How does the Scottish system work?

hcb42

Pixie5740 wrote: »

It's why the whole process of buying and selling moves much more quickly in Scotland rather than these ridiculous chains you have in E&W where people make offers when they're not really in a position to exchange or complete any time soon and there guzundering, gazumping and collapsing chains left, right and centre.

I really don't think it is as bad as that!

I have sold three in Scotland and three in England, and had a failing in both (yes even after offer in Scotland and right before exchange in England so it does happen!)

As a buyer I would never make an offer in England until I was pretty comfortable I had a committed buyer myself, and equally I wouldnt entertain an offer from someone who had not sold their own house and had a committed buyer themselves. Not as far apart as in Scotland

It's changed now, but Scotland used to be a nightmare for surveys too, especially in the rising market, no different to England there, worse in my experience. I recall colleagues losing a lot of money on fees/legals.

Never experienced gazundering or gazumping, but have gone to closing date (time!!) in Scotland when I sold house no 2, one pulled out and the other upped his offer even though he was effectively in a one horse race! Legalised Gazumping I called it at the time, as I cracked open the Champers.

AdrianC

hcb42 wrote: »

As a buyer I would never make an offer in England until I was pretty comfortable I had a committed buyer myself, and equally I wouldnt entertain an offer from someone who had not sold their own house and had a committed buyer themselves.

If only everybody was so ethical, though...

My mother's nearing exchange at the moment. Her house went on the market in May, and she had an acceptable offer quickly. She found somewhere she liked, and had an offer accepted.

Then her buyer just evaporated into thin air. So she had to pull out of her purchase. They took it off the market.

She got another buyer, funds all in place. She contacted the agent for the place she'd liked, who contacted the vendors, who agreed to sell it to her. Then it turned out her buyer DIDN'T have all the funds in place, but needed to wait for a couple of flats they owned (no chain, they're developers) to sell. Finally, the funds were all in place. In the meantime, the vendors of the place she's buying have had THEIR purchase fall through because of the delay. Fortunately, they're happy to go into rented...

googler

AdrianC wrote: »

Exactly the same. Hence my confusion as to how the Scottish system avoids chains.

It's still a chain of buyers and sellers, but in Scotland, it's a chain of people waiting to rubber-stamp everything they've agreed to already, from the point where the offer was accepted, up to the point where they conclude missives. It's buyers who have shown evidence to their solicitors that they can either afford to buy straight up, either with cash or mortgage, or have shown that they can finance the purchase from another sale plus funds. It's sellers who, having agreed that they will actually sell to the buyer on a certain date, will honour that agreement.

In E&W, as I see it, it's a chain of buyers and sellers who don't have contracts finalised, who haven't agreed an entry date, and who haven't even finalised what extras / fixtures and fittings will be included, who have to wait on others in the chain to look for somewhere else, with effectively no promise that they will complete in any timescale at all.

Don't you think there's a difference?

In Scotland, the offer forms part of the contract, and the offer contains a firm entry date, an agreed price, outlines the contract terms, and in conjunction with the published brochures and other advertising, effectively finalises what will be included and excluded as well as the house/flat itself.

googler

AdrianC wrote: »

So "missives" is the same as "exchange" in England.

Only if you agree that all the terms of the exchange were essentially agreed at the time of the offer.

googler

How the system works, from offer to entry date. Short version.

Buyer's sol sends written offer to seller's sol (p3 here is typical format). This is the first 'missive'.

Offer can be accepted by letter (unqualified acceptance) at this stage, and if so 'missives are concluded' and a binding contract exists.

If offer is acceptable, but seller wants to vary conditions of offer, seller's sol writes back (another 'missive'), saying 'we accept, but subject to X, Y and Z (qualified acceptance). A number of exchanges can take place (missives) in order for both sides to agree terms. When the seller's solicitor writes the final letter, saying that subject to all that has been agreed before, the seller accepts finally the offer, missives are concluded, in solicitor's language the 'bargain' is made.

The contract, made up of the offer, the standard clauses (in the link above) referred to in the offer, and the exchanges in the missives that followed, is now finalised and both sides are committed.

Both sides make plans for the agreed entry date, on which the solicitors exchange the money, transfer title, and seller releases keys to buyer.

davidmcn

I think in general everyone seems a bit more serious about it than in England. I've seen threads here where buyers in England are reluctant to instruct a solicitor to do anything until they have a mortgage offer - often in Scotland pretty much everything has already been done by that time. I've completed purchases within 24 hours of the mortgage offer turning up.

Also things like more efficient searching systems help - if we can get private searches within 24 hours, and the same lenders accept them for Scottish properties, why is everyone in England putting up with the ridiculous timescales from the local authorities?

Hoploz

Wow 24 hours! That's amazing! It sounds like a much better system.

googler

Hoploz wrote: »

Wow 24 hours! That's amazing! It sounds like a much better system.

A typical average, from offer to entry date, would be four to six weeks, though... I think David is suggesting that everything else was sorted, and once the mort came through, the final missives were completed in the next 24 hours.

HAMISH_MCTAVISH

Hoploz wrote: »

Wow 24 hours! That's amazing! It sounds like a much better system.

The last house I bought in Scotland, I had moved in within 28 days of first viewing it. That is not uncommon.

The real difference is that up here, the offer forms part of the missives (exchange of contracts), if it gets an unqualified acceptance then the deal is done and you can't really back out.

There isn't then another stage where you wait for contracts to exchange, that was the exchange of contracts.

And whilst a solicitor can qualify an offer or acceptance with various terms, ie, subject to survey, subject to final mortgage approval, etc, all parties have to be acting in good faith, solicitors have to ensure their clients can proceed before making offers (ie having sight of funds or mortgage offers), they can't tolerate gazumping/gazundering, and the whole system is really set up to try and ensure that ethical behaviour is happening from both sides.

It doesn't always succeed, but it does usually.

In practical terms that means you don't get buyers running around making offers they may not be able to proceed with, everyone is aware that offers and acceptances are usually binding, and the people overseeing the sale have a strict code of ethics they must adhere to.

It works really well on the whole, and I have no idea why England tolerates the system it has, which appears to be significantly inferior.

zagubov

HAMISH_MCTAVISH wrote: »

The last house I bought in Scotland, I had moved in within 28 days of first viewing it. That is not uncommon.

The real difference is that up here, the offer forms part of the missives (exchange of contracts), if it gets an unqualified acceptance then the deal is done and you can't really back out.

There isn't then another stage where you wait for contracts to exchange, that was the exchange of contracts.

And whilst a solicitor can qualify an offer or acceptance with various terms, ie, subject to survey, subject to final mortgage approval, etc, all parties have to be acting in good faith, solicitors have to ensure their clients can proceed before making offers (ie having sight of funds or mortgage offers), they can't tolerate gazumping/gazundering, and the whole system is really set up to try and ensure that ethical behaviour is happening from both sides.

It doesn't always succeed, but it does usually.

In practical terms that means you don't get buyers running around making offers they may not be able to proceed with, everyone is aware that offers and acceptances are usually binding, and the people overseeing the sale have a strict code of ethics they must adhere to.

It works really well on the whole, and I have no idea why England tolerates the system it has, which appears to be significantly inferior.

I can vouch for the speed difference. I've bought three houses in England and they all took a couple of months. My sis in Scotland saw the house she wanted and it was all completed within three weeks.