How To Create Time In A Property Transaction
As I am lying in the dentist’s chair for my annual check-up, squirming around like an upturned woodlouse, I am thinking to myself ‘if only I could control the time this took and make it as pain free as possible!’ The same can be said when it comes to time in property – one either has too little of it or more often than not, the process takes too long and you lose control of the situation. However what if there was a way to make time on your terms, in order to make the selling and onward purchase process as pain free as possible?
I regularly speak with homeowners who wish to sell their property, but are reluctant to do so as they feel there are limited options in the market for them to purchase. They feel by initially looking in the market to find a property they would love to purchase, and then come back to selling their home is the pain-free property transaction way to go. However, it isn’t.
The problem that these homeowners have is that they are viewed as very high risk by other vendors and estate agents, as they still need to sell their home in order to proceed – the amount of time and uncertainty are the issue. Putting in an offer subject to the sale of their own home especially when it’s not even on the market, is often a pointless exercise as they are inadvertently shooting themselves in the foot by benchmarking the property in the market, which can then be used against them with more proceedable purchasers than themselves. They are of course only seeing part of the market and properties openly advertised – not those in the off-market sector. So their judgement is skewed from the outset.
Time on a vendor’s side
Often I advise homeowners that they need to get themselves into the best possible buying position, which regularly means finding a buyer for their own home first and then doors start to open. Given that the conveyancing process takes between 3 and 4 months just to reach exchange, it is very rare nowadays that a buyer stipulates they wish you to vacate in just a matter of weeks. So already there is time on a vendor’s side to give them the reassurance in the process and to start making it more pain free.
Move into rented accommodation
In addition, there are some further ways that one can force more time into the process. The default position is of course going into rented accommodation. Yes I appreciate this isn’t ideal as it is two moves, however one is then able to sell and go on and purchase from a position of strength. It equally takes a huge amount of stress out of the situation and one doesn’t feel forced into quickly buying a home just to please your buyer.
Exchange and delay completion
One approach is to exchange and delay completion (which can be made earlier by prior mutual agreement). The most sizeable delay I have done recently is 11 months post exchange, however this was to a full cash buyer. If a lender is involved, the most they will usually delay is by 3 to 4 months, however the option is there if you need it.
Licence back option
Lastly, there is a licence back option. This is where the vendor exchanges, completes and then licences back (ie rents back) their home from the new owner at favourable market rates. This gives additional time and flexibility to both sides.
In the last 10 years, I have never had a vendor client withdraw from a property transaction because they couldn’t find the right property to move to. So you see, there are always options out there, but by coming into the light of the market, there is no need to be a woodlouse any more!