Exchange and complete same day

cii4ps

I’m curious to hear opinions on this subject. 

Major law firms (eg O’Neill patient) recommend to exchange and complete on same day to avoid the deal from falling through (eg COVID related delays and changes).

I’ve read multiple articles about why this isn’t a good idea, but none of them seem compelling for a buyer. In fact, I think there’s advantages for a buyer. Especially a FTB. 

From a buyers perspective you can have everything ready with your solicitor before exchange, ready to just exchange & complete over phone/internet. 

The above assumes that the buyer doesn't mind a likely overlap with their current rented property (valid for first time buyers). Most (eg solicitors) recommend an overlap for obvious reasons.

Either way the whole house buying process in the UK is heavily protective of the seller, with all (serious) risk solely resting on buyer. 

(Ignoring all the losses a buyer will incur before exchange if seller pulls)
- If deal falls through after exchange due to some reason on seller side, they have negligible losses. Buyer can only claim incurred cost (relatively negligible at this stage).
- If a deal falls through on buyer side for any reason, they lose their deposit + incurred seller cost. For most buyers this could be life changing. It’s not about incurred cost, it’s about punishing the buyer while enriching the seller.

It seems that with each day passed between exchange and completion, especially in this time, the risk increases for the buyer that their lender pulls the deal.

[Deleted User]

The main disadvantage is that everyone needs to be packed and ready to go and risk that exchange is delayed.

However the obvious advantage is that the risk of non completion goes away.  You're not quite right to say that the seller is taking minimal risk as they would be responsible for all costs in the chain if they fail to complete. They are also likely to be a buyer.

cii4ps

Deleted_User said:

The main disadvantage is that everyone needs to be packed and ready to go and risk that exchange is delayed.

However the obvious advantage is that the risk of non completion goes away.  You're not quite right to say that the seller is taking minimal risk as they would be responsible for all costs in the chain if they fail to complete. They are also likely to be a buyer.

Well, you wouldn't need to be 'ready to move in' if you have an overlap on your existing rental, which I do (and every buyer should). The cost of the overlap can be seen as insurance against losing one's deposit + incurred cost of seller. It seems to me that it'd come down to the sellers situation. The most risk averse option is for the buyer to delay the exchange date until seller is actually ready to tackle it in one go.

"You're not quite right to say that the seller is taking minimal risk as they would be responsible for all costs in the chain if they fail to complete. They are also likely to be a buyer."

That's just irresponsible management of your own affairs. A seller (who's also a buyer) and is trying to match their own buyer dates with the selling dates is just dumb. Most likely they're doing this, at significant risk, to save cost on intermediary short term rental + storage cost with the movers. Now couple that with an outstanding mortgage and buyer not finalising and you've effectively bankrupt your family.

A simple risk analysis shows that it's best to wait for the exchange and not rush it. From my own analysis, ignoring new houses, buyers seem to be rushing into exchanges with long completition dates to accomodate sellers (with FOMO as main motivator). Zero advantage and all the risk for buyer. Just dumb.

In my case, with the risk of losing ~120K, it stands to reason it's best to delay exchange until both parties are ready to progress and then exchange and complete in one day.

davidmcn

cii4ps said:

Either way the whole house buying process in the UK England & Wales

No contractual deposits in Scotland (not sure about Northern Irish practice).

p00hsticks

cii4ps said:

Well, you wouldn't need to be 'ready to move in' if you have an overlap on your existing rental, which I do (and every buyer should).

Not all buyers are in rented accomodation though - in fact, I suspect the majority aren't. Your seller is most likely buying elsewhere, and so on up the chain. Every one in that chain has to exchange and complete at the same time as the others, to avoid being left contractually committed to buy but without the funds to do so, and for all but the first time buyer at the bottom of the chain the chances are that they will be having to arrange a move of a houseload of 'stuff'  from one property to the other (which could be hundreds of miles away) on completion day. That's not usually something you can do in a few hours.

cii4ps

davidmcn said:

cii4ps said:

Either way the whole house buying process in the UK England & Wales

No contractual deposits in Scotland (not sure about Northern Irish practice).

I like how Scotland doesn't have leasehold properties either (huge scam in this country).

p00hsticks said:

cii4ps said:

Well, you wouldn't need to be 'ready to move in' if you have an overlap on your existing rental, which I do (and every buyer should).

Not all buyers are in rented accomodation though - in fact, I suspect the majority aren't. Your seller is most likely buying elsewhere, and so on up the chain. Every one in that chain has to exchange and complete at the same time as the others, to avoid being left contractually committed to buy but without the funds to do so, and for all but the first time buyer at the bottom of the chain the chances are that they will be having to arrange a move of a houseload of 'stuff'  from one property to the other (which could be hundreds of miles away) on completion day. That's not usually something you can do in a few hours.

cii4ps said:

- If deal falls through after exchange due to some reason on seller side, they have negligible losses.

Again, that's assuming that the seller isn't also buying, and therefore is the catalyst for the whole chain breaking down.

Seller could move to temp accommodation ahead of the combined exchange/completion date, but the one-sided system doesn't encourage that. If they were to lose an equivalent amount, many would do it.

In my case I'm a bit lucky. Although I'm dealing with 5 owners (not sure how that happened), none of them live at the property and it's empty. There's just one person guarding the house, just sleeping on the floor with some blankets, etc. I'd be surprised if they object to a same day transaction.

[Deleted User]

cii4ps said:

Deleted_User said:

The main disadvantage is that everyone needs to be packed and ready to go and risk that exchange is delayed.

However the obvious advantage is that the risk of non completion goes away.  You're not quite right to say that the seller is taking minimal risk as they would be responsible for all costs in the chain if they fail to complete. They are also likely to be a buyer.

Well, you wouldn't need to be 'ready to move in' if you have an overlap on your existing rental, which I do (and every buyer should). 

Very few buyers move into rental before buying again.  The majority are reliant on selling and moving out on the same day they mobuy and move in.  

Your scenario only applies to people at the bottom of a chain.

Linton

cii4ps said:

Deleted_User said:

The main disadvantage is that everyone needs to be packed and ready to go and risk that exchange is delayed.

However the obvious advantage is that the risk of non completion goes away.  You're not quite right to say that the seller is taking minimal risk as they would be responsible for all costs in the chain if they fail to complete. They are also likely to be a buyer.

Well, you wouldn't need to be 'ready to move in' if you have an overlap on your existing rental, which I do (and every buyer should). The cost of the overlap can be seen as insurance against losing one's deposit + incurred cost of seller. It seems to me that it'd come down to the sellers situation. The most risk averse option is for the buyer to delay the exchange date until seller is actually ready to tackle it in one go.

"You're not quite right to say that the seller is taking minimal risk as they would be responsible for all costs in the chain if they fail to complete. They are also likely to be a buyer."

That's just irresponsible management of your own affairs. A seller (who's also a buyer) and is trying to match their own buyer dates with the selling dates is just dumb. Most likely they're doing this, at significant risk, to save cost on intermediary short term rental + storage cost with the movers. Now couple that with an outstanding mortgage and buyer not finalising and you've effectively bankrupt your family.

A simple risk analysis shows that it's best to wait for the exchange and not rush it. From my own analysis, ignoring new houses, buyers seem to be rushing into exchanges with long completition dates to accomodate sellers (with FOMO as main motivator). Zero advantage and all the risk for buyer. Just dumb.

In my case, with the risk of losing ~120K, it stands to reason it's best to delay exchange until both parties are ready to progress and then exchange and complete in one day.

I would not consider exchanging and completing on the same day.  If the chain collapses at the last minute there could be major hassle and possible cost.   For example removals may well have to happen over 2 days - would you really be prepared to pack everything and effectively move out before exchange?  Until exchange there is zero legal commitment by anyone to anything and so no reason for someone not to drop out if their circumstances change or they simply decide not to move after all.  It is extremely rare for people to exchange and then fail to complete because of the responsibility of meeting the costs of everyone  in the chain.

The only exception I could think of is for a FTB with minimal stuff to move, perhaps living at home.  But then they would need a vendor with the same ability to deal with a chain collapse after all the ancilliary arrangements and commitments had been made and with a vendor themselves who is similarly tolerant all the way up the chain.

cii4ps

Deleted_User said:

cii4ps said:

Deleted_User said:

The main disadvantage is that everyone needs to be packed and ready to go and risk that exchange is delayed.

However the obvious advantage is that the risk of non completion goes away.  You're not quite right to say that the seller is taking minimal risk as they would be responsible for all costs in the chain if they fail to complete. They are also likely to be a buyer.

Well, you wouldn't need to be 'ready to move in' if you have an overlap on your existing rental, which I do (and every buyer should). 

Very few buyers move into rental before buying again.  The majority are reliant on selling and moving out on the same day they mobuy and move in.  

Your scenario only applies to people at the bottom of a chain.

I'll take your word for it, though I know three sellers who've done just that.

Linton said:

cii4ps said:

Deleted_User said:

The main disadvantage is that everyone needs to be packed and ready to go and risk that exchange is delayed.

However the obvious advantage is that the risk of non completion goes away.  You're not quite right to say that the seller is taking minimal risk as they would be responsible for all costs in the chain if they fail to complete. They are also likely to be a buyer.

Well, you wouldn't need to be 'ready to move in' if you have an overlap on your existing rental, which I do (and every buyer should). The cost of the overlap can be seen as insurance against losing one's deposit + incurred cost of seller. It seems to me that it'd come down to the sellers situation. The most risk averse option is for the buyer to delay the exchange date until seller is actually ready to tackle it in one go.

"You're not quite right to say that the seller is taking minimal risk as they would be responsible for all costs in the chain if they fail to complete. They are also likely to be a buyer."

That's just irresponsible management of your own affairs. A seller (who's also a buyer) and is trying to match their own buyer dates with the selling dates is just dumb. Most likely they're doing this, at significant risk, to save cost on intermediary short term rental + storage cost with the movers. Now couple that with an outstanding mortgage and buyer not finalising and you've effectively bankrupt your family.

A simple risk analysis shows that it's best to wait for the exchange and not rush it. From my own analysis, ignoring new houses, buyers seem to be rushing into exchanges with long completition dates to accomodate sellers (with FOMO as main motivator). Zero advantage and all the risk for buyer. Just dumb.

In my case, with the risk of losing ~120K, it stands to reason it's best to delay exchange until both parties are ready to progress and then exchange and complete in one day.

I would not consider exchanging and completing on the same day.  If the chain collapses at the last minute there could be major hassle and possible cost.   For example removals may well have to happen over 2 days - would you really be prepared to pack everything and effectively move out before exchange?  Until exchange there is zero legal commitment by anyone to anything and so no reason for someone not to drop out if their circumstances change or they simply decide not to move after all.  It is extremely rare for people to exchange and then fail to complete because of the responsibility of meeting the costs of everyone  in the chain.

The only exception I could think of is for a FTB with minimal stuff to move, perhaps living at home.  But then they would need a vendor with the same ability to deal with a chain collapse after all the ancilliary arrangements and commitments had been made and with a vendor themselves who is similarly tolerant all the way up the chain.

Have you considered how much removal and temp accommodation cost and compared that to the deposit of a buyer? 1% of my deposit is £8K. Like I said, the system is one-sided and broken and that's the point I'm making.

There's no advantage to a buyer dropping out even before the exchange. The leverage is fully on seller side. By the time a buyer has reached the exchange date, there's already significant stake in it for the him. There'd have to be a very good reason. If the seller drops out, they've only lost the time their house wasn't published.

Linton

cii4ps said:

Deleted_User said:

cii4ps said:

Deleted_User said:

The main disadvantage is that everyone needs to be packed and ready to go and risk that exchange is delayed.

However the obvious advantage is that the risk of non completion goes away.  You're not quite right to say that the seller is taking minimal risk as they would be responsible for all costs in the chain if they fail to complete. They are also likely to be a buyer.

Well, you wouldn't need to be 'ready to move in' if you have an overlap on your existing rental, which I do (and every buyer should). 

Very few buyers move into rental before buying again.  The majority are reliant on selling and moving out on the same day they mobuy and move in.  

Your scenario only applies to people at the bottom of a chain.

I'll take your word for it, though I know three sellers who've done just that.

Linton said:

cii4ps said:

Deleted_User said:

The main disadvantage is that everyone needs to be packed and ready to go and risk that exchange is delayed.

However the obvious advantage is that the risk of non completion goes away.  You're not quite right to say that the seller is taking minimal risk as they would be responsible for all costs in the chain if they fail to complete. They are also likely to be a buyer.

Well, you wouldn't need to be 'ready to move in' if you have an overlap on your existing rental, which I do (and every buyer should). The cost of the overlap can be seen as insurance against losing one's deposit + incurred cost of seller. It seems to me that it'd come down to the sellers situation. The most risk averse option is for the buyer to delay the exchange date until seller is actually ready to tackle it in one go.

"You're not quite right to say that the seller is taking minimal risk as they would be responsible for all costs in the chain if they fail to complete. They are also likely to be a buyer."

That's just irresponsible management of your own affairs. A seller (who's also a buyer) and is trying to match their own buyer dates with the selling dates is just dumb. Most likely they're doing this, at significant risk, to save cost on intermediary short term rental + storage cost with the movers. Now couple that with an outstanding mortgage and buyer not finalising and you've effectively bankrupt your family.

A simple risk analysis shows that it's best to wait for the exchange and not rush it. From my own analysis, ignoring new houses, buyers seem to be rushing into exchanges with long completition dates to accomodate sellers (with FOMO as main motivator). Zero advantage and all the risk for buyer. Just dumb.

In my case, with the risk of losing ~120K, it stands to reason it's best to delay exchange until both parties are ready to progress and then exchange and complete in one day.

I would not consider exchanging and completing on the same day.  If the chain collapses at the last minute there could be major hassle and possible cost.   For example removals may well have to happen over 2 days - would you really be prepared to pack everything and effectively move out before exchange?  Until exchange there is zero legal commitment by anyone to anything and so no reason for someone not to drop out if their circumstances change or they simply decide not to move after all.  It is extremely rare for people to exchange and then fail to complete because of the responsibility of meeting the costs of everyone  in the chain.

The only exception I could think of is for a FTB with minimal stuff to move, perhaps living at home.  But then they would need a vendor with the same ability to deal with a chain collapse after all the ancilliary arrangements and commitments had been made and with a vendor themselves who is similarly tolerant all the way up the chain.

Have you considered how much removal and temp accommodation cost and compared that to the deposit of a buyer? 1% of my deposit is £8K. Like I said, the system is one-sided and broken and that's the point I'm making.

There's no advantage to a buyer dropping out even before the exchange. The leverage is fully on seller side. By the time a buyer has reached the exchange date, there's already significant stake in it for the him. There'd have to be a very good reason. If the seller drops out, they've only lost the time their house wasn't published.

What is this 1% of your deposit? If 1% is £8K it means your total deposit is £800K.  How much is the house - £10M??? With you a FTB???  In any case you should be able to claim your costs from your reneging vendor.  But as I said the chances of someone pulling out after exchange are virtually zero.  It has been said before on this forum that most solicitors/conveyancers have never seen it.

On the other hand vendors or buyers dont pull out because it's to their advantage but rather because they have changed their minds, for good or bad reasons.  And if that happens there is no come-back prior to exchange and potentially a very serious come-back afterwards,

cii4ps

Linton said:

cii4ps said:

Deleted_User said:

cii4ps said:

Deleted_User said:

The main disadvantage is that everyone needs to be packed and ready to go and risk that exchange is delayed.

However the obvious advantage is that the risk of non completion goes away.  You're not quite right to say that the seller is taking minimal risk as they would be responsible for all costs in the chain if they fail to complete. They are also likely to be a buyer.

Well, you wouldn't need to be 'ready to move in' if you have an overlap on your existing rental, which I do (and every buyer should). 

Very few buyers move into rental before buying again.  The majority are reliant on selling and moving out on the same day they mobuy and move in.  

Your scenario only applies to people at the bottom of a chain.

I'll take your word for it, though I know three sellers who've done just that.

Linton said:

cii4ps said:

Deleted_User said:

The main disadvantage is that everyone needs to be packed and ready to go and risk that exchange is delayed.

However the obvious advantage is that the risk of non completion goes away.  You're not quite right to say that the seller is taking minimal risk as they would be responsible for all costs in the chain if they fail to complete. They are also likely to be a buyer.

Well, you wouldn't need to be 'ready to move in' if you have an overlap on your existing rental, which I do (and every buyer should). The cost of the overlap can be seen as insurance against losing one's deposit + incurred cost of seller. It seems to me that it'd come down to the sellers situation. The most risk averse option is for the buyer to delay the exchange date until seller is actually ready to tackle it in one go.

"You're not quite right to say that the seller is taking minimal risk as they would be responsible for all costs in the chain if they fail to complete. They are also likely to be a buyer."

That's just irresponsible management of your own affairs. A seller (who's also a buyer) and is trying to match their own buyer dates with the selling dates is just dumb. Most likely they're doing this, at significant risk, to save cost on intermediary short term rental + storage cost with the movers. Now couple that with an outstanding mortgage and buyer not finalising and you've effectively bankrupt your family.

A simple risk analysis shows that it's best to wait for the exchange and not rush it. From my own analysis, ignoring new houses, buyers seem to be rushing into exchanges with long completition dates to accomodate sellers (with FOMO as main motivator). Zero advantage and all the risk for buyer. Just dumb.

In my case, with the risk of losing ~120K, it stands to reason it's best to delay exchange until both parties are ready to progress and then exchange and complete in one day.

I would not consider exchanging and completing on the same day.  If the chain collapses at the last minute there could be major hassle and possible cost.   For example removals may well have to happen over 2 days - would you really be prepared to pack everything and effectively move out before exchange?  Until exchange there is zero legal commitment by anyone to anything and so no reason for someone not to drop out if their circumstances change or they simply decide not to move after all.  It is extremely rare for people to exchange and then fail to complete because of the responsibility of meeting the costs of everyone  in the chain.

The only exception I could think of is for a FTB with minimal stuff to move, perhaps living at home.  But then they would need a vendor with the same ability to deal with a chain collapse after all the ancilliary arrangements and commitments had been made and with a vendor themselves who is similarly tolerant all the way up the chain.

Have you considered how much removal and temp accommodation cost and compared that to the deposit of a buyer? 1% of my deposit is £8K. Like I said, the system is one-sided and broken and that's the point I'm making.

There's no advantage to a buyer dropping out even before the exchange. The leverage is fully on seller side. By the time a buyer has reached the exchange date, there's already significant stake in it for the him. There'd have to be a very good reason. If the seller drops out, they've only lost the time their house wasn't published.

What is this 1% of your deposit? If 1% is £8K it means your total deposit is £800K.  How much is the house - £10M??? With you a FTB???  In any case you should be able to claim your costs from your reneging vendor.  But as I said the chances of someone pulling out after exchange are virtually zero.  It has been said before on this forum that most solicitors/conveyancers have never seen it.

On the other hand vendors or buyers dont pull out because it's to their advantage but rather because they have changed their minds, for good or bad reasons.  And if that happens there is no come-back prior to exchange and potentially a very serious come-back afterwards,

1% of home value, as in 1/15th of the deposit. The total being 15%. Yes, FTB.

Anyway, removal/rent/rent is virtually nothing compared a buyer's deposit. Even if the seller stays at an AirBnb for a month.

Ignoring the loss of a buyer's deposit and covering incurred cost of seller, at any stage after exchange, under normal circumstances, both buyer and seller stand to lose the same if the deal falls through. It's when you add the deposit to the equation, that it tips this whole deal enormously in favour of the seller. A fair deal would be that either side covers the incurred cost of the other.