How to make an offer on a house
Should you make a cheeky bid? Discover how to offer on a house and get accepted.
Property market insight
Let’s set the scene. You’ve viewed a property, fallen in love with the floor-to-ceiling windows and parquet floors, and you’re ready to open your wallet and make an offer. But how do you know how much to offer on a house? Get yourself comfy and read our guide.
Work out what you can afford
Before you make an offer on a house, you should set a ceiling on your highest possible purchase price. If you haven’t done so already, the best way of knowing what you can afford is to hire a mortgage broker to find the right deal, and to undergo an affordability assessment from your chosen lender to obtain a ‘mortgage in principle’ — read more in the Nested guide to mortgages. While you can still make offers without a mortgage in principle, the estate agent and vendor are more likely to take you seriously if you go through this process. Remember that some properties will need immediate repairs and maintenance, so you may need to leave some funds aside for a rainy day.
Do your homework
Summon your inner Sherlock Holmes and investigate the recent (one to three months) sold prices in the area, especially for similar properties. Asking prices don’t necessarily reflect the eventual purchase price, but can be a good barometer of current market conditions. Check out the Land Registry website, which publishes actual sales figures. If you’re buying a flat which seems suspiciously cheap, find out the lease length as otherwise, you could face an expensive lease extension further down the line.
Beyond the bricks and mortar, there are lots of other factors you should consider before making an offer. What are the local schools like? Rightmove’s ‘school checker’ feature is replete with Ofsted ratings and admissions criteria for primary and secondary schools. Elsewhere, there are online tools which can show you the exact outer reach of a school’s catchment area based on the most recent available data. Other factors to consider include transport links, as a new train line — or conversely, any planned reduction in service — can affect long-term property prices. Don’t forget to research any planned infrastructure projects and developments; a new cinema complex might be nice, but a new airport runway or belching power station, not so much.
Many buyers make the mistake of not checking the flood defences of an area. Unless you’re willing to risk eye-watering buildings insurance, you should input the property’s postcode into the government’s handy flood map to figure out the risk levels. What’s more, your personal safety is understandably a priority, so research local crime levels online using the official police data to put your mind at rest, or confirm your fears!
How your estate agent can help
Perhaps the most important thing to remember is that your estate agent works for the seller, and will aim to secure the best possible deal for them. That said, your agent can be useful when it comes to scratching beneath the shiny property ad. Ask how long the property has been on the market — you can always Google it to double-check — and enquire as to how long the owner has lived there, why they’re leaving, and whether the viewings have been busy. All these questions can help you build a picture of the seller’s situation and the likelihood of getting your offer accepted.
It’s also important that you understand the vendor’s position in a chain; if they already have their heart set on a new property, they may be open to offers. In theory, your agent is allowed to disclose details of any offer received, so long as they follow the correct procedures; according to the Property Ombudsman, they must obtain the seller’s permission first, and inform any would-be bidders that their practice is to reveal offers. If an agent discloses an offer, they must share this information with all prospective buyers who have skin in the game.
Play it cool
If you’ve stumbled into the home of your dreams, it’s understandable if you can barely contain your excitement, particularly if you’ve been on a wild goose chase. But remember you’re playing a poker game, and too much enthusiasm will tell your estate agent that you’re willing to stretch your budget to the limit. You may face tough competition, so in general, it’s a good idea to play the long game and not be too disheartened if things don’t work out.
Should I accept an offer before I make bids?
There’s nothing to stop you from making bids before your own place is under offer, but to give yourself the best chance of having a bid accepted, it certainly can’t hurt if you’ve already said yes to an offer. If your own viewings have only produced tumbleweed so far, don’t be surprised if any offer you make is answered with a provisional ‘yes’, as the vendor will probably keep the property on the market until they’re confident you’re in a position to move. If someone else matches your bid and they’re further along the chain, you may find yourself escorted to the back of the queue. For this reason, some people even choose to wait until they’ve sold a property to give themselves extra muscle as cash buyers.
How do I make an offer?
So, you’ve set eyes on a property and it’s love at first sight. What happens when you make an offer on a house? First, you should call your estate agent and make a verbal offer, followed up with an email to confirm the offer in writing. You should also provide:
- Proof of funds, such as a bank statement showing the deposit amount
- Your mortgage agreement in principle
- Proof of ID
- Proof of address.
The law states that the agent must inform the seller of your offer, regardless of the amount. Offers must be confirmed in writing to all parties within 48 hours of being made. You may hear back straight away, or the owner may mull it over in the hours and days that follow.
How to make a house offer more attractive
While the money on the table is ultimately what will turn a seller’s head, there are other key advantages that may apply to you.
- Chain-free status — first-time buyers, those who’ve already sold and yes, good old Nested customers, can move quickly.
- Flexibility — if you’re willing to wait and you have somewhere else to hang out, the seller may appreciate having more time to find a place of their own.
- Mortgage in principle approved — you’ll be taken seriously as a buyer if your lender has given the thumbs-up (in theory) for your home loan.Can you tug at the heartstrings?
Can you tug at the heartstrings?
You never know what might swing it for you, and while the vendor will most likely accept the highest bid, you could always write a note accompanying the offer which explains why you love the property. If, for example, you’re buying from a family and you have children yourself, that may persuade the vendor to sell to you, rather than say, a buy-to-let developer. Nothing is guaranteed but if there are two equally attractive bids, sometimes the fine margins can make all the difference.
How much should you offer on a house?
It’s a general rule of thumb that an opening offer can be 5% below asking price, or up to 10% if you’re feeling optimistic. Any lower than that, though, and you run the risk of irritating the vendor and estate agent, who may not consider you a serious buyer.
In reality, working out what to offer on a house or a flat depends a great deal on market conditions. If properties are selling fast, you may have to meet (or exceed) the asking price. If the market is stuck in the mud, you may have scope to haggle.
It’s normal for an opening bid to be rejected, so don’t be surprised if the seller bats away your first offer. Realistically, you’ll want to be able to increase your offer, even if it means meeting the asking price. If you suddenly have competition and you need to break the bank, think carefully about what you can afford, and go with your head as well as your heart. In the end, you might need to make a final offer, in which case, remember that ‘final’ means final!
What is a sealed bid?
If you find yourself in a bidding war, you might be asked to make a sealed bid. As you may have guessed, this traditionally meant you’d have to write down your offer, seal it in an envelope and give it to the estate agent. These days, it’s more likely that you’d be asked to simply email your bid to the estate agent before the agreed deadline. The seller will then have their pick of the bids, and will accept the best offer — note, this doesn’t always mean the highest offer, as sometimes the seller may want to move quickly and will consider the merits of each bid. So even if you think you don’t stand a chance, submit your best proposal and you never know! But remember, you only get one opportunity, so if it does come down to money, adding a few pounds or pence to your offer could make all the difference.
Sealed bids are usually good news for a seller as it shows there is strong interest in the property. They’re also more common than you might think, and have been a feature of the London sales market during periods of high demand. As the buyer, you should keep your cool, stay within your budget and consider how much the property is really worth to you.
When is the offer legally binding?
Once you’ve had an offer accepted, it only counts for real at the moment you exchange contracts. This means until then, there is still a risk of being gazumped, which means the seller has accepted a higher offer at the 11th hour. This is why it’s important to get the seller to ‘take the property off the market’, which more accurately, means marketing it as SSTC (Sold Subject to Contract) and cancelling all viewings. If they don’t, you may want to hold back from spending thousands on surveyor and solicitors fees until you’re assured the sale will go ahead. For their part, your agent may be reluctant to take a property off the market until you’ve received your mortgage offer and have begun to incur costs. Remember, the agent is working for the seller and they will protect their client’s position.
It’s a little different in Scotland, where an accepted verbal offer soon leads to a legally binding contract drawn-up by each party’s solicitors.
When should I withdraw an offer?
Not every house hunt has a happy ending, and there may come a time when you simply have to pull out of a purchase. Your survey is there to find fault, so don’t expect it to say everything is rosy. If your survey highlights serious structural defects or causes for concern, you can discuss them with your agent and provide a copy of the report. Your agent can then raise the matter with the seller and recommend further action. A ‘bad survey’ doesn’t necessarily warrant a withdrawal, but you’re within your rights to revise your offer down, or ask the seller to fix the problem. Legally, you can even reduce your offer at any stage before you exchange, known as ‘gazundering’, but unless you have a good reason, it’s a dubious practice and not advisable.
Ultimately, a property is worth whatever someone is willing to sell for, so take everything into consideration and decide whether the home in question feels like good value to you.
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