This blog includes tips on how to calculate the offer price, making your offer stronger without giving more money, etc. But if you take any one thing out of it, it'll probably be to prepare. The more you prepare, the more collected you are, so you can make a decision you're proud of. The more you prepare, the more serious you look, so the seller can trust you'll do your part efficiently and the estate agent can recommend you as the best buyer.
Step one: know what you can offer
If you haven't already, it's important that you speak to a mortgage adviser. You'll want them to prepare a mortgage agreement in principal (AIP), which will calculate what mortgage and interest rate you can afford. Not only will this be important in making an offer, but you can also use this as evidence of your funds for a vendor.
We recommend our partner, Alexander Hall, who work with all lenders, large and small, to deliver a huge range of mortgage options for you. They can also help you gather the paperwork, submit the application and liaise with lenders, supporting you every step of the way.
We also recommend you speak to a solicitor prior to making your offer. You'll want to have plenty of time to find the best solicitor for your situation, so they can begin their work making enquiries as soon as possible after your offer has been accepted. We recommend you contact Conveyan who will help you ensure you're Buyer Ready.
What's in an offer?
There are multiple strategies for putting in an offer on a house. You might start right out with your real offer to avoid haggling. You might, otherwise, start with a lower offer to give yourself room in negotiations to compromise without topping out your budget. Buyers sometimes try 5-10% below the asking price as a first offer. We only recommend you remain realistic with your offer.
Whatever your strategy, you'll want to make a list of all the factors driving the price. This will be useful, not just in your first offer, but also if negotiations get going. Consider:
- The housing market. Is it a buyers' or sellers' market? Do you have the upper hand?
- How keen is the vendor? Are they in a property chain and need a sale ASAP to free up their funds? Are they just testing the waters and only selling if a price tempts them?
- How keen are you? In the beginning, this can influence how much you want to risk on things like low bids. You may also fall more in love with a property the more you negotiate over it.
- The value. Look into other homes of similar size in the area to see how fair, low or inflated the asking price is. Properties under offer are useful here, as they can give a better indication of value than sold properties, which reflect an earlier market.
- Who’s interested? If you’re first through the door, you think the asking price is fair and you know offers will pile in by the weekend, you might put in an offer at the asking price. If it’s been on the market for a while without a bite, you might have luck with a lower offer. You might even offer slightly over the asking price and ask for no further viewings, on the condition that you hit agreed milestones along the way.
- A speedy timeline. Everyone wants to avoid negotiations that take so long they fall apart. If you can make the process quicker – show proof of your deposit, proof of your mortgage approved in principal/any further funding, have a fully instructed solicitor ready, if your own home is on the market/sold, if you have the necessary documents (including proof of ID and address) ready to go – that’s all worth something. The seller may accept your lower bid over a higher bid from a less prepared buyer.
- The deposit. especially if you’re thinking of bidding low, consider how much cash you can put down upfront. Padding out your deposit can sway an uncertain seller.
- What work it needs. How old is the boiler? How old is the roof? If there is work needed, is it urgent or can it wait? Big repairs eat into your budget for your new home, so are they worth it?
How to make an offer
In the offer letter (or email), you'll obviously want the amount your willing to pay. Here's what else you can include:
- Which factors led you to that amount: what your research of the area found, what you estimate any repairs would cost, how quick the timeline will be, and whatever else you considered when coming up with your offer.
- Your proposed move-in date
- What work needs to be done
- If you have a mortgage agreed in principal/solicitor in place
- The amount in your deposit
- Contingencies: conditions that, if not met, mean you can back out of the deal without penalty. They include 'subject to survey', where the offer is dependent on what's discovered in a survey you'll arrange; 'subject to contract', which means that the legal side of things (the sale contract) has to be satisfactory to you and your legal advisor; and 'taking the property off the market', which is often a request to stop new viewings while good progress is being made.
Always, always send your offer in writing (yes, an email is considered 'in writing'). You need written proof of the full, complete offer to avoid confusion down the line.
The second offer (and third)
Don't be discouraged if the first offer isn't accepted, it happens a lot. Do ask your estate agent why, and get as much information as you can. That way, you aren't blindly offering more money, when that might not be why it was rejected.
Let’s say the seller rejected your offer because of your suggested timeframe. You ask for more information, and you find the sticking point is that you've asked for the 'subject to survey' contingency. Keep asking. You may discover you’re competing with a cash buyer that doesn’t want a survey and could get a sale through quicker. When you know the whole story, you'll know whether to walk away, increase your price or find a surveyor who can visit the property soon.
After you've found the reasons behind the rejection, it's time to figure out what you're going to do. Go back to your list of factors and think about what this property is worth - if you want to make a second offer. When you get to making the second offer, you may want to try and ask what you'd get in return for compromising, especially if you're increasing your price.
If the second offer is rejected too, why not ask for them to put up a counter offer, to see where they're coming from? You might not be able to come to an agreement with the seller. It happens and it is upsetting. But if it does happen, take the positives - you've got a much clearer image of what you want in a new home, a lot of research on the area and market, and experience putting in offers. Talk to your agent and get back out there, perhaps the perfect home is just one more viewing away.
Next steps
If, on the other hand, your offer is accepted, it’s essential that you secure a solicitor (if you haven’t done so already!) A good solicitor can make all the difference – resulting in a swift and smooth purchase.
The market is currently awash with buyers, so we would recommend sourcing a solicitor prior to making an offer to ensure that you’re ahead of the competition.
Whilst there are plenty of great solicitors out there, we recommend Conveyan – Foxtons panel of specialist solicitors. Conveyan work with a number of independent law firms, all of whom have been invited to join the panel based on their previous performance on Foxtons transactions. With a wealth of experience across a number of firms, you’ll always have the necessary expertise at hand. You’ll also be kept in the loop with regular updates, 24/7 access to case tracking via the Conveyan portal, as well as a dedicated solicitor who’ll be your point of contact throughout the process.
All the firms on the Conveyan panel also operate on a no-move, no-fee basis, so if there are any hiccups along the way and you fail to reach an exchange, you wouldn’t be saddled with legal fees.
The other thing you’ll need to do is arrange a survey of the property. It is important to approach this major life investment with all the facts, and a good surveyor will help get you there. We partner with Arnold & Baldwin, property surveyors who provide expert insight, regulated by the Royal Institution of Chartered Surveyors (RICS). They give the honest third-party information that you can use to make decisions, avoid expensive surprises and have confidence in your offer price.
