Types of buyers and dealing with offers
Getting the best price is the primary objective for most sellers, but there are other important factors to consider, including your buyer’s position. We take a look at the different types of buyers and how to deal with offers.
Different types of buyers
There are generally three different types of buyer:
- Those using borrowed money, generally a mortgage
- Those funding with cash from the sale of their home
- Those buying outright using cash
In an ideal world, you should be looking for a buyer capable of proceeding immediately, having either no dependent sale or a sale agreed with a complete chain and the required funds available.
Buyers who haven’t sold yet
Buyers who need to sell their property first are not necessarily in a great position to proceed. You should think carefully before accepting their offer, especially if they’re struggling to sell their home.If you do decide to accept their offer, you may need to give them more time to sell their home before you can exchange contracts. After all, it could take them much longer to find a buyer than they had expected and they may not get the price they need to be able to buy your property at the price they’ve agreed with you. They could also end up being part of a long or weak chain.
Cash buyers are a more attractive proposition, although you may find you end up accepting a lower offer in exchange for the greater security and flexibility you’ll get. It’s important to get confirmation of the funding situation from a professional acting for your buyer, such as their accountant, solicitor or bank, before accepting any offer.
If your buyer is in rented accommodation, you can’t just assume they’ll wait endlessly. They could have a fixed term tenancy which cannot be extended, even if it can be extended, it may be for a minimum three or six month period, which could make your buyer reluctant to complete quickly.
Anyone with a sale that depends on others selling their own property will have a chain. It may only be a chain of one, i.e. their buyer, or it could be a chain of ten. Usually the longer the chain, the greater the risk, but the selling position of those within the chain is also key.A chain of six, where each party has solicitors well advanced with searches and contracts, surveys carried out, half of them already in receipt of their mortgage offers (but with plenty of time until they expire) can be a much lower risk than a chain of three where no-one has had a survey carried out and each party has incurred little financial cost.
When does an offer become legal?
The point where both parties become ‘safe’ is when you exchange contracts. This is when both parties are legally bound to honour the agreement, the terms are fixed and each party knows where they stand. Finally, avoid putting any direct agreements with your buyer in writing until you have taken legal advice. If you make an agreement verbally, it’s worth mentioning that it is subject to the contract. This will put your solicitor/conveyancer in charge of checking and drafting the wording.
Getting to exchange as quickly as possible with little deviation from the agreed terms is the goal here. There are a number of factors for you to consider to help prevent things from going wrong:
- If you need a mortgage, get started with your application as soon as your offer to buy your new home is accepted
- Make sure your solicitor/conveyancer starts working promptly on the draft contract and searches
- Check all parties are in communication and responding to requests within the agreed timescales
- Complete and return the paperwork sent to you as quickly as possible
What is the timescale?
The timescale can be very hard to predict, especially if you’re looking to link your sale with your purchase, but haven’t yet found a property you want to buy. Even if you have found somewhere, if the upper chain is not yet complete it’s very difficult to be specific about dates.
You should seek commitment from your buyer and know when they’ve instructed their solicitors, applied for their mortgage and having their survey carried out. The quicker your timescale for exchanging contracts, the more you’ll keep your buyer on-board. If they’re going to walk away or try and renegotiate with you having seen their survey, it is better for you that this happens sooner rather than later, so you can get your property back on the market.
It’s also worth noting that some buyers seek to renegotiate offers for genuine reasons, while others think it acceptable to try to haggle for reasons which are not valid. Although, the more motivated your buyer is, the more likely they are to be flexible in their negotiations. If they are actively negotiating spending money on buying your property, they’re less likely to be thinking about making an offer for someone else’s.
If your purchaser delays things, then the owner of the property you are going on to buy may also doubt your commitment.
It’s important that the sale is not allowed to drift. If it does there is a much greater risk it will not happen at all.
The HomeOwners Alliance provides members with guidance on buying and selling their homes. To see how we can help, find out more about the benefits of joining the HomeOwners Alliance.
- How do I break the housing chain?
- Our mortgage service
- Conveyancing made simple for sellers
- How much should conveyancing fees cost?
- How do I exchange contracts?
- Completion – what to expect
- Can I take my mortgage with me when I move home?
- How to make your home more valuable and sell faster
- Types of buyers and dealing with offers