Making An Offer
Before you think about making an offer it is good to do a few checks.
- Check the value of the house. Estate agents valuations can vary a surprising amount, so remember to check the price of other similar properties in the local area. If similar properties seem cheaper, then remember this when deciding how much to offer. If similar properties seem more expensive, then you could be onto a bargain!
- Check for any planned developments in the surrounding area – is the house next door about to build a huge extension, which is why the seller is selling now?
- You should probably know by now, but if not, check whether the property is leasehold or freehold. Mortgage lenders normally require a leasehold property to have 60+ years left on the lease.
If the property still looks good, then how much should you offer? The level of your offer should depend on several factors:
- Interest in the property – if there are other interested parties, then the seller can be more demanding with the price tag. If you are the only party interested then it is you who has more control over the price tag.
- Time on the market – if the property has been on the market a long time, then there is low interest in the property so you should be in a more powerful position.
- What would you be happy paying? Set a price that you do not want to go over – you will need to offer less than this as there should be some room for negotiation
- Is the seller desperate to sell? If so then you are in a good position to make a lower offer.
The position you are in as a buyer can also be useful in negotiations. When possible use any of the following points to your advantage:
- Have you sold your own house or are you a first time buyer? If you dont need to sell your own home before you could move, this puts you in a better position.
- Short chain (if any)? If you are in a short chain or are not selling another house this also puts you in a stronger position.
- Arranged finances? Do you have a deposit ready and a provisional agreement with a mortgage lender? If you are prepared financially the seller will take you more seriously.
If several of the points above work to your advantage, then you should be in a good position for making an offer. When negotiating remember to stay pleasant – if the seller has other potential buyers with similar offers, they will naturally want to sell with the one they have the best relationship with.
If you are negotiating with an estate agent, always remember that the agent is usually getting paid a percentage of the selling price, i.e. they will negotiate hard for a higher price, and since they do this for a living they should be good negotiators. If they sense that you have your heart set on the property, they will use this to their advantage – try to remain indifferent. If may be worth contacting the seller directly to negotiate a price.
Once you have agreed on an offer, it must be made in writing. Remember though that verbal offers are not legally binding whereas written ones are. Bearing this in mind you should always clearly mark your written offer as “subject to contract and survey”. Therefore if anything goes wrong with exchanging contracts, or the survey reveals any problems, you are not committed to continue with the purchase. You offer should also include details of what fixtures and fittings the offer assumes will remain with the property.
When you have made the offer, you should always make sure the property is taken off the market. If the property remains on the market, gazumping is more likely.