Once you find the perfect property for you, it is natural to want to secure it as soon as possible. But first, you must go through the process of making an offer on a house.
This process can be a bit tricky, given that you want to make an offer that secures the house, but you don’t want to pay more than needed. Do you put in a high offer to clinch it, and risk wasting money? Or, do you make a lower offer and risk missing out on your dream home?
If you’re a first time buyer or if you’re not familiar with property negotiations, this ‘How to make an offer on a house’ guide will help put you in the best position when starting negotiations with the seller. In this article, you will find tips and guidance that will help make the process of submitting and negotiating a house offer as smooth as possible.
The first thing you need to do when thinking about making an offer on a house is do your research.
You should look up asking prices and sold prices of similar properties in the same area as the one you’re hoping to purchase. This will help you better understand the local housing market and ensure that the price you’re offering is right for the property.
Once you’ve gathered all the information needed to properly inform your house offer, it’s time to submit it. However, many first time buyers fall at this first step – don’t make an offer directly to the seller.
Instead, the correct procedure for putting in an offer on a house is to go through the estate agent. It is often best to submit your house offer over the phone and follow it up in writing to confirm, just in case anything gets missed during the call.
Your property offer letter/email should include:
Next, it is up to the estate agent to inform the seller of your offer. By law, they must pass every offer they receive to the seller. They will then notify you as to whether your offer has been accepted or not. If your first offer is accepted, congratulations! If it’s a no, it’s either time to continue your property search or enter into negotiations.
If you choose to start negotiating on the house price, before making a second offer, it’s a good idea to ask if any other offers have been made and whether they’re higher than your first offer. This will help you determine how much to increase your house offer to get it accepted, but without going higher than necessary.
Throughout this process of making an offer on a house, it is important to keep reminding yourself of the offer limit you originally had in mind. You need to seriously consider whether it’s worth offering more money and take into account any extra fees you might have to pay, such as stamp duty or surveys.
Just to make ‘How to make an offer on a house’ that bit more confusing, let’s introduce two different types of bids.
When estate agents invite offers on a property, they will specify whether they want open bids or sealed bids.
Open bids are when the estate agent can tell you what other people have offered and whether the seller knows the price they would be willing to accept.
Whereas, sealed bids are when you’re invited to submit an offer in an envelope, and you won’t know the amount other parties have offered. At the end of the process, the seller will collect all the sealed bids, open them and choose the one they want to accept.
This means that there is no opportunity for a buyer to increase their bid. It can be a way to lure people into making higher offers, or simply a means of speeding up the offer process.
Before making an offer on a house, it is important to work out your budget so you know how much you can offer. The simplest and most accurate way to do this is to apply for your mortgage first. The maximum mortgage you can comfortably afford, plus however much you’ve saved for a deposit, is your budget.
When deciding how much to offer on a house, the asking price is a good place to start. It is likely that you will be able to secure a lower price than the initial asking price, however, the final accepted offer could also end up being higher if the seller receives a lot of realistic offers.
Always keep in mind that you should never offer more than what the property is worth, or more than you can afford. There are two potential bidding strategies that you can use to negotiate the house price:
Making an offer on a house is one thing, but winning the bidding war is another challenge altogether. As unnerving as it might be, there are some steps you can take to increase the chance of your offer being accepted:
It is a great feeling when your offer is accepted, but be aware that the deal is not legally binding until the contracts have been exchanged.
This means that there is still a risk that the seller could back out or that another person could gazump you by putting in a higher offer which the seller decides to accept.
In fact, currently, around 1 in 3 property sales fall through as a result of the buyer or seller pulling out of the deal.
To avoid gazumping, you should ask the seller to stop marketing the property. This will minimise the risk of other buyers being able to find it and reduce the risk of them putting in an offer for the house.
If you are gazumped, you could potentially lose hundreds or even thousands of pounds in unnecessary survey fees, land search fees and solicitors fees. There is not much you can do to get out of it except counter-gazump, but this could cause you to go above your initial budget.
Next, you can enlist a solicitor to handle your purchase and speak to your lender to finalise the mortgage agreement. Usually, it takes between 4 and 12 weeks to be in a position to exchange contracts, but it can take longer.
In this article we have outlined how to make an offer on a house for first time buyers. Hopefully, these tips and tricks will help you get your first offer accepted so that you can secure your dream first house.
When it comes to making an offer on a house, make sure you are prepared and stick to your limit.
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