They say that moving home is one of life’s most stressful activities, along with bereavement and divorce etc and particularly so if you are actually buying and selling. If so, why doesn’t the Government try to improve it and make it less stressful? I believe that it can be improved – after a brief outline of the way it is now I suggest how this might be achieved.
The fact is that the English Conveyancing System is as they say ‘Not Fit For Purpose’ and it’s a testament to the dismal quality of both civil servants and particularly legislators.
Buying and Selling basics
You find your ideal home, make an offer and if it’s accepted, both parties pass relevant details to their solicitors and then the whole rigmarole starts. The buyer’s solicitor requests endless documents, mortgage companies are alerted, removals companies contacted, a survey is commissioned and so on. At some point contracts are exchanged with an agreed completion date. The whole tortuous process can take up to three months…if you’re lucky!
Of course, the point at which both parties can reasonably relax is Exchange of Contracts, when the buyer contracts to buy and the seller contracts to sell, both being liable to lose a large amount of money if they renege on the deal.
Subject to Contract
But as we all know, at any point right up to exchange of contracts either party can withdraw, or simply demand a higher sale price (gazumping) or demand a lower sale price (gazundering). And unless agreement can be reached, the whole process collapses, the buying chain is broken..along with the hopes and dreams of all the rest of the people in that relevant chain. Also huge amounts of money, on solicitors, surveys, reports etc are wasted by the would-be purchaser. Then the whole tedious process starts again.
This absolutely ludicrous, because the whole English Conveyancing System is not so much based on ‘subject to contract’ but subject to a nod and a wink!
Putting your money where your mouth is
What I suggest, is that once an offer to buy is formally accepted and a survey completed, an Initial Deposit be placed in escrow by both parties. This deposit will then be forfeited to the aggrieved party in the event that the other party seeks to change the agreed sale price or withdraws from the process before actual Exchange of Contracts.
Of course the devil is in the detail, as they say. There will have to be very carefully specified reasons for a buyer to withdraw, such as a search revealing that a motorway or similar is planned to go through the sitting room or at least within hearing distance of the property in question and that was not revealed in the initial Property Details. Precise grounds for parties to withdraw from the commitment to buy and sell will need to be established but the current system is ridiculous and badly needs reform.
But how much should the Initial Deposit be? I would suggest 0.5% of the agreed sale price but obviously others would have a view on that. But it has to be sufficient to ensure that both parties are serious about the transaction and really ARE willing and able to proceed. It will also at least go towards compensating the aggrieved party for wasted survey and legal costs.
Serious purchasers will benefit, serious vendors will benefit…even estate agents will benefit! The only people who won’t benefit are mortgage companies, surveyors and of course…solicitors – but that’s not a bad thing is it!
Tell us what YOU think – take our poll