Negotiating and making an offer
There are many elements to consider when negotiating and making an offer on a property.
The asking price for a property is the price that the current owner would like to receive for that property and it should be a realistic figure within the price bracket given when the property was valued.
Knowledge of the property market in the area will help you to decide what to offer. If you are looking to buy in an area where there is a lot of competition, it is more likely that other potential buyers will offer the asking price. Your estate agent will be able to help you with local market knowledge.
What the seller will consider when you make an offer
When you make your offer, the seller will consider a number of elements:
- Timescale - whether you want to progress things quickly or slowly, is your schedule convenient for them?
- Size of chain - are you also selling a property and will the availability of your funds be affected by this?
- Proof of affordability - it is advisable to have a written agreement in principle from your mortgage lender, to demonstrate your ability to move forward with the purchase
Offering less than the asking price
There are many reasons that you might decide to make an offer below the asking price:
- Other, similar properties in the area have sold for less
- The property requires some work
- The property has been on the market for a long time without any offers
Your bid needs to be sensible and reflect the value of the property. If your offer is too low, then it may not be taken seriously, or may trigger a drawn out negotiation process. In a drawn out process, it is possible that by the time you settle on a price, another buyer may have made a higher bid.
Offering the asking price
Estate agents will be able to tell you if there have been other offers, but not how much they are for. To some extent, this information can help you decide upon the size of your bid.
There are occasions where, offering the asking price - or even more – can be the right decision. In areas where competition is high, property generally attracts many offers and is purchased quickly, exceeding the asking price may be required.
Bidding wars and sealed bids
In such circumstances bidding wars can occur if there is more than one interested buyer. One approach a seller may take in this situation is to instruct their estate agent to contact all potential buyers and ask them to submit a sealed bid. If you find yourself in this situation, put emotions to one side and only enter a bid you are comfortable with.
How to make an offer
To make the offer, you will need to contact the seller’s estate agent and they will manage the process between you and the seller. The offer you submit should be subject to satisfactory survey reports, the terms of the contract and your ability to get a mortgage, which should have been arranged in principle ahead of making the offer.
If your offer is accepted in principle, you may wish to ask for the property to be removed from the market and not shown to any other potential buyers. The seller is not obliged to do this.
You will then need to arrange for the necessary survey. The survey will give you a clear indication of the state and value of the property and go into greater depth than the mortgage lender’s cursory valuation.
Once the offer has been accepted, your estate agent will confirm this to you in writing and your solicitor will begin to prepare the contract ahead of the next phase of the process.
Other things to consider when making an offer
It is important to present yourself as an attractive buyer throughout the process, as this may give you an advantage over others when multiple offers are being assessed. If you are quick to respond to any correspondence, and have your mortgage approved in principle, then the seller and their respective agent may be more willing to sell their property to you.
Buying a property can be very stressful and emotional, and requires a degree of flexibility and compromise. By keeping your options open, and not pinning all your hopes on one property, disappointment can be minimised.