Who Signs The Contract First When Selling A House?
Deciding whether or not to sell your home can be an overwhelming decision. After all, your home is more than just where you live. Inside are memories, all of the comfort it provides you every day when you get home, and quite a bit of money! As you work to decide whether to sell your home, you might have lots of questions about the process itself and whether or not it’s one on which you want to embark. Signing a house contract is part of that process. Exploring how and when that happens may help make your decision a bit easier.
What Is A Contract For A Home?
It may help to start with the basics. A contract for a home in the UK typically refers to the legal document that outlines the terms and conditions of the sale between the person selling and the person buying the home. It’s a key part of the property-buying process. Usually prepared by a solicitor or conveyancer, the contract typically represents the needs of both parties. There are several things listed on a contract including the
- Parties Involved: The buyer’s and seller’s full legal names and addresses.
- Property Details: The address and description of the property.
- Purchase Price: The amount both parties agreed the property was worth.
- Deposit Amount: The total amount of the initial deposit the buyer may have paid.
- Day of Completion: The day that ownership of the property will legally change hands.
- Sale Conditions: The requirements necessary for the sale to move forward like specific actions the buyer or seller must take before the sale can go through.
- Fixtures and Fittings: Any items that are specifically excluded or included with the sale like built in appliances.
- Current Ownership: A confirmation that the seller has the legal right to sell the property and that the buyer will get the title after the day of completion.
- Financial Arrangements: Any details of the buyer’s financing arrangements to purchase the property.
- Completion Statement: The overall financial details of the transaction including the balance due by the buyer.
Why Is Signing A Contract Necessary?
Ever wonder why there are even contracts involved in UK property transactions? There are several reasons for this documentation. Given that a contract for a house is signed fairly early in the process, the first reason signing a contract is necessary is that it helps demonstrate commitment from the buyer to the seller. Both buyers and sellers alike have been known to back out of home sales in the past. A contract helps keep that from happening. In fact, they’re legally required for property transactions. Once the contracts are exchanged, both the buyer and the seller are legally bound to the transaction. That means the contact is like protection for both the buyer and the seller. It outlines your respective rights and obligations, and that reduces the likelihood of disputes or misunderstandings during the transaction. Remember, once the contracts are signed and exchanged, they become legally enforceable documents. This means that if either party fails to fulfil their obligations as outlined in the contract, the other party has legal remedies available.
Speaking of terms and conditions, that’s another good reason you might want a house sale contract in this process. It doesn’t just state the fact that the property is to be sold. It also clearly outlines the terms and conditions of the sale. This includes details such as the purchase price, deposit amount, completion date, and any special conditions agreed upon by the parties.
Additionally, it includes assurances that the seller has the legal right to sell the property and that the buyer will receive a clear title upon completion. This helps ensure that the buyer is purchasing a property free from legal encumbrances.
Because it helps to include all of these assurances, you might want to think of a contract as risk mitigation for both parties. By signing a contract, both parties mitigate certain risks associated with the property transaction. For example, the buyer may be protected against the seller accepting a higher offer from another party, and the seller may be assured that the buyer is committed to the purchase.
The property sale contract does more than just mitigate your risk, though. It’s also central to the conveyancing process. It provides a framework for the exchange of information, searches, and other necessary steps to ensure a smooth and legally sound property transaction. It may include details about the buyer’s financing arrangements, including any mortgage conditions, further ensuring that the financial aspects of the transaction are clear and agreed upon, which is helpful for both parties during conveyancing. It should also have a completion statement in it that outlines the financial details of the transaction, ensuring transparency regarding the balance due from the buyer on completion, thus helping everyone understand exactly what is expected.
What Does The Process Look Like?
Now that you know what’s inside a contract, you may want to know more about the process of actually having one signed. That happens during the conveyancing process. Conveyancing initially starts when both the buyer and the seller instruct their conveyancers or conveyancing solicitors. Both the buyer and the seller usually engage the services of a solicitor or licenced conveyancer to deal with the legalities involved in the sale. That person acts on behalf of their client throughout the process. The next step occurs when your solicitor prepares the draft contract, which includes details like the description of your house, how much you’re selling it for, the amount deposited from the buyer, and any special conditions that might apply to the sale, then sends it to the buyer’s solicitor.
Once that’s complete, you have a bit of work to do. You must complete the property information forms, providing details about the property, such as boundaries, fixtures, and fittings. These forms are sent to the buyer’s solicitor after you finish them.
At that point, it’s the buyer’s turn to do a bit of work. Their solicitor will usually conduct various searches to check the property’s title, uncover any potential issues, and gather relevant information from local authorities. The buyer’s solicitor also ensures that the seller has the legal right to sell the property and that there are no legal issues affecting the transaction. Additionally, he or she may raise enquiries with your solicitor based on the information obtained from those searches and the forms you submitted to help clarify any uncertainties and ensure both parties have accurate information.
Once that’s complete, the buyer typically arranges for a survey to assess the property’s condition. Simultaneously, the buyer’s lender will do something similar. They’ll conduct a valuation survey to make certain the property is worth what the buyer is paying. Once the lender is satisfied, they issue a formal mortgage offer.
The next stage is for both parties to review the contract so they can make any necessary changes. After both parties are satisfied, the buyer and seller are signing house contract documents. When selling a house, who signs the contract first? Typically, the seller does so. These signed contracts are then exchanged, and at this point, the transaction becomes legally binding. The buyer usually pays a deposit, which is often just a small per cent of the purchase price.
What To Consider Before You Decide To Sell Your Home?
Exchanging contracts is just one step in the process of selling your UK home. If you’re still on the fence about selling your home, you may wonder how you even begin to decide whether this is the right step forward for you. Perhaps the best first thing to consider is your finances.
It may help to get a closer look at exactly how much your home is worth. Take a closer look at the property market. Is it currently favourable to sellers? If so, this is a good time to sell. If it’s a buyer’s market, though, you could lose money on your home. Most estate agent companies run a blog to help you understand what the current market conditions are. Don’t just look at national conditions, though. Research local market trends, such as property values in your neighbourhood, demand for homes, and the average time properties stay on the market, too. In the world of property sector, some areas are often hotter than others at times, and that matters when it comes to the sale of your home.
As you’re thinking about selling your home, establishing its value is important. If you’re not quite sure what your home is worth, it’s essential to have a professional property valuation at this point to better understand the current market value and set a realistic selling price. Remember, too, that the condition of your home plays into its value. If significant repairs or renovations are needed, you may need to make significant repairs to bring it up to its potential value, and in some cases, you may not have the time or money to do so.
Selling price is only one part of the equation, though. The amount of equity you have in your home matters too. The amount of equity you have in your home is the difference between the value of your property and the balance on your mortgage, and selling it when you have plenty of equity may mean a substantial profit. It may help to talk to your mortgage broker to establish a strong picture of your finances overall. Don’t forget to review your existing mortgage terms and any potential penalties for early repayment. Understanding the financial implications of paying off your mortgage early is important, as that may affect your decision.
Along with that, though, you’ll want to think about your bigger financial picture. Does selling your current home align with your financial goals for the long term? Talk to a financial professional about the potential tax implications of selling your home. When you sell something as large as a home, there’s a potential capital gains tax you may be responsible for.
Think, too, about your personal goals. What do you hope to achieve by selling your home? You might be looking for a change of scenery, a bit more space, or a way to simplify your life. Consider whether you are emotionally ready to part with your current home and move on to a new chapter in your life. You’ll want to consider your future housing plans in this process. If you’re planning to upgrade to a larger home, downsize, or relocate, these factors can influence your decision to sell, as they may all impact your finances as a whole.
Ready To Sell? Working With A Cash Buyer Is The Way To Go
If you’re ready to undertake the process of selling your home and getting through the contracts and conveyancing, the best way to do so is to work with a cash buyer. Cash buyers provide fast, certain sales to UK homeowners just like you. One of the primary advantages of selling to a cash buyer is how quickly they work. Since cash buyers don’t need to go through the mortgage approval process, the sale can be completed more quickly. This can be especially appealing to sellers who are looking for a fast and efficient sale. Often the process can be completed in less than a fortnight, allowing you the ability to move forward with the next chapter of your life. More than that, though, selling to a cash buyer is a simpler, more straightforward process. There are no mortgage lenders involved, so the paperwork involved is quite a bit less. Cash buyers can be particularly helpful if your home requires extensive repairs. Cash buyers are usually more willing to purchase a property in its current condition, without requiring extensive repairs or renovations. If you don’t have the time or money to deal with repairs to get your investment out of the house you’re living in now, a cash buyer is typically the best choice for your sale.
Think about whether you’re truly ready to sell your home, and if you are, you simply won’t make a better decision than to go with a cash buyer for your upcoming sale.