Everyone looks forward to the completion of a house sale.
It’s the end of a long and often stressful process.
Many categorise this as the exchange. However, exchange and completion are two different things in the property process.
Keep reading to learn about the differences between them.
What is the exchange of contracts?
Exchange of contracts (often referred to simply as exchange) is when a house transaction becomes legally binding.
Each party will sign a contract agreeing to buy/sell the house for a certain price. This is when the buyer puts down their deposit.
The seller cannot back out of the sale without facing significant penalties.
What is completion?
Completion involves handing over the key from the previous owner to the new owner.
The funds will be transferred to the seller on this day. The buyer then arranges to move into their new home. And the seller moves out before this.
What is the difference between exchange and completion?
The main difference between exchange and completion is timing.
They usually occur on different days, although not always. Either way, completion happens after the exchange of contracts.
While the sale is legally binding from exchanging contracts, this isn’t when the move occurs.
So, another way to put it is: completion is a more final stage of the end of a house sale than exchange is.
How long between exchange and completion?
The average time between exchange and completion is around 2 weeks.
However, this varies based on the circumstances. It can sometimes be much shorter or much longer.
There are some instances of exchange and completion happening on the same day. However, this is very rare.
When time between exchange and completion is low
The time between the two tends to be shorter for chain-free buyers. This is because they don’t have to navigate the sale of another house.
The same applies to chain-free sellers, as they are okay with completing another purchase.
There are several other factors impacting the time between exchange and completion, including:
- Other sales happening in the housing chain is a major factor. Each party often needs to carry out the sale/purchase of another property and the timeframes need to line-up
- Personal circumstances are another major factor. One of the parties being away on holiday can slow things down
- National holidays or events may disrupt the timeframe. This is especially true in late December…
- Mortgage lender delays are another common example. The bank needs to get the mortgage sorted and can sometimes be slow
- If your solicitor or estate agent is slow to handle certain tasks.
Should I exchange and complete on the same day?
Exchanging and completing on the same day can be advantageous in some situations.
If you want to move on quickly with the next phase of your life, for example. Or perhaps you have a long-term commitment in the coming weeks.
You should speak to your solicitor about exchanging and completing on the same day. It will need careful coordination with the other party.
Why exchanging and completion on the same day isn’t advised…
Many property experts advise against exchanging and completing on the same day.
Handling both processes on the same day can be very stressful.
Many parts of the process might go wrong as you rush things through. You may also find it more difficult to schedule removal companies at an appropriate time on the day.
It is also almost impossible if you are getting a mortgage. This is because the bank usually takes five days to send the funds.
Can I exchange contracts without a completion date?
In almost all cases, you cannot exchange contracts without a completion date. This applies to any traditional sale on the market involving two people.
There is one major exception to this rule. If you are buying a new build property, you may exchange contracts before the construction is finished.
This means that you have agreed on a price but cannot yet move in. You’ll then need to wait for the construction company to guide you on when completion is possible.
Do I get penalised if I delay completion day after exchange?
You can negotiate with the other party on when completion should occur.
You both need to agree on a date. If either of you then backs out afterwards, you will often be in breach of contract. You could then be sued by the people above and below you in the chain.
If you are considered to be deliberately and repeatedly delaying exchange, the other party can take action.
In many cases, this could be up to 10% of the sale price.
