Data released on improving completion process
A new report from View My Chain, compiled using unique property transaction data, is giving the property industry its first robust insight into the issues in buying and selling, highlighting potential solutions that could speed up the process and reduce fall-through rates.
Transactions have been tracked from sale agreed to completion, capturing data on timescales, fall throughs and the relisting of property, all of which reveals a very complete picture of how sales currently progress.
The report shows that 2016 was a better year for sales than 2015, with 109,000 fall throughs, compared to 149,705 in 2015. Approximately 20% of these properties were eventually withdrawn from the market, which translates to 40,205 properties withdrawn from the market in 2015 and 23,088 in 2016. The data indicates that this reduction in fall throughs was mainly due to the Stamp Duty changes in March 2016, when buyers were more motivated to follow through with their purchase to beat the deadline, as well as a flatter market for the rest of the year.
Sam Tyrer, Managing Director of Retail for Countrywide summed up the importance of the new report: “It’s a big decision when someone decides to buy or sell a home and of course it’s never helpful for either party if a sale falls through. While more work needs to be done to look into the causes behind this issue, this study provides us with a good starting point on some of the challenges being faced by our customers, and the industry. As pressure on the UK housing supply continues to increase, it’s important that we unpick and address the underlying causes of failed house sales, so we can get better at making sure they happen the first time around, where possible.”
The cost to the industry
The loss of £33,129,583* in failed sales transactions each year is calculated from assuming a loss of 1% commission, based on the average property sale price in each region multiplied by the number of listings that fell through and were then sold by another agent that year. It does not include the additional monies that could have been earned from conveyancing and other services that benefit agents, so the real cost figure would undoubtedly be higher.
Some of this lost commission could be saved immediately if the original agent was able to retain the seller by identifying a problem early in the process and providing them with an excellent and transparent sales progression service from the start.
And it’s not only the financial loss of a buyer that causes problems. The stress of losing a sale on behalf of a seller affects emotions and staff morale, and it can be difficult to maintain a positive relationship with the seller and anyone else in the chain who is affected.
Commenting on these figures in the report, Russel Quirk, CEO of EMoov, said: “This data reaffirms the industry’s concerns around the significant waste that occurs in the home buying and selling process, to their own detriment and that of the consumer.”
The time it takes to progress a sale
In addition to providing accurate information on the number of sale fall throughs, the report also details the number of days it takes for a sale to progress from SSTC to completion. Bob Scarff, a leading consultant in the estate agency industry, said that “the most interesting data from the View My Chain report is the time it takes to get searches done and the regional differences that apply.”
According to the data, it takes an average of 30 days to secure searches, while order-to-delivery times from the search industry state that it takes an average of just 10 working days, with some regional variances.
Analysing the same data from 2015 through to 2016 on a quarterly basis, the variation of timings is huge. It shows that the quickest securing of searches was 19 days in the North East in Q1 2016, while the longest was 35 days in the North East and South East in Q3 2015.
Part of the reason for the shorter lead times overall, from SSTC to completion, in Q1 2016 was the stamp duty deadline. Everyone had to work together to complete sales by a known and universal deadline (31st March 2016) in order to avoid the 3% higher stamp duty that was coming in for second home owners. Both Bob Scarff and Nick Leeming, a property portal pioneer, agreed that a ‘common deadline’ has always helped speed up the legal process and that the data accurately reflected market conditions. Meanwhile, Beth Rudolf, a leading consultant in the conveyancing industry, felt this supported the recommendation in the recent Conveyancing Association paper, that introducing an early legal commitment through a reservation agreement would significantly shorten the legal process.
Don’t change agents
Another insightful piece of learning from the data for the industry is, if a property sale has fallen through, the seller does not increase their chance of selling again by switching agent. The 2016 data shows that, of the sales that fell through, when the seller remained with the same agent, 45% went on to sell the property to another buyer; for those that switched to another agent, the percentage was slightly less.
Debbie Franklin, from Andrews Property Group, felt this made sense. In her experience, an existing agent understands both the needs of the vendor and the reasons for the fall through, so is well-placed to work effectively with both the seller and future buyer to manage expectations and secure a successful sale.
The importance of a quality sales progression service
In conclusion, agency experts agreed that the data in the report confirmed sales progression is an essential part of an estate agent’s role, something that is often not understood or appreciated by consumers when choosing which agent to work with. In addition, Debbie Franklin commented that this data was “invaluable to help benchmark your own agent’s performance against the average, when it comes to offer-to-completion speed and sales fall throughs, even on a regional basis.”
Sohail Rashid of View My Chain, commented: “The data clearly shows the biggest delays are in the early stages, where the consumer is required to instruct a legal representative to issue contracts and request searches, and apply for their mortgage. Until every party in the chain has progressed to this stage and all searches have been ordered, the data shows that the chain is three times more likely to fall through.” He concludes, “The unique whole of market data coverage from View My Chain on listings, legal searches and mortgage applications allows agents and consumers to access a level of transparency that has not been previously available.”