What does 'Upward Chain' mean when buying a property?

Find out what Upward Chain means when you are buying a property. 'What does Upward Chain mean?' plus over 150 other property related terms and jargon in plain English

Upward Chain

A property has an upward chain if the person selling it will only move out when they have found a property to buy and are in a position to exchange contracts on their purchase. Is this a problem?

Chains are never the ideal situation because one third of all property purchases never make it through so the more transactions in the chain the higher the chance of that chain collapsing.

The most extreme case I have ever been involved with was a chain of 11 transactions - so 12 properties altogether. That's 12 properties that all need their documentation in order before contracts can exchange, that's before the sale becomes official.

Now getting from sale agreed to contracts exchanged usually takes a few weeks but if the person you are buying from needs to go off and find a place to move to and then the person they are buying from needs to do the same this adds substantial time from day one.

In my mega chain of 12 properties it took just under a year for the sales to all go through and that was just sheer luck. Say, for example, the property at the top was being sold by a property investor.

Well after 6 months he's going to start thinking he might be able to get a better price and pull out causing the entire chain to collapse until the person at the top can find a new place to buy.

That did actually happen and that's why it took months and months for this chain to come together. In that time anything else could have happened. Someone in the middle of the chain might have lost their job and decided not to move after all. Someone could have had a complete change of heart, deciding to stay put because they were, say, getting a divorce. Its a miracle that didn't happen more in this mega chain, I've seen far smaller chains collapse for less.

Obviously then a property with no upward chain is a bonus. You can move in or start renting it just as soon as you can get your paperwork and finances together and the vendor can provide his or her documents.

Hence why "Chain Free" or "No Upward Chain" is often trumpeted by Estate Agents on their property details.

To learn more about handling chains in a property purchase pick up a copy of my ebook How to Really Buy a Property.