As a seller, it’s great to experience the euphoria of receiving and accepting an offer on your property. However, unfortunately there is still some considerable work to do before you “pop the cork” to celebrate the sale. You will need to be a little patient in the period between offer and completion, as the overall process seems to take an “eternity” as searches are performed, mortgages are approved, enquiries are answered etc.
Many Estate Agents believe that their job is done when they get an offer accepted. The file is handed to a junior member of staff to “keep an eye on things” while the senior team move onto the “next sale”. We do not concur with this approach, as the data clearly shows that after offer, a transaction still has a 40% chance of not completing successfully. Cognisant of this fact, at Aspire, we do things somewhat differently. We recognise that obtaining an offer is only part of our job, and that is why the file stays with our senior staff to manage right through to successful completion of the transaction.
We call this period between offer and completion the “sales progression process”. There are a number of parties involved including solicitors, surveyors, mortgage companies, the buyer and seller and of course, the agent. While much of the work performed during this period happens “behind the scenes”, it still requires a considerable degree of coordination to keep things moving along.
This is what you can expect to happen during the sales progression process.
Instruct your solicitor or conveyancing firm
Now that you have agreed a sale subject to contract, it’s time for you to instruct your solicitor or conveyancing firm to conduct the legal aspects of the sale on your behalf.
Memorandum of sale
Once a sale has been agreed, we will confirm each party’s solicitor information and check any outstanding identification documentation in order to issue the ‘Memorandum of Sale’ (MOS). The MOS is confirmation from the agent of the agreed terms and conditions of the sale.
Completion of property information forms
As the seller, you will need to complete a number of “property information forms” which provide the buyer with further information on the property, the fixtures and fittings to be included in the sale and, where relevant, details regarding leasehold property. You should aim to get these forms completed as quickly as possible and remember that all information provided in the property information forms should be correct. If it is determined that you have misled the buyer with the information you provide, you may be liable to legal action.
The solicitors cannot progress the transaction until these forms have been completed so it is important that you deal with them as quickly as possible.
Management pack (leasehold only)
If the property being sold is leasehold, then a “management pack” will typically be required (otherwise known as an LPE1 form). The management pack provides information with regards to the block of flats in which the leasehold is held, what the maintenance charges are, whether there is a reserve fund etc. It is the seller’s responsibility to pay for this pack.
Issuing a draft contract
Your solicitor will request the deeds to the property from your mortgage lender and office copies from Land Registry. A contact will be drafted by your solicitor and sent to the buyer’s solicitor for review. The contract will set out the key terms of the sale including the selling price, the time between exchange of contract and completion and any other critical matters.
The buyer’s solicitor might raise a number of enquiries/questions about the property based on the draft contact, search results, survey or any other matter. Ideally, all enquiries will be raised at one time, however practically, they tend to be raised sporadically as more information is received by the buyer’s solicitor. Your solicitor should answer the majority of the enquiries, however on occasion, they might need to refer the matter back to you for your input or decision.
Additional actions your buyers will need to take
While you have a lot of work to do to complete the sale, your buyer and their solicitors have an even bigger job. Your buyer will likely undertake the following tasks;
- Their mortgage lender will require a valuation/inspection of the property to ensure that it represents sufficient security for the amount your buyer wishes to borrow. This inspection will also identify any major issues with the property such as damp, movement etc.
- The lender will release the mortgage offer once it has completed all of its underwriting and due diligence. This typically happens between one and two weeks after the valuation.
- In addition to the mortgage lenders valuation/inspection, your buyer might commission an independent survey, which is a more comprehensive examination of the condition of the property.
- Your buyer’s solicitor will undertake what is know as “searches”. There are predominantly three searches that will be undertaken. Firstly - a Local Authority Search – where information is supplied by the local council on any development or enforcement issues that might affect the particular property. Secondly - a water and drainage search - which will establish a number of things, but specifically if the property is connected to mains water and drainage supply, and if and where any pipes run across the land. And, finally - an environmental search is used to identify any risks in the immediate area such as flooding and landslides.
Exchange of contracts
Prior to exchange of contract, there is no obligation on either party to proceed, and either party may withdraw without penalty (other than paying the costs that they have incurred for solicitors, surveyors etc). However, an exchange of contract between solicitors creates a legally binding commitment on both buyer and seller to complete the transaction. If either party withdraws from the transaction after exchange, there will almost certainly be legal and financial consequences.
Once all enquiries and outstanding matters have been dealt with and a formal mortgage offer received by the buyer’s solicitor, exchange of contracts can take place. Both the buyer and the seller will sign identical contracts and the “exchange” is undertaken between solicitors. On exchange, the buyer typically makes a “deposit” payment of 10% of the contract amount to the seller’s solicitor. The balance of the purchase price is paid on the completion date.
It is normal practice to allow between 1 and 4 weeks (with 2 weeks usual) between exchange and completion to allow all of the parties to finalise their preparations.
Completion is the day that you will receive the funds from the sale of your property and the buyer will be handed the keys. Your solicitor or agent will notify you when completion takes place. Depending on the mortgage company, this normally takes place in the morning of the completion date, however where there is a long chain or there are banking delays, it can happen slightly later in the day.
Where you have an outstanding mortgage on the property, the lender will calculate the redemption value as at the date of completion and the solicitor will remit this amount from the proceeds received. Your solicitor will also normally deduct their fees and your estate agents’ fees, and pay any balance to you. Following completion, your solicitor will register the change of ownership with Land Registry.
Congratulations, your property is now sold.