OK – so after much searching, wailing and gnashing of teeth you’ve finally found the property you want to move into. You’ve seen 20 odd homes and this one ticks all the right boxes: garden, garage, utility room, space for little Johnny’s Pokémon collection and even an annex for Aunty Edna. You have your mortgage in place, the stars are aligned and you can even see a moving-in date looming into view. What could possibly go wrong?
The offer is crucial.
Firstly, what’s a fair and reasonable price? Well, one of the things to find out is the price of similar properties in the area. This may be particularly useful if you are looking to make an offer below the current asking price. There are other considerations too of course…how long has the property been on the market? If it’s been a while, it may indicate the property is overpriced, potentially giving you some leverage. 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. Also your viewing checklist may have identified issues which you think should be reflected in the price – if you notice that there is work to be done for example, you may want to make a lower offer. Most prices are subject to your homebuyer’s survey, so if there is something you have missed or aren’t qualified to spot, this should be flagged up when your survey is completed.
Your financial position can also put you at an advantage. If you are a first-time buyer, if you aren’t in a chain or if you 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, as this is attractive to potential buyers. 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 your 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.
To make an offer all you need to do is you need to tell the estate agent, who is legally obliged to pass it on to the seller – even if it’s unrealistic. 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.
If your offer is rejected then it will be time to begin negotiations. Now, obviously you are looking for the best possible price, but remember so is the seller! They may well have a figure in mind but there are factors which may give you a better chance of getting a lower price, for example:
- Has the house been on the market for a while? The seller may accept a lesser price in order to sell.
- 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.
- If there are fewer buyers interested in the property, you could be in a good position to negotiate.
- If the seller is expecting an offer between 5% and 10% a lower bid is worth a try.
In open negotiations your estate agent will advise you of higher bids, giving you the chance to raise yours to secure the property. Try to 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 estate agents use a variety of terms to confirm that an offer has been accepted but the paperwork is yet to be completed: examples include 'Under Offer', 'Sale Agreed', or 'Sold Subject to Contract' which can also be written as 'SSTC' or simply 'STC'.
The seller may request a holding deposit as a sign that you are serious about buying the property and is meant to deter those who aren’t serious. 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 directly to the seller, there will be no security for your money. Also it is important to 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.
For any further help or advice please get in touch – we’re always happy to help!