The exchange of contracts occurs when the buyer and seller of a property are ready to sign their respective copies of the contract relating to the sale. Before this stage is reached, the buyer and/or the seller can back out of the sale. Hence why many people focus on the exchange of contracts as a key part of the buying and selling process.
There is one contract covering the sale, and a copy of this is sent to the legal representative working on behalf of the buyer and the seller. Many people assume the contract is binding from the second the papers are signed, but this is not the case. The binding moment comes when the solicitors exchange the paperwork with each other. When the point of exchanging contracts occurs, it is very unlikely either party would withdraw from the sale. To do so would incur steep financial penalties, hence why most sales go through without issue from this point.
Since the buyer is formally and legally agreeing to buy the property at this stage, it is vital to make sure everything has been done before signing. All surveys and searches should be complete and satisfactory, any mortgage required has been offered in writing, and the deposit is ready to be paid. The deposit is usually required once the contracts have been exchanged by both parties. The completion date is then agreed and is usually the day when the buyer can finally move into the property they have just purchased.