. But there are also insurance products you can buy to protect yourself from another party pulling out. They may not prevent the hassle of a collapsed sale, but they can at least take some of the financial pain out of the experience.

The HomeOwners Alliance provides insurance from £47 that covers legal, survey, mortgage arrangement and lender fees, but it’s only available to buyers.

Other providers offer “residential abortive transaction insurance”. Available to both buyers and sellers, this is a hedge against either side pulling out of a purchase. For buyers the risk here is being “gazumped”, where a seller accepts a higher offer that comes in after an initial offer has been accepted.

Consumers can purchase it directly via Northcott Beaton Insurance Brokers, but it’s more commonly sold through solicitors, search agents and mortgage brokers and typically costs about £50-60.

Take-up of this type of insurance remains low, says Northcott Beaton’s Andy Payne: “It’s one of those areas that if Joe Bloggs knew about you’d sell a lot more of.”

What about the future?

While the Government has indicated it plans to make changes to the country’s flawed house-buying process in future, it’s worth remembering there are already ways to protect yourself from being out of pocket if you find yourself on the end of an “I’ve got some bad news” call from your estate agent.

Source: www.telegraph.co.uk/