It’s common knowledge that buying a home is likely to be the biggest single purchase you’ll ever make, so it stands to reason that many find the process of making an offer on a house or flat rather daunting. This is true for both first-time buyers and those who already have a foot on the property ladder, but making an offer on a property you love needn’t be cause for sleepless nights.
With a little guidance and a bit of research, you’ll be able to confidently make an offer on a home without too much stressing. As with most things in life, breaking the process down into smaller, more manageable steps helps a great deal, and we’re going to walk you through the process in this post.
Work out your budget first
Before you even consider making an offer on a house or flat, it’s important to know what your own personal budget is. In fact, you should do this before you even start looking at property, let alone making an offer!
Many a buyer before you has fallen head-over-heels in love with a property they simply cannot afford, which only leads to disappointment and wasted time. Don’t fall into this trap! Make sure you know exactly what you have to spend before entering the market.
Speaking to a mortgage broker is a good idea, as they will be able to assess your personal circumstances accurately and give you a guideline on your borrowing status prior to beginning your search.
Before making an offer on a house
Once you’ve worked out what you can afford and have found a property within your financial reach, it’s time to start considering making an offer. Contrary to some advice you may read elsewhere, this is not simply a case of taking the asking price and knocking off a set percentage.
Obviously, you can do it that way, but you’re more intelligent than that, aren’t you, dear reader? (You’re reading our blog, after all!) But, having a strategy is far more effective, and not as difficult as you may think.
All you need to do is the following:
Explore the market
The first thing you should do is to take a look at the local market. Comparing apples with apples, as much as you possibly can, will give you an insight into whether or not your prospective new home is fairly priced. Look at similar properties within the area, are they in the same ballpark as the house you want to make an offer on?
Currently listed properties will give you a great idea on what the market is doing right now, but don’t forget to look at completed sales as well. Many of the major property portals will allow you to search for recently sold properties, too, and you can also delve into the HM Land Registry’s ‘Price Paid Data’ to get more information on local property prices.
...and the area
Property prices will give you a good indication of the area, but it doesn’t hurt to do a little extra homework. Look at things that add value both to the property and to your lifestyle and personal circumstances, such as:
- What are the schools like?
- Are there decent transportation links nearby?
- What plans are in the offing for the area?
- Is crime better or worse than other nearby neighbourhoods?
All of these things will help you make a more informed decision when it comes to deciding whether or not you deem the asking price to be fair and reasonable.
Talk to your estate agent
Speaking to the estate agent offering the property is a must, too. Many people overlook this step as they assume, quite rightly, that the agent will be on the seller’s side. While this is true, there is a wealth of information to be had here, without the agent compromising their client in the slightest.
Ask questions like:
- Why has the seller put the property on the market?
- Has the property attracted a lot of interest?
- How long has the home been on the market?
- Has the owner lived in the house/flat long?
- Has the agent received any other offers?
- Does the seller already have a property to move into?
- Is the seller open to offers?
Try to build a picture of the seller in your mind. Figuring out things like why they want to sell up, how keen they are to move, and what the competition is like will enable you to put yourself in their shoes and give you a rough idea of whether or not a deal can be done.
Deciding whether to offer below or above the property’s asking price
Now that you have done a little digging, it’s decision time: should you go high, low, or simply agree to the seller’s asking price?
Let’s take a look!
When should my offer be below the asking price?
You may be able to buy the property for less than the asking price for a number of reasons. Some sellers may set their price much higher than market value as they are not in a rush to sell and therefore will accept slightly less, while others may be desperate to sell and be willing to strike a deal for a quick sale.
The homework you did prior to considering making an offer on the property will stand you in good stead here. Key points to look out for would be whether or not the property has been on the market for a long time or if the owner has a time-sensitive reason to sell. Again, put yourself in their shoes...would you take less for the property if the tables were turned?
There are other reasons for going in with an offer lower than the seller’s asking price. You may think that the property requires work to bring it up to standard or you might be in a position where your offer will be more attractive to the seller than others in the market, such as being chain-free or a cash buyer, for example.
Remember that the asking price is not set in stone. If you feel as though the property is worth less than what the seller is asking, go in lower, but be fair. Offering half isn’t likely to go down well!
When should my offer meet the asking price?
There are some instances when the asking price may be spot on, or even seem like a bargain. Be sure to check and double-check, though, as there may well be a reason you’ve missed if the asking price seems overly cheap.
Other reasons for meeting the asking price when making an offer on a house or flat could simply be that, after doing your research, you feel that the home is ideal for you and your family and you don’t want to miss out. There’s nothing wrong with this approach, but it’s still vital to ensure you’re not overpaying, as doing so could prove costly further down the line.
When should my offer be above the asking price?
Believe it or not, there are some instances where offering more than the asking price can be a good idea. If you happen to be house hunting in a competitive market and your research has informed you of interest from multiple competing buyers, an offer above the asking price may be warranted and can ward off the danger of being gazumped.
There are a few things to bear in mind here, though. As the market is competitive, there is a chance your prospective property purchase is sitting at the top end already, and offering above the asking price may make a short-term loss more likely should the market cool off. This is fine if you’re buying a forever home, but if you’re looking to move on again in the near future it may not be such a good idea.
It’s also key to remember your budget. Competition can do funny things to our brains, so keep your initial affordability range in mind and don’t stray. Even if this truly is your dream home, finding out that you’ve overstepped the mark can quickly turn it into a nightmare.
How do I go about making an offer on a house or flat?
Now that you’ve done the groundwork, found a property you like, and completed the necessary research to arrive at an offer you think will suit both yourself and the seller, how exactly do you go about making an offer on a house or flat?
In the vast majority of cases, the property you are making an offer on will be handled by an estate agent and your offer should be made to them either in person or by phone. It is also best practice to submit an offer in writing as well. Estate agents are required by law to pass on each and every offer they receive to the buyer and placing your offer in writing will ensure that no mistakes are made should you be misheard or misunderstood.
Tips to help ensure your house offer is accepted
Naturally, we can’t guarantee a seller will accept your offer, but there are a few things you can do that will help strengthen your position and potentially make your offer more attractive.
Play on your position
If you are a first-time buyer or otherwise chain-free, it’s always a good idea to stress this when making an offer. The seller’s agent will likely ask about this, but not always, so you should make it clear from the outset that you are potentially in a better position than other buyers who may be showing an interest in the property.
While doing your research is vital, acting quickly is also of paramount importance...especially in competitive markets. By simply moving things along at pace you will demonstrate to both the seller and their agent that you are a serious buyer, which is something that always goes down well.
As a buyer you will obviously want to pay as little as you possibly can for the property, but it’s important to remember that there’s another party involved in the transaction, too. Just as you’ll want a good deal, so too will the seller, so make sure that your offer is both fair and reasonable. Going in too low could run the risk of irritating the seller, thus scuppering your chances should you face competition from other buyers.
Get to know the agent
You don’t need to invite them out for drinks, but putting a face to your offer can go a long way, so do pay the seller’s agent a visit rather than simply sticking to phone or email if you possibly can. This will also emphasise just how serious you are about the property.
What happens if my offer is refused?
If your offer has been refused, there are only really two options available to you: increase your offer or walk away. A lot will depend upon your budget and how close you were to it with your initial offer.
If you feel as though you’d like to make another offer, the process remains the same as before. However, it’s worth speaking with the agent to see if you can find out why the offer was rejected. While it’s extremely unlikely you’ll receive a hard and fast figure from them, you may be able to get an idea of whether or not you were in the right ballpark.
What happens after an offer has been accepted?
It’s important to bear in mind that even after your offer has been accepted the job is not yet complete. In England and Wales, acceptance of an offer is not, unfortunately, legally binding. Only when contracts have been exchanged does it become so.
You can, however, ask the seller to remove the property from the market. This they should do without question if they are happy with your offer. Alarm bells should ring if they refuse and you are well within your rights to ask why they want to continue marketing the property.
Can I change my offer once it’s been accepted?
Legally speaking, yes, but it’s not good form to lower an offer once you’ve had one accepted unless there’s a good reason to do so. Things like a survey turning up an undeclared or unknown problem warrant this kind of action, but gazundering for the sake of financial gain is frowned upon, and rightly so.
What about withdrawing my offer altogether?
As above, you are not legally obliged to follow through with an offer until contracts have been exchanged, but it’s not something you should do without good reason.
If you’re thinking of buying your next home in or around Wanstead, we are here to help. With over 100 years experience locally (we set up shop in E11 back in 1908!), we’re perfectly positioned to give you the best possible advice and guidance.
Drop by our office on Woodbine Place or get in touch via phone or email. We’d love to help you find your new home.