Once you’ve found the property you want to buy, the next stage is to make an offer.
Before making an offer:
- Find out what similar properties in the area are selling for. If you are looking to make an offer lower than the asking price, this may help you. Look at both the sold prices of previous properties and current selling prices, as the market does change.
- How long has the property been on the market? If it’s a while, it may indicate the property is overpriced, potentially giving you some leverage. It is worth noting that certain properties, for example, those at the higher end of the market, take longer to sell.
- Think about the market for this particular property. If it’s the only one in the area, the seller is in a strong position with little competition, meaning they may be less likely to accept a lower offer.
- Your viewing checklist may have identified issues which you think should be reflected in the price – if there is work to be done which you have noticed you may want to make a lower offer. Most prices are subject to your homebuyer’s survey, so if there is something which you have missed or aren’t qualified to spot, this should be flagged up when you commission a survey.
- Find out about the fixtures and fittings included in the sale. If the kitchen has a large freestanding island full of appliances which aren’t included, you will need to buy those appliances when you move in. The cost of these items can add up and it’s worth considering.
- Your financial position can also put you at an advantage. If you are a first-time buyer, you aren’t in a chain or have a pre-arranged mortgage you are in a better position and should be sure to make this clear to the estate agent when making an offer.
- If you enter into negotiations, be absolutely clear about what your budget is. There are other costs involved in buying a home, such as stamp duty, mortgage fees and the removal fees, which should be factored into your overall budget.
- Ask the estate agent if there is a price the seller has in mind when viewing the property. They may remain vague and say "close to the asking price", or they may give you an insight into what the seller is hoping for. It’s always worth asking.
Making an offer and negotiating:
- To make an offer, you need to tell the estate agent. A telephone call followed-up by an email means you will have confirmed your offer in writing, which may be useful to you in the event of any confusion.
- The estate agent is legally obliged to pass your offer on to the seller, even if it is low or unrealistic.
- If your offer is rejected, negotiations can start.
- While you are looking for the best possible price, so is the seller. The seller is likely to have a figure in mind, but there are factors which may mean you have a better chance of securing the property for less than the asking price:
o When a house has been on the market for a while, a seller may accept a lesser price in order to sell.
o If the seller is in a hurry, perhaps due to personal circumstances or looking to buy a house they are interested in, they may accept a lower offer.
o If there are fewer buyers, you could be in a good position to negotiate.
o If the seller is expecting an offer between 5% and 10% lower, that may be factored into their asking price, so a lower bid is worth a try.
- In open negotiations, the estate agent advises you of higher bids, giving you the chance to raise yours to secure the property.
- Should you offer more than the asking price? This is dependent upon your situation, generally people are only likely to pay more if they are desperate to buy the property and are, of course, able to afford it.
- Remain as practical as you can. Be realistic about your offer and what you can expect – accepting an offer which is below the asking price is at the seller's discretion. If a seller has the time and they think they may get a better offer by holding on, they will.
Once your offer has been accepted:
- Agents use a variety of terms to confirm an offer has been accepted, but the paperwork is yet to be completed: Under Offer, Sale Agreed, or Sold Subject to Contract which can also be written as SSTC or simply STC, for example.
- The seller may request a holding deposit. It is a sign that you are serious about buying the property and is meant to deter those who aren’t serious. Citizens Advice states this is usually between £500 and £1,000. Be sure to ask about this further: will it be refunded if you withdraw your offer? Will it be refunded if the seller pulls out of the deal? Who is this payable to? Be aware that if you pay this direct to the seller, there will be no security for your money.
- Remember that either party can pull out of the contract up until the exchange of contracts, which is when the sale becomes legally binding.
- Once your offer has been accepted, ask the seller to take their property off the market. They don’t have to, but you should consider why they might continue to market their property – are they holding out for a better offer?
- Should another, higher offer be made and accepted for the property, you are described as being ‘gazumped’. This is more common when a lower offer has been accepted.
- Once your offer has been accepted, start working on the next stages as soon as you can.