Contrary to popular belief, the challenge of selling a home does not come to an end when you accept an offer on your property. Right up until the funds enter your account, there is still much that can happen to compromise the outcome.
Exchange of Contracts
After accepting an offer on your home, a contract is signed by both the seller and the bidder, resulting in the property being removed from the market. It is at this point that the deposit will be paid by the bidder – typically 10% or more – which should indicate that the sale will go ahead successfully.
It is commonplace for most residential property purchase agreements to include some kind of cooling-off period. This will usually be a period of two to five days after the exchange of contracts takes place, during which the buyer can pull out of the deal for any reason they see fit. For example, they may conduct an inspection of the property and find faults that were not disclosed.
If a cooling-off period is included in the agreement, the deposit will be returned to the bidder if they pull out of the deal during this time.
This is the point in the process where the actual property finance transaction takes place, following extensive inspections and assessments from the solicitors and/or conveyancers hired by both parties. The seller will need to provide evidence that they have the legal right to sell the property, and that all information disclosed regarding inclusions and exclusions, conditions, zoning, planning permissions, boundaries and so on is accurate.
The settlement period usually lasts around six weeks, depending on market conditions at the time.
When the funds are transferred from the seller to the buyer, this is sometimes referred to as the settlement day. But as the seller will typically not have finalised their mortgage until after they placed a bid on the property, there are no iron-clad guarantees they will be approved.
The mortgage underwriting process in the UK currently takes around 10-12 weeks. During which, any number of complications could result in an applicant being declined at any stage.
Should this occur, the seller will not be under any legal obligation to return the deposit to the bidder. However, the sale of their property will not be able to take place, and it will subsequently need to be placed back on the market.
Opting Out of Property Chains
Increasingly, households in the UK are looking for options to buy their next home as quickly as possible and sell their previous homes later. Bridging finance has become a popular choice for opting out of property chains, empowering homeowners with the spending power of a cash buyer.
In today’s highly competitive housing market, this can also be a useful way to give yourself the time you need to ensure your home sells for the best possible price. Rather than rushing into a sale simply to get the job done, the breathing room afforded by bridging finance can give you all the time you need to find your perfect buyer – after moving into your perfect home.