How do other countries move house and avoid chains?

[Nevermindtheteacaps]

Having just, after 9 months which included several collapsed chains, sellers pulling out, buyer threatening to pull out, forays into the international banking system and countless other stresses completed on the sale of our house I am wondering:

If the UK house buying system with chains and no guarantees is the worst in the world, what do other countries do? And do they tie up buying and selling so no one is left homeless?

Exactly! Our buyer demanded possession before Christmas but top of chain could not complete until January so we're in a very expensive Airbnb for a month!

We moved in with family for three months until our new house (newbuild) was ready to move into. It meant putting our furniture into storage and paying storage fees but at least we didn't have to pay for rent as well.

I do think the English system could be improved if the seller had to provide all the searches and survey in advance. At the moment, having an offer accepted is only really a starting point and we spend far more time getting to exchange (the legally binding bit) than other countries. There’s too many opportunities for people to mess you about, whereas if the sellers have to provide searches etc up front, you know what you’re actually buying far more quickly and can (in theory) proceed to exchange more rapidly.

Where we are there's far far less moving area permanently so exchanging one house for another is rarer, so hardly any chains.
More likely that people buy a second home outright than exchange one for another.
I think about 15% of people own a second home. In the last 20 years I have hardly met anyone who has exchanged one home for another.

You saved me saying it, but the Scottish system, which includes the seller doing the survey/home report, whilst not perfect, is a million times more sensible and faster than England (and Wales?) . Every time we’ve moved we’ve done it inside 8 weeks from making an offer

It needn't be terrifying. In the German system, you can take out a bridging loan for up to 2 years (the longer duration might be used if people have a building society savings scheme coming due some time after they want to purchase.) Haven't seen any up to date numbers but two years ago banks were offering rates of 2 to 3 percent on them so a far cry from unsecured loans even if higher than a normal mortgage. You don't make monthly payments on them but just pay them off once your sale or other funding has come through.

Portugal is similar to other european countries in that chains are not a thing. Completion normally requires a cheque which takes a couple of days to clear which makes it impossible. I guess the Portuguese don't move house the same as we do in the UK so you have to adapt to their system.
They do not have the lengthy enquiry process either. It's a bit more a case of the purchaser needs to do due diligence and you can go from offer to the equivalent of exchange of contracts in a week.
That said the UK system offers you more protection in this respect and you do hear some horror stories here of people being unaware of issues with the property they have bought.

I hate to be THAT. Poster, but it’s not the UK system, it’s the ENGLISH SYSTEM. The Scottish system is way less ridiculous and risky as the Home a report is carried out by the seller and despite this, is totally impartial-and I say that having been on both sides more than once in the last couple of years

Sorry, very sloppy wording on my part, just very used to referring to home as UK.

I did wonder if that was the case 😊. Thanks for the info re Portugal, there’s always been a bit of a pipe dream….

The downside of the US/Canada system is that estate agent commission is quite high - generally 6%, paid by the seller and split between the buyer and seller agents. I will say though that our EAs in the US did a lot more for that money - on the phone with updates, chasing reports etc constantly. Agents in Canada are basically done once the offer is accepted, and the lawyers take over.

Actually now I come to think of it, I don't know what EA commission rates are like in the UK.

Belgium is 10% deposit at offer acceptance and 16 weeks to complete or lose deposit. Housing market is less volatile than England as people tend to rent until they buy and then stay put. Chains isn't a thing. The English house purchasing process is nuts.

Australia. You buy by offer or live auction - in the street outside the actual house, so it is a great piece of live theatre for the neighbours. Pay 10 % deposit and agree on a settlement date of 60 or 90 days. It is up to the purchaser to be able to come up with the remainder of the money on that date. We don't get involved in each other's circumstances ie chains. When I have bought I have immediately put my existing house on the market and sold it with a shorter settlement date.

The Scottish system is not something to brag about.

1 in 12 sales still fall through in Scotland due to the fact the signing of the missives doesn't happen until the last minute, meaning people can pull out any time. Used to be done much earlier in the process, but that doesn't always happen now; often day before or day of sale.

Compare this to 1 in 4 in England and of course it's still a vast improvement, but it's not correct to say sales don't fall through. Scotland also has the "offers over" process whereby properties in good areas sell for a huge % over what they're marketed at with a blind bidding process often only accessible to those in the most privileged position financially. Home Reports are limited, filled with caveats that don't hold the surveyor accountable, and often miss property issues.

www.scottishhousingnews.com/articles/espc-scotland-sees-20-fewer-property-sale-collapses-than-england

I’m in South Australia. You either buy at auction which means you take ownership pretty much immediately or if your offer is accepted on a non auction sale you have a cooling off period of two working days. Then you have a settlement date after about a month for finance legal etc to be sorted when you get the keys. I felt terrible for using the cooling off period once. The whole chain system you have seems insane!

You also have a deposit you pay after the cooling off period.

In Belgium, you sign a contract which is binding and pay the deposit- as quickly as possible after making offer and having it accepted. It is non refundable! You have to complete within 4 months. Plus you pay shed loads in tax / stamp duty. People don't move often here as it is so expensive

In France the purchaser pays a 10% deposit on acceptance of the offer which is held by the Notaire in Escrow. If the sale doesn't proceed to the agreed timescales or the buyer pulls out then the deposit is given to the selling party.

in the netherlands the offer is binding 3 days after accepting. completion happens on an agreed date 3 weeks or so later.
a basic survey is part of the sale pack but you can ask your estate agent to organise a structural one for you if you want.
your estate agent works for you and handles everything from offer to completion. the seller has their own agent.
on completion you walk through the property with both agents for a handover, reading meters, removing for sale signs...

In the US, you get yourself a buyers agent, see a house, make an offer, and it's accepted after a bit of negotiating. You deposit your earnest money with the seller's agent in an escrow account.
Once the offer is accepted, or even before, you get a lawyer as well as the buyers agent .

The agreed price is part of the contract. The contract usually includes stipulations that the buyers will have a survey done, their mortgage lender will do an appraisal, and they will secure a mortgage for 80-90% of the agreed price, that the buyers will have a home inspection by a licensed home inspector, and that they can pull out if they can't get a mortgage for the percentage of the agreed price or if the home inspection reveals anything they're not happy with. Buyers can pull out if the title to the property is clouded too. A title search is done as part of the process.

There are dates by which all of the above have to be accomplished. The agents can negotiate extensions if needed, but they are rarely more than a short period.

Sometimes, the parties will renegotiate the price if the inspection reveals that costly structural repairs are needed or if the mechanicals need replacing (HVAC, plumbing, any appliances that are going with the house). This depends on how motivated the seller is. Sometimes a seller will offer appliance or HVAC insurance in lieu of a price drop.

The important thing is that the various deadlines by which the different elements of the sale/purchase are accomplished are set forth in the contract and must be adhered to. Parties can't pull out or entertain other offers while under contract except for reasons related to financing or the home inspection (or death, disability, or posting out of the area on the part of the buyer, or death or huge change of circumstances for the seller, or full or partial destruction of the property by any means - this sort of detail is all in the contract boilerplate). Some places include ability to secure insurance or flood insurance as part of the contract. The mortgage company will not issue a mortgage without insurance.

So there's no gazumping, and at closing, there is no gazundering. Closing is usually straightforward and involves lots of signing of documents and the handing over of the keys. Possession is guaranteed immediately for the buyers.

In Australia. You buy the house, sign the documents on the day of purchase (usually auctions here) and you can have a 30 (unusual) 60 or 90 day settlement. I have heard of 120 but they are not the norm. You then move in 90 days later. There's no extensions, or arsing a round

Yes in Australia you sign a binding contract, put down a deposit (at least 10%), completion date in my state defaults to 60 days but can be negotiated longer or shorter.

It's then up to you to be ready to pay the final amount on completion date.

Some people will have sold first and be ready to move into temp accommodation before they buy again. Others will take the risk that they can sell their house in time - easier if the market is 'hot'.

My MO has been to get current house spruced up ready to sell. Then buy, with the longest contract period the vendor will accept. Then current house straight onto the market.

In the past I've arranged bridging finance so the purchase can go through a few days/week before the sale - gives time to clean up the old property and get any tweaks done to the new one before moving in. The finance is expensive though, and more difficult to get in a post-GFC world. (Your mortgage looks like a telephone number!)

More commonly, people just juggle everything so that the purchase, sale and move all happens on the same day.

Interesting thread.
It seems from others responses that in other countries bridging loans or temporary renting is more normal.
In the UK bridging loans are usually expensive and you then end up paying two mortgages until your house is sold. Most people cannot really afford this, as they depend on the sale of their house to finance the buy. Also if a buyer of your house realises you need to sell ASAP to avoid the double mortgage, they may put in a lower offer.
My DB sold his house and rented, but there are also disadvantages to this. He ended up renting for nearly a year, during which prices are going up. He put his furniture into storage before he realised he was paying more on storage than what it was worth.
Then 2 lots of removal fees, of course. There is also a minor risk of what you do with the money from the sale of the first house. Remember in the uk, deposits are only guaranteed up to 85k, in the event of a bank going bust. Unlikely, yes but northern rock failed in 2007/8 (I had an account with them at the time)

@MissBuffyAnneSummers its VERY common! We have just had the most stressful time due to multiple offers falling through ( mainly because people just changed their minds)

In the UK bridging loans are usually expensive and you then end up paying two mortgages until your house is sold. Most people cannot really afford this, as they depend on the sale of their house to finance the buy.

but then again, a bridging loan or other meadure is just part of house buying in other countries. you know up front the costs and calculate what you can offer accordingly.

How horrible for you.

However I don't know anyone this has happened to.