Chain (real estate)

A chain, when used in reference to the process of buying or selling a house, is a sequence of linked house purchases, each of which is dependent on the preceding and succeeding purchase. The term is commonly used in the UK.[1]

Each member of the chain is a house sale, which depends both upon the buyers receiving the money from selling their houses and on the sellers successfully buying the houses that they intend to move into. Where no chain exists, it is called a chain free property but only 10% of property transactions in the United Kingdom have no chain.[2]

For example, in a four-household chain, A buys B's house, B uses the money from that sale to buy C's house, and C uses the money from that sale to buy D's house. (A chain can be circular. This example becomes circular if D buys A's house.) All sales in a chain close on the same day. On that day, all the households involved in the chain leave their former homes and move to their new homes.

This situation is notorious for being liable to "break" if one of the transactions fails, for example due to financial difficulties, a change of heart, or the practice of gazumping or gazundering. The failure of one member of the chain fouls the whole set of transactions.[1] The remaining chain fragments must find new buyers and sellers to form new chains.

A chain begins with a household buying a house without selling their current house. Examples:

A chain ends with a house being sold and not depending on existing owners buying a house to move into. Examples:

See also

References

  1. 1 2 Estate agency market in England and Wales (PDF), Office of Fair Trading, March 2004, retrieved 27 June 2013 (Archived) Check date values in: |access-date= (help)
  2. "How to stop a house chain collapsing". The Independent. 8 March 2006. Retrieved 2013-07-06.
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