For most house sales in England and Wales there is a gap between exchange and completion of between two to four weeks. But can exchange of contracts and completion take place on the same day? Let’s take a look…
Can you exchange contracts and complete on the same day in brief:
Simultaneous exchange and completion means that you will exchange and complete on the same day. Whilst it’s usual practice to allow at least a week or two between exchange and completion, there are times when a same day completion is an advantage. But there are risk too.
Can exchange of contracts and completion take place on the same day?
Simultaneous exchange and completion means that you will exchange and complete on the same day.
It’s usual practice to allow at least a week or two between exchange and completion. But there are times when a same day completion is an advantage.
Why would you exchange and complete on the same day?
A simultaneous or same-day exchange and completion is used when both parties are looking for a quick transaction.
Same day completions are often used by cash buyers or investors. This means there’s no chain and the buyer isn’t going to move into the property themselves.
What happens on simultaneous exchange and completion?
A simultaneous exchange and completion is where exchange of contracts and completion happen on the same day.
Whereas with an exchange and completion with the usual two-four week gap between the two dates is used, this provides time for certain things to happen.
However, where exchange of contracts and completion take place on the same day, all such tasks need to be carried out prior to the simultaneous exchange and completion.
With a same day exchange and completion, contracts are exchanged and then the contract is completed.
This means the full agreed price paid for the property is paid over on the same day. This is as apposed to the usual 10% deposit paid at exchange, followed by the balance at completion.
What are the advantages of exchange and completion on same day?
The advantages of exchange and completion on the same day include the following:
- The seller gets their sale proceeds much quicker and don’t have to wait for the usual 2-4 weeks.
- From a buyers perspective, they can crack on with whatever it is they have planned for the house, without having to wait for a future completion date.
- Whilst exchange of contracts is binding on both parties, there are times when this can go wrong. At least by completing on the same day as exchange, this risk is removed.
- You are advised to take out insurance on the day of exchange. This represents an extra cost to you when you are not able to benefit from the property. However, by completing on the same day this is no longer the case.
What are the risks of simultaneous exchange and completion?
Whilst there are the above advantages to a same day completion, there are also risks or disadvantages too.
Risks of simultaneous exchange and completion:
- If you intend to live in the property and you’re planning an exchange and completion on the same day, you’ll need to have a prior arrangements in place for a removal company. In this situation the seller pulls out beforehand, you might lose money.
- Similarly, if the property concerned is one you intend to live in, on the morning of the planned simultaneous exchange and completion, you’ll wake up having packing but not knowing if you are moving or not.
- There’s a lot to be organised prior to the same-day exchange and completion. But without any guarantee that the sale/purchase will go ahead.
- If you exchange contracts and complete simultaneously, it’s often argued this causes extra stress, as all your finances will need to be arranged before the contract day.
- During the planning for exchange and completion on the same day, there are a number of things that could hold up exchange. This includes delays in getting the paperwork signed, searches being delayed, title issues or possibly last-minute mortgage issues. If any of these occur, you risk losing out and running into problems. This is especially true if you’ve already committed to removals, arranged for mail to be redirected and for utilities to be changed.
- The seller changes their mind at the last minute. They may raise the agreed sale price or they may withdraw from the transaction altogether. Or if they decide to gazump you, the impact will be far greater if you are planning to complete and exchange simultaneously.
- Similarly, if you’re the seller and the buyer reduces the price at the last minute and gazunders you, this will be harder hitting if you’d planned a simultaneous exchange and completion.
Can you exchange and complete on the same day with a mortgage?
Where a mortgage is required, a same day exchange and completion may not be possible. There are some lenders or mortgage companies that require a minimum period between exchange and completion. This is typically five working days.
In order to complete on the same days as exchange, you either need to:
- Buy the property with cash;
- Or find a mortgage company, lender or backer who’s willing to lend on those terms.
But this will obviously need to be arrange beforehand.
Ultimately, unless there is a good reason for pushing for a speedy same day exchange and completion, you are far better to leave at least a two of weeks between exchange and completion.
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