What is a ‘ready to exchange’ pack?

The question of what constitutes a ‘ready to exchange’ pack is in a number of respects very similar to the age-old question of how long is a piece of string?

There are so many different definitions within the Home Information Pack community to the extent the true objective of the concept has to a large degree become lost and diluted

In the past week or so we have seen a number of home information pack facilitators come to market with their own versions of a ‘ready to exchange’ pack.

First on the block was Simply HIP with a product that purports to put the home seller in a position to move from offer to exchange of contracts that much quicker. Their ready to exchange pack has all of the mandatory components of the home information pack but with the addition of a general contract of sale, documents referred to within the registered title, guarantees etc, and a certificate stating that in the opinion of Simply HIP the pack is ‘ready to exchange’.

 

The pack however has no additional searches meaning that if there are mining, flood or other environmental issues for example, ultimate responsibility for commissioning these will still rest with the buyer. To that extent perhaps the title of ‘ready to exchange’ still falls short of the true meaning of those words.

Next on the scene was an organization called ‘BOLD’ – Bundle of Legal Documents - that also promotes the concept of ‘ready to exchange’ by urging a seller to engage with a solicitor or regulated home information pack provider and to order before marketing those documents already within the HIP apart from the searches. Again the recognized benefits of ‘ready to exchange’ of speeding up the sale process, reducing the opportunity of ‘guzumping’ and taking the stress out of the sale process, are not truly addressed with this offering.

The idea here is that the ordering of the searches should be left to the buyer. Hold on though – is the ordering and delivery of the searches not one or the main reason for delay? One thing the HIP experience has shown is that a large number of local authorities around the country are not geared up to deliver a quick and efficient service when it comes to property searches.

If one is to build a standard definition of ‘ready to exchange’ it is important to ensure this includes the early ordering of property searches. Without this as a fundamental feature, the whole objective of speeding up the sale process is lost.

 

So back to the question of what constitutes a true ‘ready to exchange’ concept. The truth is that it is perhaps too much too soon to look at a prescribed format for the delivery of documents and information needed by a buyer to enable a seller to put pressure on that buyer to move from offer to exchange within a couple of weeks as opposed to where we are now with a window of around 9 to 10 weeks. Surely the best and perhaps only way forward is to leave the content of the delivery to the judgment of the deliverer of the documents and information whether that person is a solicitor or other facilitator.

So how could this work? I am looking to put my property on the market. Before I can do that I am obliged to engage a solicitor or other regulated facilitator and to order from that supplier all those legal documents and information I will need to ensure that when an offer is made from my home I will be able to put pressure on the buyer to proceed to an early exchange. The obligation would require the information and documents to be delivered within 28 days of first point of marketing and no later than the receipt of offer.

 

The advantage of a non-prescriptive approach is that searches can be selected and ordered in response to specific factors such as location of property. Each transaction is different and needs to be dealt with differently to ensure the true benefits of ‘ready to exchange’ are secured.

This idea also falls within the Conservative Party’s policy-making ideology. They do no like regulation and where regulation is necessary they prefer regulation where the delivery is non prescriptive and relies of the judgment of the deliverer. See my earlier article on Oliver Letwin.

This concept should lend itself to support from stakeholders. Speeding up the time it takes to complete should be good news for estate agents and the National Association of Estate Agents. They will have happier clients and more importantly get their hands on their commission that much quicker. Surveyors may also see it as an opportunity to demonstrate the benefits of including within the delivery a property condition report. RICS already has an offering along these lines. As regards Solicitors and the Law Society - what better way is there than this to try and retain conveyancing services in the face of one of the greatest threats ever presented to the profession, that is the implementation next year of the Legal Services Act.

So in conclusion ‘ready to exchange’ is about delivering the benefits of making legal documents and information on a property to be marketed upfront and available to a prospective buyer. How this is delivered and packaged will I am sure vary, but it is important for there to be present some regulation as with out it there will be no prospect of universal compliance. This is vital as without all parties within a chain of transactions subscribing, the speed of each linked transaction will be very much dependant on the slowest party within it.

Those interested in learning more about how my company proposes to keep pace with the move towards ‘ready to exchange’ and of how we propose to use technology to make the process more interactive with the consumer please contact me at david.pett@hipshomes.com. We will Beta trialing our offering in early December.