Buying Positions Explained
Why Estate Agents Ask About Buying Positions and Funding
If you’re searching for a new home, you’ve probably been asked: “What’s your buying position?” and “How do you intend to fund the purchase?” These questions are not just a formality—your buying position is one of the most important factors in the home-buying process.
Estate agents need this information for two main reasons. Firstly, it’s a legal requirement under Anti-Money Laundering (AML) regulations to verify where your money is coming from. Secondly, sellers rely on this information to assess which buyer is in the best position to complete the sale without delays. A strong buying position can make your offer much more appealing, while a weaker position might mean you face challenges securing the property you want.
Understanding your own buying position and being transparent about it can help speed up the process and reduce the chances of issues arising later. Below, we explain the different types of buyers and how your position impacts your ability to buy.
What is a Buying Position?
Your buying position refers to how ready and able you are to proceed with purchasing a property. It considers factors such as whether you have a property to sell, whether you need a mortgage, and how quickly you can complete the transaction. Estate agents assess this to ensure sellers have all the facts before accepting an offer.
Some buyers are in a strong position to move forward quickly, while others may have additional steps to take before they can proceed. Let’s break down the different types of buying positions and what they mean for you.
First-Time Buyers – No Chain, But Mortgage-Dependent
First-time buyers have a significant advantage in that they don’t have a property to sell, meaning they aren’t part of a chain. This makes them attractive to sellers, as the sale is often more straightforward. However, first-time buyers typically require a mortgage, which means they need to secure a Decision in Principle (DIP) or Agreement in Principle (AIP) before making an offer.
Having a mortgage agreed in principle reassures sellers that you can afford the property and reduces the risk of delays. However, if you haven’t arranged a mortgage before making an offer, it could weaken your position compared to buyers who are already financially prepared.
Why First-Time Buyers Are Attractive to Sellers:
- No property to sell means fewer delays.
- Can proceed quickly if the mortgage is secured.
- No risk of a chain collapsing due to another sale falling through.
Potential Challenges:
- Mortgage approval can take time.
- If funding relies on a gifted deposit, additional checks may be needed.
Buyers in a Chain – The More Complex Position
Many buyers need to sell their current home before purchasing another, which creates a chain. If your sale depends on someone else completing their purchase first, delays can happen, making sellers hesitant to accept your offer.
However, being in a chain doesn’t necessarily mean you’re in a weak position. If your home is already under offer, you’re in a much better place than someone who hasn’t even listed their property yet. Sellers will often prioritise buyers who have already secured a sale because it shows they are serious and ready to move forward.
How to Strengthen Your Position in a Chain:
- Get your current property on the market early to avoid delays.
- Accept an offer on your property before making offers elsewhere.
- Work with an efficient estate agent who can help keep things moving.
Why Being in a Chain Can Be a Challenge:
- If one sale in the chain falls through, it can affect all parties.
- Sellers may prefer chain-free buyers to reduce risk.
- It can take longer to complete the purchase.
Selling to Buy – When Your Purchase Depends on a Sale
If you’re selling a property to fund your next purchase, your selling position will directly impact your ability to secure your next home.
Sellers prefer buyers who already have an offer on their property, as this means their funds are secured. If your home isn’t yet on the market, a seller may not want to accept your offer because it introduces uncertainty into the transaction.
How to Improve Your Buying Position When Selling to Buy:
- List your home for sale before looking for a new property.
- Secure a buyer for your home before making an offer on another property.
- Keep the process moving by working closely with your solicitor and estate agent.
Sellers want certainty, and the further along you are in selling your home, the more attractive your offer becomes to the seller of your next property.
Cash Buyers – The Strongest Buying Position
Cash buyers are the most attractive buyers in the property market because they don’t require a mortgage and are not part of a chain. This means they can often complete the purchase much faster and are seen as lower risk by sellers.
However, even cash buyers need to provide proof of funds. Under AML regulations, estate agents must verify where your money is coming from. This means providing bank statements, evidence of savings, or documentation showing the sale of another asset.
Why Sellers Prefer Cash Buyers:
- No risk of mortgage application delays.
- No risk of a sale falling through due to financing issues.
- Often able to complete the transaction more quickly.
While cash buyers are in a strong position, they must still provide proof of funds for compliance with legal requirements. Estate agents cannot proceed with an offer unless this is provided.
Why Estate Agents Must Verify How You’re Funding the Purchase
Estate agents are legally required to confirm how buyers are funding their purchase to comply with Anti-Money Laundering (AML) regulations. Whether you’re buying with cash, using a mortgage, or selling a property to fund your purchase, you must provide proof of where the money is coming from.
Failure to provide this information means an estate agent cannot legally proceed with your offer. This protects all parties involved and ensures the sale is legally compliant. Buyers who have their financial documents ready will always be in a stronger position than those who delay.
How to Strengthen Your Buying Position
Regardless of where you stand, there are ways to improve your buying position and make yourself a more attractive buyer. Ensuring you have your mortgage agreement in place, listing your current property for sale early, and providing proof of funds as soon as possible will all help speed up the process.
Sellers need buyers who are ready, willing, and able to complete the sale. The more prepared you are, the easier and faster your property transaction will be.
If you’re looking to buy in Stamford or Rutland, having a clear understanding of your buying position will put you in the best possible place to secure your dream home.
Final Thoughts
Your buying position is just as important as the offer you make. Sellers want buyers who can proceed smoothly, and estate agents are legally required to verify your funding source before progressing with an offer. Whether you’re a first-time buyer, in a chain, or a cash buyer, being transparent and prepared will give you the best chance of success in today’s property market.
Frequently Asked Questions
Why do estate agents ask about buying position?
Estate agents need to assess how proceedable you are to help sellers make informed decisions.
Why do I need to provide proof of funds?
It’s a legal requirement under AML regulations to verify where your money is coming from.
Can I make an offer on a house before selling my current home?
Yes, but sellers are more likely to accept your offer if your home is already under offer.
What’s the best buying position?
Cash buyers are the strongest, followed by first-time buyers and buyers with their property already under offer.