Contract exchange: How long does it take?
Exchanging contracts is the exciting bit. It’s when both the buyer and seller sign identical contracts on the sale of a property and when the sale/purchase becomes legally binding. Once your offer is accepted things will start to feel real, but nothing is set in stone. It’s only once you’ve exchanged contracts that either side has a legal obligation to buy or sell. That’s when you can really start planning life in your new home.
On average it can take between 8 and 12 weeks to reach this point, while part exchange can be much quicker as there is no chain. Every sale is different and some can move quicker, with others taking longer, but use that as a guide.
What do I need to do before exchanging contracts?
When you exchange contracts, you’re entering into a legal agreement with an obligation to buy or sell. You must do several things to make sure nothing can go wrong. Only exchange once you’ve done the following:
- Agreed on an offer, including for fixtures and fittings
- Had the mortgage valuation and conducted any surveys
- Received a formal mortgage offer in writing
- Arranged funding for the deposit
- Conducted the relevant searches through your solicitor
- Organised buildings insurance
- Settled on a date of completion for the sale
- Read and understood the contract
- Provided proof of funds or deposit to solicitor
- Signed the following documents:
- Agreement or contract
- Transfer or lease
- Mortgage deeds
When do you usually exchange contracts?
It is entirely dependent on the chain, but the exchange of contracts is usually done between seven and 28 days before completion, although it is possible to do it on the same day. It normally happens around midday on a weekday.
However, it is possible to exchange contracts and then have a longer wait for the completion. This happens when there is no buyer for a property that’s being sold. Remember that most mortgage offers are only valid for 6 months, so the wait for a buyer can’t be longer than that.
Is there anything that can cause delays?
Unfortunately, there are many factors that can cause delays and lengthen the time it takes to exchange contracts.
Size of the chain
Of course, new-build properties aren’t part of a chain and the only wait is for the property to be built. However, for people moving into older homes, one of the biggest issues is the size of the chain. You may be a first-time buyer, happy to move as soon as possible, but the seller will also have to find their next property. Once they’ve done this a completion date will be set that suits others further up the chain too.
Remember you won’t exchange contracts until you’ve agreed a completion date. It can sometimes become a long a drawn out process and is only as quick as the slowest person involved. The moves which happen quickest are generally first-time buyers moving into home that have just been completed.
Receiving a mortgage offer
You might have received a mortgage in principle to enable you to make the purchase offer, but you can’t exchange until you have a formal mortgage offer from a provider.
If there are any problems with your application, this can increase the time you’re waiting to exchange.
A difference in valuations
Once your mortgage provider has the property valued, there is no guarantee it will match up to the price you agreed to pay. For instance, if the lender values the property at a price lower than you’ve agreed to pay, then they will only lend if you buy at the lower price.
Unforeseen issues like this can take longer to resolve.
Any delays in conducting the searches
When you agree to buy a property, your solicitor will undertake several searches, including Local Authority, Environmental, Water Authority, Chancel Repair, and Location specific. A Local Authority search can take up to six weeks which could potentially cause a delay simply due to the timescales.
If anything unexpected is revealed by the searches which could impact the purchase, this may have a knock-on effect for exchanging.
How are contracts exchanged?
Contracts are exchanged by solicitors representing both the buyer and seller. They both read the contacts in unison over the phone to check they’re identical and then immediately post them to each other. The completion date is also finalised in the exchange call and, once all this has happened, you’re in a legally binding contract to buy the property.
Despite agreeing on the date for this to happen, there again is the possibility of delays occurring on the day too. If you’re involved in a chain, it will only happen if everyone in the chain is set to go ahead. If someone pulls out at the last minute this will trickle down and could impact your exchange.
What should I do once contracts have been exchanged?
Once you’ve exchanged contracts you should make sure you:
- Insure your new property on risk from exchange
- Visit the property with your estate agent to ensure everything you agreed is still in place and nothing has been damaged
- Send a copy of the title deeds to your mortgage lender
- Register the transfer of ownership with the Land Registry
- Contact your banks and utility companies
Waiting for contracts to be exchanged can be extremely frustrating at times, but it’s always vital to make sure everything is in place before you legally agree to buy any property.