Exchanging and Completing on the Same Day – Pros & Cons

Exchange and completion on the same day is not common. It’s more common among property transactions that do not involve a chain. The circumstances of the property sale dictates whether or not there are enough benefits to outweigh any potential risks that come with doing exchange and completion on the same day.

Difference between exchange and completion

There are two steps in the house buying process after an offer is accepted. Exchange of contracts happens first and it is when the buyer and seller establish a legal commitment to complete the sale of the property. The most common rate for an exchange deposit is 10% of the sale price.

Completion comes after the exchange. It is the day when the buyer transfers the remaining balance of the sale and the property becomes legally theirs. In a lot of cases, there will be a gap of at least one week between exchange and completion. The following reasons may explain why it’s vital for some buyers and sellers to have some time between exchange and completion.

• To align completion day with the end of a buyer’s tenancy period.
• To give more time for solicitors to prepare for the transfer of mortgage funds.
• To give enough time for the buyer and seller to pack and organise removals.
• To give time for buyer and seller to transfer services such as broadband and set change of address.

Benefits

There could be several benefits to exchanging and completing on the same day.

For buyers

Buyers that are purchasing a property with a mortgage may potentially find it less risky to exchange and complete on the same day as it reduces the chances of a mortgage offer being rescinded. While rare, there are horror stories of buyers losing their deposit because of their mortgage offer getting rescinded after the exchange of contract. This could be due to the mortgage offer expiring or for reasons outside of the buyer’s control such as a sudden change to the condition of the property.

For sellers

Less stress for sellers who are not bound to a certain deadline. For example, there is not a big risk for exchange and completion to happen on the same day if the property is already vacant or if the seller is a in position to easily move out their belongings.

Risks

Here are some of the things that can go wrong with exchanging and completing on the same day.

For buyers

You might come across issues with drawing down the mortgage money so having exchange and completion on the same day may also put you at risk of paying a penalty if you fail to complete. Things can also go wrong if signed paperwork is not sent or received in time or if last minute issues pop up in the conveyancing searches.

While unlikely, there is also the risk of losing money if the seller has cold feet and does not decide to go through with the property sale. They can do this since there is no legal commitment until the exchange of contracts takes place. You put yourself at risk of losing money spent on arranging a removal company as well as other services required on completion day.

For sellers

The buyer likewise could pull out of transaction at the last minute. You may want to consider all the stress that could come with having to exchange and complete on the same day, especially if you are still living in the property. There are stories of sellers packing up their whole house with no guarantee that the exchange will take place.

Should you exchange and complete on the same day?

Our advice is to negotiate for a gap between exchange and completion unless a tight deadline needs to be considered from either party. Even a few days gap will give both parties enough breathing room to organise their move and have the financial transaction and documentations in order. Make you walk through all possibilities with your solicitor before committing to a decision.