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What Is Exchange of Contracts?

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What Is Exchange of Contracts?

Selling a house is a process that is complex, involved, nuanced and full of ups and downs. It can feel like an eternity as you wait for the step after step to be completed so you can move forward. Then comes the exchange of contracts. After perhaps weeks or months of waiting, of hoping for offers, of negotiating, of waiting for surveys and searches… it is here. You’re making progress!

This is an exciting time but it can be overwhelming. What do you need to know about this step in the process so you can enter into the situation with confidence – and calmer nerves?

What’s the Exchange of Contracts?

Well… it is exactly what it sounds like! At this stage, the buyer and seller exchange contracts, typically through their estate agents or other representatives (e.g. solicitor or conveyancer). The crux of the situation is that an agreement has been reached as far as the purchase of the property goes. This includes the sales price. Until this point, either the buyer or the seller can pull out with no penalty. Even if an offer has been made, for example, either party can say, “No, I’ve changed my mind” and walk away.

After the exchange of contracts, however, the agreement is legally binding. This means that if the buyer or seller should pull out, they would face financial and legal penalties. At this point, you can breathe a big sigh of relief and relax a little bit. Your sale is going forward, and you are nearing completion. 

At this stage, every detail is checked and verified to be certain all is in order. The contract not only signals that an offer was made and accepted but also that relevant forms have been completed and filed (e.g. TA 6 and TA 10), that surveys and searches have been completed, and that the Energy Performance Certificate (EPC) is set, that funding is approved and confirmed, that buildings cover is in place and that a date for completion has been set.

As you can see, there is a lot going on here – and most of it happens behind the scenes, so to speak. This is where an experienced conveyancer, solicitor and/or estate agent is most helpful. 

What Happens Next?

The exchange of contracts is a positive sign that you are nearing the finish line. Usually, if all goes to plan, completion occurs one to four weeks after the exchange. You can, theoretically, exchange and complete on the same day if the buyer’s lender agrees. However, many do require five working days at a minimum.

This can work out for you as the seller though. If you exchange and complete on the same day, you need to be packed up and moved out that day. Most people are not ready at this point.

On exchange day itself, you don’t need to do much, except pack and arrange removals! Your solicitor will handle this part of the process. There may be a recorded phone call or meeting between buyer and seller solicitors. Here, the contracts are read to make sure they are identical. Then, each posts the contract to the other solicitor for finalisation. 

You’re almost there! The priority now is preparing to move, arranging a change of address, registering a transfer or ownership with the Land Registry (or having your solicitor do this) and saying your goodbyes to your house. In one to four weeks, typically, you will have a completion day (or moving day, if you like). Here, the buyer’s funds are transferred to you and your hand over the keys. 

Need to Streamline the Process?

If the thought of waiting months for your house to sell – including weeks from the exchange of contracts to completion – is not appealing to you, you may consider your options. Some people need to sell on a faster timeline, and this is where cash buyers come in.

A reputable cash house buyer typically offers between 80 – 85% of total market value, and you do not have to pay for the myriad of costs associated with a traditional sale, including estate agent and solicitors’ fees. They also buy houses as-is, so you do not need to worry about repairs, improvements, upgrades, staging or viewings. The entire process takes as little as 7 days, so you can begin moving on to the next chapter of your life with great efficiency. 

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