How to Make the Best Offer on a Property
You’ve found the property of your dreams and now comes the minefield that is putting in an offer. Whilst your estate agent can give you their best advice, it is up to you to decide what you’d be willing to pay for the home. It can be a game of cat and mouse between you and the vendor, so knowing how to make the best possible offer is paramount.
Questions to ask your estate agent
Whilst your estate agent may not know everything you’d like to know about the home, they should at least be armed with any basic information. Most agents will contact the property owner if you have any questions they cannot answer.
You should go to viewings with a list of questions prepared relating to the property and the area. Ask such things as why the owners are leaving the property, what the neighbours are like, whether the property is at risk of flooding and whether it has had any major work carried out on it.
There is no harm in taking a list of questions to tick off as you view a property and a pad to take notes.
Before you make an offer on a property, consider the following points to help decide what to offer:
- Are the owners in a rush to sell? Do they need to sell by a certain date?
- How long has the property been on the market?
- How many people are considering putting an offer in on the property you want?
- What have properties on the same street sold for?
- Are the owners accepting offers in the region of? Offers over a certain amount?
- Could you afford the property comfortably if you had to offer the asking price?
How to make an offer on a house
The estate agent will handle the process of putting in offers for you. By this point they know the seller well and they are aware of your situation too. However, remember that the estate agent works for the seller and the higher the property sells for, the more commission they receive!
Before you put in a first offer, agree a figure that would be the absolute maximum you would be willing to spend on the property.
If there isn’t much interest in the property, you could put forward an offer around £15,000 below your best and final offer. Whilst it may seem cheeky, it will give you a change to gauge the reaction from the agent and their client. This also gives you £15,000 worth of negotiation space.
If there are multiple offers coming in, you will need to change your strategy and the seller’s agent will keep you abreast of any counter offers placed. If your maximum is lower than the asking price, the agent may suggest you put in a best and final offer.
Be sure that your estate agent highlights any buyer strengths to the sellers. These could include:
- Being a first-time buyer
- Being a chain-free buyer
- Having your mortgage agreed in principle
- Being an enthusiastic buyer and keen for the property
- Being flexible to the seller’s requirements
What happens after you make an offer?
Once you have made an initial offer it will either be accepted or declined. You may also be out bid by somebody else. If your offer is rejected or you are outbid, you can put in another offer. This process can go backwards and forwards multiple times.
If you have an offer accepted, the seller’s agent will draw up a document for you that is titled ‘subject to survey and contract’. At this point the house is not yours and either party can pull out if they wish.
At this point you should get in touch with your mortgage provider. You will already have an agreement in principle with them, so completing the full application won’t take long. You’ll need to supply:
- Your passport or driving license
- Proof of address (council tax or utility bill)
- Your three most recent payslips
- Your most recent P60
- Any details of credit commitments
- Student loan
- Credit card statements
If you’ve had an offer accepted, ask the seller’s agent to take it off the market. Be aware that they do not have to.
Removing the property from the market means a less likely chance of somebody else sneaking in and offering a higher price to the sellers. Yes, this can happen even when a seller has accepted your offer and it is called gazumping. It is completely legal but not good etiquette in the property world.
Sometimes you are able to put down a non-refundable deposit to lock-in the sale and protect you from gazumpers. However, not all agents operate in this way.
The final stages
After conveyancing and surveys are complete and all the paperwork has been completed, you will be ready to insure the building. After this you will be able to exchange contracts and move in.