So you’ve found the one, and you want to make an offer. Although it might be exciting, don’t just rush in and make the first offer that comes to mind. You need to have a strategy. Remember the list price isn’t necessarily what the house is worth, you need to do your own research and make an offer which suits you.
Everything you learn about the property should inform your offer. You will obtain all the essential information from your viewings, the agent, vendor and other research you carry out online. Getting to know as much as you can about the subject property will enable you to formulate a good offer strategy. The things you should be looking for are:
If the vendors are in a rush to sell, they might be open to accepting a lower offer. Likewise, if there has been limited interest, there might be an opportunity to bag a bargain.
Use an affordability calculator or talk to a mortgage advisor to find out how much you can afford.
Before making an offer, the agent might ask you to provide evidence that you are in a position to make the offer. Sending them a copy of your AIP (agreement in principle) from the lender tells them that you are serious and have the financial backing to make the offer.
Don’t forget about the other costs such as your solicitor, survey fees, mortgage fees and deposit. Incorporate all the costs you have calculated for home improvements and ensure you have enough money for all these things too.
Getting an RICS Homebuyer Report (Level 2) or RICS Building Survey (Level 3) is an essential part of the buying process. To ensure you are buying at a reasonable price and are aware of any significant or costly defect, get a quote from us today.
Once you’ve collected all the relevant information, you’ll need to consolidate it all to calculate an offer figure. Use the list price as a point of reference and deduct anything you think negatively affects its value. Detractors could include anything from defects you’ve noticed to the seller being in a rush to sell. Always anticipate that the vendor will reject your first offer, and leave a bit of room for increasing it if they do.
This process is all about your judgement. If you use a degree of financial awareness, you might find that you end up with a bargain. Many property developers and investors make a living from implementing good judgement when buying a property. The average homebuyer can do the same.
Remember that there isn’t an exact figure that is correct. A house is only worth what somebody is willing to pay for it. And so you must always remember this as your overriding policy in developing your offer strategy.
Make your offer sound more attractive by explaining why you are the perfect buyer. For example, you might not be in a chain, which makes you a more attractive buyer than someone who is because it means less delay for the seller.
Other things include
Tip: Writing a note about how much you love the property might just put you ahead of the competition. It might sound cheesy, but it’s actually quite clever. If a seller is emotionally attached to their home, it will put them at ease knowing the buyer will look after it, just as they did. Tread carefully though, you might come across as too keen, and they could take advantage.
You would typically submit your offer verbally by calling the estate agent. But you could also do this in writing, followed up by phone to ensure it’s received. Making a written offer may be more suitable when you want to explain why you are a suitable buyer. Never explain how you calculated the offer though, as this may give away your strategy.
Always state your offer is subject to contract and survey. Saying that it is subject to contract and survey lets the seller know that you might renegotiate if the survey picks up any significant issues. It will also inform the seller that you are serious about the offer as you will be making a financial commitment by instructing a surveyor. Having a survey carried out might put them on the back foot as they become nervous about what the surveyor will find. This can be a good thing, as it questions their expectations. Hold your nerve though, don’t let the fear of them being put off stop you from following through on your promise. A survey is essential to protect your investment. As part of your offer, state that the vendor should take the house off the market, this reduces the risk that someone will gazump you.
Once you have submitted your offer, the agent is obliged to pass the information on to the vendor to consider. Ask for confirmation that both the agent and vendor have received the offer. After this, wait it out and see what they say. Be prepared for a bit of back and forth if they reject your offer. Most first offers get rejected so don’t be disheartened. You should have allowed for a rejection in your calculation, which will give you a bit of room to increase if needed.
If your offer gets accepted, you’ll now move on to the next stages which include instructing an RICS surveyor, and a solicitor and finalising your mortgage arrangements.
Disclaimer
The material contained in this article is intended for information purposes only and not as advice. We take no responsibility for the result of any actions you take as a result of reading this information.
You should always obtain professional legal or other advice if you are unsure about the effect on you of any matter in this article.
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