Exchange and complete same day

p00hsticks

cii4ps said:

 If the seller drops out, they've only lost the time their house wasn't published.

If the buyer was proceedable and the seller didn't have a very good reason for dropping out then they may well end up having to pay the estate agent fees.

And you seem to be ignoring the fact that most sellers are also buyers - when the chain gets broken, they'll lose the costs involved in their onwards purchase

And how much short term rental accomodation is there around for sellers to move into ?

In my experience most want a minimum six months AST

Linton

cii4ps said:

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.

cii4ps said:

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.

So as a FTB you are buying a house worth £800K. Congratulations.

If someone drops out after exchange their immediate vendors and buyers can both sue for all expenses incurred.  It isnt a 50/50 split.  With a chain these expense claims cascade until they all end up with the person who caused the collapse.

cii4ps

p00hsticks said:

cii4ps said:

 If the seller drops out, they've only lost the time their house wasn't published.

If the buyer was proceedable and the seller didn't have a very good reason for dropping out then they may well end up having to pay the estate agent fees.

And you seem to be ignoring the fact that most sellers are also buyers - when the chain gets broken, they'll lose the costs involved in their onwards purchase

And how much short term rental accomodation is there around for sellers to move into ?

In my experience most want a minimum six months AST

That depends on the contract between the seller and his EA, but yes it's possible. Generally not for the whole fee though, just the fees for putting it on the market and finding a purchaser. It's enough to annoy you (<~£1000), but not enough to ruin your future plans and life (10%+ of home value).

As for the cost of an onward purchase. I mentioned this before, this is a situation a seller (with an 'onward purchase') voluntarily puts themselves in. It's an unnecessary risk that can be avoided by the seller by moving into a short/long let/airbnb.

You mention that there aren't many short lets, and that may be true in your region, but you can also agree to put in an additional break clause for a long term rental. I'm in a long term rental agreement (1 yr) with a break clause for when I find a house (2 months notice that can be given at any moment).

If we look at Dutch/European systems, there's a break clause in the "exchange contract" (generally just called 'purchase agreement') where both sides our bound to pay at least 10% of the house value to the other in case they're either found in breach of the agreement (e.g. purposely delaying, dropping out the sale, etc) and there's a break clause in case the finances can't be arranged (e.g. lender not giving an offer or dropping an offer) not through their own fault.

[Deleted User]

cii4ps said:

p00hsticks said:

cii4ps said:

 If the seller drops out, they've only lost the time their house wasn't published.

If the buyer was proceedable and the seller didn't have a very good reason for dropping out then they may well end up having to pay the estate agent fees.

And you seem to be ignoring the fact that most sellers are also buyers - when the chain gets broken, they'll lose the costs involved in their onwards purchase

And how much short term rental accomodation is there around for sellers to move into ?

In my experience most want a minimum six months AST

That depends on the contract between the seller and his EA, but yes it's possible. Generally not for the whole fee though, just the fees for putting it on the market and finding a purchaser. It's enough to annoy you (<~£1000), but not enough to ruin your future plans and life (10%+ of home value).

As for the cost of an onward purchase. I mentioned this before, this is a situation a seller (with an 'onward purchase') voluntarily puts themselves in. It's an unnecessary risk that can be avoided by the seller by moving into a short/long let/airbnb.

You mention that there aren't many short lets, and that may be true in your region, but you can also agree to put in an additional break clause for a long term rental. I'm in a long term rental agreement (1 yr) with a break clause for when I find a house (2 months notice that can be given at any moment).

If we look at Dutch/European systems, there's a break clause in the "exchange contract" (generally just called 'purchase agreement') where both sides our bound to pay at least 10% of the house value to the other in case they're either found in breach of the agreement (e.g. purposely delaying, dropping out the sale, etc) and there's a break clause in case the finances can't be arranged (e.g. lender not giving an offer or dropping an offer) not through their own fault.

Every jurisdiction is essentially the same (England/Wales, Scotland or Netherlands) once you conclude the contract then there are costs incurred for non-performance.

I doubt all 'European systems' are the same as the Dutch legal system. 

cii4ps

dahj said:

cii4ps said:

p00hsticks said:

cii4ps said:

 If the seller drops out, they've only lost the time their house wasn't published.

If the buyer was proceedable and the seller didn't have a very good reason for dropping out then they may well end up having to pay the estate agent fees.

And you seem to be ignoring the fact that most sellers are also buyers - when the chain gets broken, they'll lose the costs involved in their onwards purchase

And how much short term rental accomodation is there around for sellers to move into ?

In my experience most want a minimum six months AST

That depends on the contract between the seller and his EA, but yes it's possible. Generally not for the whole fee though, just the fees for putting it on the market and finding a purchaser. It's enough to annoy you (<~£1000), but not enough to ruin your future plans and life (10%+ of home value).

As for the cost of an onward purchase. I mentioned this before, this is a situation a seller (with an 'onward purchase') voluntarily puts themselves in. It's an unnecessary risk that can be avoided by the seller by moving into a short/long let/airbnb.

You mention that there aren't many short lets, and that may be true in your region, but you can also agree to put in an additional break clause for a long term rental. I'm in a long term rental agreement (1 yr) with a break clause for when I find a house (2 months notice that can be given at any moment).

If we look at Dutch/European systems, there's a break clause in the "exchange contract" (generally just called 'purchase agreement') where both sides our bound to pay at least 10% of the house value to the other in case they're either found in breach of the agreement (e.g. purposely delaying, dropping out the sale, etc) and there's a break clause in case the finances can't be arranged (e.g. lender not giving an offer or dropping an offer) not through their own fault.

Every jurisdiction is essentially the same (England/Wales, Scotland or Netherlands) once you conclude the contract then there are costs incurred for non-performance.

I doubt all 'European systems' are the same as the Dutch legal system. 

Scottish system is the reverse of the English system. It's very protective of the buyer. There are conditions under which a buyer can change their mind all the way until the settlement (completion) without any sort of penalty. It's significantly more difficult for a seller to get out of an agreed deal. Another way it's different is that an offer (verbal or written) is binding.

EU systems that I'm aware of are similar, I assume it's valid for at least all the north-western European countries. E.g.
- Offers are binding when accepted
- Penalties for both sides for failing to complete under normal circumstances
- Conditions can be applied to the offer (e.g. building survey, mortgage/finance being in place, unreasonable delay).

This makes it all very different from the English system that is heavily protective of the seller. I imagine the way it's come to be like this is that it's the most 'free market' in the EU. However, at the same time it's been a sellers market since margaret thatcher, so conditions have moved that way.

davidmcn

cii4ps said:

dahj said:

cii4ps said:

p00hsticks said:

cii4ps said:

 If the seller drops out, they've only lost the time their house wasn't published.

If the buyer was proceedable and the seller didn't have a very good reason for dropping out then they may well end up having to pay the estate agent fees.

And you seem to be ignoring the fact that most sellers are also buyers - when the chain gets broken, they'll lose the costs involved in their onwards purchase

And how much short term rental accomodation is there around for sellers to move into ?

In my experience most want a minimum six months AST

That depends on the contract between the seller and his EA, but yes it's possible. Generally not for the whole fee though, just the fees for putting it on the market and finding a purchaser. It's enough to annoy you (<~£1000), but not enough to ruin your future plans and life (10%+ of home value).

As for the cost of an onward purchase. I mentioned this before, this is a situation a seller (with an 'onward purchase') voluntarily puts themselves in. It's an unnecessary risk that can be avoided by the seller by moving into a short/long let/airbnb.

You mention that there aren't many short lets, and that may be true in your region, but you can also agree to put in an additional break clause for a long term rental. I'm in a long term rental agreement (1 yr) with a break clause for when I find a house (2 months notice that can be given at any moment).

If we look at Dutch/European systems, there's a break clause in the "exchange contract" (generally just called 'purchase agreement') where both sides our bound to pay at least 10% of the house value to the other in case they're either found in breach of the agreement (e.g. purposely delaying, dropping out the sale, etc) and there's a break clause in case the finances can't be arranged (e.g. lender not giving an offer or dropping an offer) not through their own fault.

Every jurisdiction is essentially the same (England/Wales, Scotland or Netherlands) once you conclude the contract then there are costs incurred for non-performance.

I doubt all 'European systems' are the same as the Dutch legal system. 

Scottish system is the reverse of the English system. It's very protective of the buyer. There are conditions under which a buyer can change their mind all the way until the settlement (completion) without any sort of penalty.

Not quite sure what scenario you're talking about here. If something materially adverse crops up in searches or the title, yes there might be ways for a buyer to exit the contract, but only in very unlikely circumstances - they certainly can't just "change their mind".

Another way it's different is that an offer (verbal or written) is binding.

This is nonsense. There's no such thing as a verbal contract for property in Scotland, and offers are only "binding" once a contract has actually been concluded.

cii4ps

davidmcn said:

cii4ps said:

dahj said:

cii4ps said:

p00hsticks said:

cii4ps said:

 If the seller drops out, they've only lost the time their house wasn't published.

If the buyer was proceedable and the seller didn't have a very good reason for dropping out then they may well end up having to pay the estate agent fees.

And you seem to be ignoring the fact that most sellers are also buyers - when the chain gets broken, they'll lose the costs involved in their onwards purchase

And how much short term rental accomodation is there around for sellers to move into ?

In my experience most want a minimum six months AST

That depends on the contract between the seller and his EA, but yes it's possible. Generally not for the whole fee though, just the fees for putting it on the market and finding a purchaser. It's enough to annoy you (<~£1000), but not enough to ruin your future plans and life (10%+ of home value).

As for the cost of an onward purchase. I mentioned this before, this is a situation a seller (with an 'onward purchase') voluntarily puts themselves in. It's an unnecessary risk that can be avoided by the seller by moving into a short/long let/airbnb.

You mention that there aren't many short lets, and that may be true in your region, but you can also agree to put in an additional break clause for a long term rental. I'm in a long term rental agreement (1 yr) with a break clause for when I find a house (2 months notice that can be given at any moment).

If we look at Dutch/European systems, there's a break clause in the "exchange contract" (generally just called 'purchase agreement') where both sides our bound to pay at least 10% of the house value to the other in case they're either found in breach of the agreement (e.g. purposely delaying, dropping out the sale, etc) and there's a break clause in case the finances can't be arranged (e.g. lender not giving an offer or dropping an offer) not through their own fault.

Every jurisdiction is essentially the same (England/Wales, Scotland or Netherlands) once you conclude the contract then there are costs incurred for non-performance.

I doubt all 'European systems' are the same as the Dutch legal system. 

Scottish system is the reverse of the English system. It's very protective of the buyer. There are conditions under which a buyer can change their mind all the way until the settlement (completion) without any sort of penalty.

Not quite sure what scenario you're talking about here. If something materially adverse crops up in searches or the title, yes there might be ways for a buyer to exit the contract, but only in very unlikely circumstances - they certainly can't just "change their mind".

Another way it's different is that an offer (verbal or written) is binding.

This is nonsense. There's no such thing as a verbal contract for property in Scotland, and offers are only "binding" once a contract has actually been concluded.

"Under Scots law, legal agreements do not, in most cases, have to be in writing. The law considers verbal agreements to be binding if the parties have a common purpose and they clearly intend to create a legal relationship.

If these elements exist, the Scottish courts will enforce a verbal agreement. In certain limited circumstances, however, the law requires that agreements be in writing. These include wills and certain contracts to transfer property."

In practise ofc I agree it's tough to prove someone said something, that's why people send written offers... be it in Scotland through a solicitor, or in other countries people themselves.

(PS: I have no practical experience in Scotland, just an observer. I do have first hand experience buying in the Netherlands).

davidmcn

cii4ps said:

davidmcn said:

cii4ps said:

dahj said:

cii4ps said:

p00hsticks said:

cii4ps said:

 If the seller drops out, they've only lost the time their house wasn't published.

If the buyer was proceedable and the seller didn't have a very good reason for dropping out then they may well end up having to pay the estate agent fees.

And you seem to be ignoring the fact that most sellers are also buyers - when the chain gets broken, they'll lose the costs involved in their onwards purchase

And how much short term rental accomodation is there around for sellers to move into ?

In my experience most want a minimum six months AST

That depends on the contract between the seller and his EA, but yes it's possible. Generally not for the whole fee though, just the fees for putting it on the market and finding a purchaser. It's enough to annoy you (<~£1000), but not enough to ruin your future plans and life (10%+ of home value).

As for the cost of an onward purchase. I mentioned this before, this is a situation a seller (with an 'onward purchase') voluntarily puts themselves in. It's an unnecessary risk that can be avoided by the seller by moving into a short/long let/airbnb.

You mention that there aren't many short lets, and that may be true in your region, but you can also agree to put in an additional break clause for a long term rental. I'm in a long term rental agreement (1 yr) with a break clause for when I find a house (2 months notice that can be given at any moment).

If we look at Dutch/European systems, there's a break clause in the "exchange contract" (generally just called 'purchase agreement') where both sides our bound to pay at least 10% of the house value to the other in case they're either found in breach of the agreement (e.g. purposely delaying, dropping out the sale, etc) and there's a break clause in case the finances can't be arranged (e.g. lender not giving an offer or dropping an offer) not through their own fault.

Every jurisdiction is essentially the same (England/Wales, Scotland or Netherlands) once you conclude the contract then there are costs incurred for non-performance.

I doubt all 'European systems' are the same as the Dutch legal system. 

Scottish system is the reverse of the English system. It's very protective of the buyer. There are conditions under which a buyer can change their mind all the way until the settlement (completion) without any sort of penalty.

Not quite sure what scenario you're talking about here. If something materially adverse crops up in searches or the title, yes there might be ways for a buyer to exit the contract, but only in very unlikely circumstances - they certainly can't just "change their mind".

Another way it's different is that an offer (verbal or written) is binding.

This is nonsense. There's no such thing as a verbal contract for property in Scotland, and offers are only "binding" once a contract has actually been concluded.

"Under Scots law, legal agreements do not, in most cases, have to be in writing. The law considers verbal agreements to be binding if the parties have a common purpose and they clearly intend to create a legal relationship.

If these elements exist, the Scottish courts will enforce a verbal agreement. In certain limited circumstances, however, the law requires that agreements be in writing. These include wills and certain contracts to transfer property."

Which is what we're talking about here. A contract to purchase property (as in land) must be in writing. In theory it could be very informal, but it can't be verbal.