Step 5 - Making an offer
You've done your homework - now's the time to get serious
In this article you'll learn:
How to get your home for less by offering low.
The various factors that will effect how much you can offer.
How to get yourself in to the strongest 'buying position.'
How much to offer for your new home.
You've come a long way from Step 1; you know how much you can afford, your credit file is tickety-boo, you have been provisionally approved for your mortgage, your solicitor is ready to go, and you've found a property you would like to buy. Brilliant - things start to get serious now and it's time to put your money where your mouth is and put an offer forward. But how much do you offer?
Start low [HINT: Most people don't start anywhere near low enough]:
How much you offer depends on a number of factors (more on that shortly), but one thing is for sure - most people do not go low enough on their first offer, for fear of 'offending' the estate agent or person selling the home you're looking to buy.
Rule No. 1: NEVER worry about offending an estate agent - they're a thick skinned bunch!
If you start low, you can always go up - but if you start high, you can't come back down again. Starting low allows you to get a feel, from the estate agent, for how 'motivated' the seller is to sell. Estate agents work for the seller and not you - it's in their interests to get as much money for the property as possible. However, it's also in their interests to sell the property quickly. Generally, the two do not go hand-in-hand.
Here's a few things to consider...
Factors that effect how much you can offer:
How long has the property been for sale?
If a house has only just come on the market, the seller is going to be FAR less open to offers than a house thats been sat around for 3-6 months with very few offers. They'll be more likely to wait to see what other offers come in that are closer to their asking price.
Is the asking price fair?
Do some on-line research and you'll instantly get a feel for whether or not the price the seller is asking is fair. You'll be amazed at the number of people who over-value their houses. It's also worth checking what houses in the area actually sold for, and even how much the home you are interested in sold for. Just go to Right Move - Sold House Prices and tap in the postcode.
What is the housing market like?
If it's a buyers market it means that there are too many properties on the market, and therefore sellers are much more likely to take lower offers. If it's a sellers market - there are not enough properties on the market, and sellers will get much nearer to their asking price (sometimes more). The state of the market has a big impact on how much you will pay for your new home.
What is the condition of the property?
If the house you are looking to buy is in mint condition, it's more likely to fetch a higher price than a place that needs work. If you don't mind taking on a project, this is where you will find the best bargains and, if you're a first-time buyer, you'll be able to add some real value if you get your hands dirty.
Who is the seller?
If you are buying a new house from a builder, they are less likely to accept offers that are below the asking price. They will have carried out their own market research and will be confident in the price they have set. If the seller is a private individual, and they are buying another house, you will have a greater chance of getting away with a cheeky offer.
Make sure you're in best buying position:
When you're looking to put an offer forward there is a good chance that there will be others also showing an interest in the same property. When this is the case - the estate agent (and the seller) will look at the merits of each potential buyer and show a preference to the one who they consider to be in the 'Best Buying Position' i.e. the person they feel is most likely to a) complete and b) in the fastest time.
The good news for you is that the first 4-steps of our buying guide has already made sure you are in a strong buying position. Here are the things the agents are looking for in a buyer:
This is a MASSIVE deal and guess what? As a first-time buyer, you are chain-free. This means that you are not having to sell anywhere and are at the bottom of the chain. Estate agents LOVE you guys and you've just just got yourself pretty near the top of the pile.
Buyers who have their mortgage in place
If you can show an estate agent that you have been provisionally approved for your mortgage (this is called a Decision-in-Principle), then you're demonstrating you mean business. As a result, you will be taken more seriously than someone who has not even started the process.
You have a solicitor
Now you're really starting to shine as someone who has got their sh!t together. Having your chosen solicitor waiting in the wings means you've done your research and are ready to go.
Make your offer
You've done all your homework and now's the time to approach the selling agent with your offer:
Gauge the estate agents reaction and offer accordingly. You'll soon know how near to (or even over) the asking price you'll need to go.
Start off 7% - 10% lower than the asking price - if the sale price is £200k, offer £180k - £186k.
Estate agents are legally bound to put any offer they receive, forward to the seller.
If your first offer is refused, go up in small increments of £2,500 - £5,000.
...and that's how you blow your competition out of the water. Booom!
Would you like to speak to John about your mortgage?
When it comes to mortgages John knows his eggs. His job is to review your individual needs and recommend the mortgage that going to cost you least over the coming years.
The 'Essential 6-Step Guide' to buying your first home:
Step 1 - Know your figures
If you don't know your figures, then you won't know how much you can afford.
Do you sums now and save time later
Step 2 - Get your credit file
Ensuring your have a clean credit file is a must when your buying your first home.
Get your free file now
Step 3 - Choose the right mortgage
Finding the right mortgage can be a minefield of options.
How to find your perfect mortgage
Step 4 -Find a great solicitor
There's a HUGE difference between a good one & a bad one.
How to choose the RIGHT one
Step 5 - Make an offer
Put yourself in the best buying position & blow the competition out of the water.
How to get your house...Fast
Step 6 - From offer to completion
Keep control of your home purchase & make sure you're in the know.
Get informed - Take control