Whether you’re a first-time buyer or moving to another property, during the house buying process, the exchange of contracts is the point where you are legally committed to buying the property that you’ve made an offer on.
Up until the point that contracts have been exchanged, you can withdraw your offer on the property that you’re looking to buy, without any risk of being sued for breach of contract. However, similarly the seller of the same property can decide to withdraw their acceptance of your offer, or to withdraw the property from the market altogether.
This all makes the exchange of contracts a critical stage of the house buying process. Making sure that you have every consideration reviewed and every worry quashed at this point is really important to ensure both a smooth completion – and most importantly, a happy home once you’ve completed!
In our guide of things for buyers to check before the exchange of contracts, we share some of our best tips to make sure that you aren’t left haggling or arguing at the end of the house purchase process.
The house buying gazumping rush
Whilst it is rare for a buyer or a seller to withdraw from the sale or purchase of a property, it does happen sometimes. A more common risk is being gazumped by another buyer, which means that they outbid you and put in a higher or more attractive offer, which the buyer is able to accept before the exchange of contracts. This would mean that you would have to go back with another offer, or in the case where a seller accepts two offers at the same time, you would be fighting against time to ensure that you exchanged contracts first.
This might seem like a nightmare just in terms of the process itself (and you would lose the money that you had invested in searches), but the main risk with getting into a bidding war, is that all caution goes to the wind. Whereas before you would have been far more likely to ensure that every little niggle from surveys to enquiry responses were fully addressed, with the lack of time, you’re more likely to put yourself at risk of buying a property that either has something wrong with it, or which is likely to cost you more time and money than you had anticipated in the long run.
Tied to a property by chains
Another risk element that can be introduced when you’re rushing to exchange contracts is when you’re in a chain. In many cases, you can find that the buyer of your property is ready to move in far more quickly than you’re able to move into the place that you’re buying. You may even find that the person you’re buying from is waiting for someone to move out of the place that they’re buying.
In these situations, people can be tempted into moving out of their property into temporary accommodation; whether this be renting or moving in with friends or family. The risk here though, is that if the person you’re buying from changes their mind, or you are gazumped – or even more out of your control – if they’re gazumped or let down from their seller’s side of things, you’re left without somewhere to live, having legally sold your house.
This is why it is always advisable to arrange to exchange contracts with your buyer as well as the person you are buying from, on the same day. This leaves far less room for risk.
Reviewing property surveys
Taking the time to read surveys is absolutely key to making sure that you’re happy with the property you’re buying. It’s surprising how many people don’t realise that the extension put up by the previous owners of a property they’ve bought is made out of single layers of brick (so both structurally and energy inefficient), until they’ve moved in and can feel their money seeping out of the walls with the heating. And that’s despite the details of this being included in a survey.
Just because a survey says that no action is immediately required, doesn’t mean that everything is in absolutely perfect condition. Take the time to read about cracks or areas of concern in case it’s something that’s important to you. For example, if you had planned for an extension to be a dining room, but only found out how terribly cold it was in the winter, then it could ruin part of the reason for you to wanting to purchase the property in the first place. On the other hand, if you were planning to knock down an extension and then found out it wasn’t worth the bricks that it was built with, it’s not such a big deal if you hadn’t read about this in the survey before exchanging contracts.
Similarly, if one of the searches that are carried out on a property shows up something that may become an issue later on (risk of subsidence for example) then you’ll need to consider whether this is something that you are prepared to deal with and fund, or whether you amend your offer – or even pull out of the purchase altogether.
Where properties need fixing
If you do take the time to read through a survey and find that there’s something not quite as you had expected, then you might need to plan extra money into your budget to fix this or put it right when you move in. However, if you had been led to believe that there wasn’t a problem, you might want to readdress your offer and ask the seller to compromise on the price you’re buying the house for, to take the cost of the work required into account.
If you’ve exchanged contracts before this point, then you won’t be able to go back and renegotiate.
Satisfactory responses to enquiries
Your conveyancer will make enquiries on your behalf to the property seller’s conveyancer. These will be to satisfy general questions that need to be answered when someone is committing to buying a property. Answers to these questions should be thorough and clear enough so that you fully understand what the responses mean and what impact any answers will have on your life when you move in. For example, if you have asked about whether there is shared access to a garden or driveway and find out that people from the neighbouring properties will have the right to walk through your garden to get to yours, you’ll need to consider whether this suits you and anyone that will be living with you, (such as children or animals), who may be far safer in an enclosed private garden.
Another common enquiry is to ask where one boundary starts and the other begins, as well as to request confirmation of whether there have been any disputes with neighbours to either side of the property. Property boundaries are a common cause for disputes between neighbours, so knowing whether they’re entitled to take up half of your driveway or not before you move in will give you the upper hand when it comes to any potential future disputes on this topic.
What you’ll find when you move in
Finally, it’s advisable to ensure that you’re happy with what has been confirmed in writing in regards to what will be left in the property. Firstly, if the property hasn’t been left in the same physical condition as when you exchanged contracts (and by this, we mean that wallpaper hasn’t been ripped off the walls or doors removed from their hinges, as well as more structural elements like walls and outer buildings remaining erect), then the person you bought the house from may well be in breach of contract, in which case you can sue them for damages.
However, if the contractual information that your seller’s conveyancer sends back to your conveyancer states that they will indeed be removing all of the doors and taking down wallpaper, then by exchanging contracts, you’re giving your official approval of this.
If you have agreed that some items of furniture or certain fixtures and fittings, such as carpets or light fixtures, will be sold along with the property and so remain in place, then make sure that this is reflected in the paperwork before you sign your contract and exchange. If it isn’t, your conveyancer can go back to the seller’s side and ask for revisions.
Have a specialist on your side when exchanging contracts
The absolute best advice that we can give you when it comes to being prepared and fully ready to exchange contracts is to make sure that you have a specialist on your side. Especially if you’re a first-time buyer (and even if you’re not), some of the answers to enquiries or features of a survey may not make full sense to you and if all you have to rely on is your conveyancer saying not to worry, then you need to make sure that they have your absolute best interests at heart before anything else.
At Bray & Bray, we give all of our clients the same, consistent level of excellent service – whether they’re first-time buyers, repeat clients or even our own families and friends. We want every client of ours to love their new home and to be able to enjoy it as quickly as they can, in a way that is as hassle free as possible.
To try out our service for yourself, give us a call. Our conveyancing teams are spread across each of our three Leicestershire locations, so whether it’s easier for you to work with a conveyancer in Leicester, Hinckley or Market Harborough, there will always be a fully qualified, experienced member of the team available to help you.
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