What is the “property chain” and how can it be broken?
4 mins reading time
24 October, 2018
So as not to put the cart before the horse, we’re going to explain the concept so all of us know what we’re talking about.
The “property chain,” or “house chain,” is the collection of linked purchases/sales in whose whirlpool all home buyers find themselves if they need to sell their own home before they can make the leap to a new one. On average, we’re talking about more than 25% of the property sales in Spain.
If you factor in the tradition of saving by investing in “brick” that is deeply rooted in Spanish culture, we understand the crucial importance of not letting go of one rope when you’re swinging from it until you’ve got the next firmly in hand. Expressed that way, it seems very simple, but putting it in practice can be a major headache. If you’ve got liquid assets to spare, you won’t need to enter this chain. But real life shows us that most buyers are constrained by the sale of their own home when it comes to attempting to buy another one.
The property chain necessarily involves the sale of a second-hand flat or house and the purchase of another property, whether new or second-hand –generally newly built, although this isn’t a rule. It’s usually a leap in quality and quantity that represents family consolidation and implies that the buyer has a degree of economic stability.
Let’s consider a practical example. If you take a look at the home adverts on Metrovacesa’s website, you’ll almost certainly find housing that suits your needs and/or tastes. But not everyone can afford to pay cash for a flat or a house. You could have the money, but invested in your walls, floors and ceilings, not in your bank account. Especially if we remember, as Metrovacesa explains so clearly in their blog, that the price of “housing continues to climb and is reaching pre-crisis levels.”
We’ll assume that you have seen a flat in one of those adverts. You like it, you’ve thought it over carefully and, between your savings, the guarantee of your steady paycheck and the value of your current flat, you can go for it. But to start off, you’ve got to sell one property first to buy the other one afterwards. And it makes you feel overwhelmed… That’s where ProntoPiso comes in.
Did we say “overwhelm”?
Yes. If by that we’re referring to the time period that you’ve got between handing over the down payment and registering a new mortgage. We could be talking about a finished flat, or one still under construction that will be turned over in, say, a year. That would be the time frame that you’d have in which to manage to sell your first home and be able to buy the second (this is pure “property chain”). And the shorter this period is, the more overwhelmed you’ll feel.
Why is the property chain overwhelming?
Because you’ll know the date on which you’ll have to sign the mortgage for the new property, but you can’t predict when the old flat or house (in which you’re still living right now) will be sold. And this overpowering sensation turns to fear as the day to sign the mortgage comes nearer and nearer… And this fear can push you into making a bad deal to sell your current residence, destroying all the calculations that backed up your decision to move into a new home.
ProntoPiso can help to keep you from being overwhelmed, cutting the links that make up the chain of purchases/sales, the famous “property chain.”
You’ll be asking yourself… How?
It’s easier than it seems.
ProntoPiso is the only real estate agency that guarantees you the money from the sale of your home in three months in Madrid and/or in Barcelona and, news flash: we’ll soon be Valencia.
And if it’s not sold in 90 days, we advance you up to 95% of your home’s value and pay you the rest after it’s been purchased at market price.
That’s not all. If your property happened to be sold for less than market value (and that would be an exception), ProntoPiso would take on the difference so that you wouldn’t lose your money in the operation. On the contrary, if it sold for above the market price, the difference would be kept by the vendor.
That’s why we say that ProntoPiso breaks the property chain. Because you won’t feel strangled by the obligation to sell your home. We’ll sell it for you, in three months. Your only concern will be ideas about decorating the new flat or house, the one that you saw in a Metrovacesa advert. Make your plans, or dream about them, because once the sense of being overwhelmed disappears, the seller can rest easy and feel relaxed while achieving the four points that define a good buyer explained in the article also published in this blog.