Making an offer on a house
Buying a house is one of the biggest expenses you can have and sometimes, can be daunting, especially as a first time buyer. Let’s say you found your dream house and you want to seal the deal; however, making an offer can be tricky. With the following tips and tricks, you can make it a smooth process.
When comes to making a bid, are couple of things you should consider before it.
- Do your research – Before you make an offer on a house, you should do your research on that specific property, and the house prices for the area. You should answer couple of question within your research: “For how long the property have been on the market?”, “Have been huge discounts in the asking price between periods?”, “For how much any similar property have been sold in last 3 to 6 months?”.
- Keep your emotions in control – Try to keep your emotions in control when comes to buying a house. Sometimes this proves to be difficult, especially when your are a first-time buyer and you get love at first sight. Emotions will overcome you and you will get this rush as to get it immediately. Try to remember: Shop with your mind and use your budget as a guide. Don’t look at houses you cannot afford as you will end up disappointed. And never rush a decision.
- Find a trusted and reliable professional – Finding a reliable estate agent, or any professional in principle is vital and usually, what you pay for is what you get. Always, look for an good professional, chosen by you, and do not be afraid of asking all sorts of questions: “What is the reason for the sale?”, “What are the most recent works carried out?”, etc.
- Always stick to your budget – It does not matter how much money your lender is prepared to give you, you should always stick to your budget. Do not forget to include within your budget any legal or extra fees, such as a surveyor fee, conveyor fee, service charges, etc.
- Arrange a Mortgage in Principle – To be considered a serious buyer, the estate agent will always ask first for a mortgage in principle. So, do not waste your time and first thing first, start your mortgage application before start looking at properties. The mortagage in principle will define your house price range.
- Talk to a Conveyancing Solicitor – By this time, you should have decided on what solicitor you are going to use. And sharing this information with your seller and/or estate agent indicates that your are serious buyer.
- Room for negotiation – Usually, the house price will be between 5 to 15% higher than the actual value of the property. Start with a low offer as you can always increase it if is not immediately accepted. Remember: leave room for negotiation and keep in mind your budget when you make an offer for your dream house.
- Let them know your circumstances – If you are a first time buyer, you should say that when you put an offer forward (there would not be a property chain for the buyer) as it could give you an advantage over other buyers. Sometimes, a seller will settle for a lower price in exchange for a no chain buyer.
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As mentioned before, a property will be put on the market with a 5 to 15% increase over the actual value of the house. So, you should start from there. However, if a survey is carried out and serious issues were highlighted during the inspection, the offer can be renegotiated.
More than a fifth of sellers will accept an offer 5 – 7% under the asking price – on average house price in UK that means around £10,000 less – if their buyer is chain free and has a mortgage agreed (Source: which.co.uk)
As a simple answer: any offer needs to go through estate agent. It is their responsibility to take each offer to the seller and then come back to you on their decision.
We recommended having your offer on a house in writing, either by email or letter. We even encourage to writing down your reasoning for your offer, especially if quite low to the asking price.
Once your offer has been accepted, the estate agent should remove the listing from their online portfolio. However, sometimes they would not do it to keep their options open for higher offers, known as gazumping. Make sure, you stress that the house is removed from further offers and that your offer is subject to a survey.
If your survey report shows any damage to the condition of the house, you should ask to renegotiate the asking price or any serious issues to be resolved before the exchange. (We would recommend asking for proof of repairs/remediation before your contract exchange).
The purchase isn’t legally binding after the offer has been accepted, this is only after the exchanging of contracts (the purchase is official once the contracts have been exchanged and to withdraw from this transaction usually means to lose your deposit).
Written by Danil P.
27th Sep 2021 (Last updated on 5th May 2023)
4 minute read
