When you receive an offer on your house, you may be be tempted to accept straight away.
But it’s important to first check that the person is a viable buyer.
That’s where offer substantiation comes in.
What is offer substantiation?
Offer substantiation is estate agents confirm that a buyer can buy a property.
They are substantiating that they are a viable buyer, which they do with two key checks:
- Firstly, the estate agent will confirm that the buyer has the funds. This often includes asking to see a ‘Mortgage In Principle’.
- Secondly, the estate agent will confirm the buyer’s identity. This involves providing evidence of their ID, such as a passport or driver’s licence.
Why it’s needed
The goal of offer substantiation is to avoid wasting the seller’s time. The estate agent is checking that the buyer is a viable candidate.
So, if the deal proceeds, it’s more likely that it will be a success.
Who completes offer substantiation?
Estate agents carry out offer substantiations on behalf of sellers.
How buyers pass offer substantiation
There are many forms of ID. But it’s important that buyers provide the right kind for certification, such as:
- A UK passport
- A UK driver’s licence
- Biometric Residence Permit
- A UK firearms licence
- A UK Military ID.
How can I prove where I live to an estate agent?
Every buyer will need to provide a certified proof of address. This is in a few different ways.
- A bank statement dated within the last 3 months.
- A council tax bill covering the current year
- A mortgage statement dated within the last 3 months
- An in-date TV licence issued this year
- A signed driving licence
How can I prove funds to an estate agent?
You’ll need to demonstrate how you intend to pay for the house. If you’re paying in cash, you’ll need to show these funds.
If a mortgage is being used, you should partner this with a ‘Mortgage In Principle’ from a lender.
Show a bank statement with your money in for the deposit. If it’s split across several bank accounts, you’ll need to show a statement from all of these.
You should then get a written Mortgage In Principle. This often comes in the form of a certificate, or an email from the lender.
It will state how much they’d potentially be willing to lend you. These two figures combined should cover the cost of the house.
When does offer substantiation happen?
This happens when your offer on a house is first accepted.
Before more work takes place, the estate agent wants to confirm that your offer is legitimate.
You’ll do these checks often in the immediate days after having an offer accepted.
How long does offer substantiation take?
For the buyer, it doesn’t usually take more than an hour.
If you’ve already got the necessary documents to hand, it’s quite straightforward.
The estate agent can then review these within the next 24 hours.
If there’s a problem, you’ll hear back from them. Otherwise, you’re good to go.
Is offer substantiation compulsory?
Yes. This is a legal requirement that all estate agents must comply with.
It will check that no illegal activity regarding identity or finance has taken place. It will result in you being able to complete your property transaction.
What happens if you fail offer substantiation?
This can cause the transaction to slow down, or fall apart altogether.
You’ll hopefully be given some time to gather the necessary documents.
But you cannot complete the transaction without proof of your address, ID, and funds.
