After spending months or years saving for a house deposit, finally placing an offer on a house is the last step to take before entering the buying process. In the period between negotiating a house offer and starting the legal part of the home-buying process, there are a few hurdles to be aware of. Here are a few pointers on how to liaise and deal with sellers, advice on understanding the seller’s mindset, and coping with a chain of sales.
When you find a home that meets your requirements you should check the seller’s asking price in relation to the local and national housing market. A quick look at Land Registry reports for houses in the same area can give you a rough guide as to what similar houses or flats in the immediate area have sold for.
At this stage you may also want to check whether any surrounding properties have planning permission for any new developments that may affect your quality of living, or if there are development plans for local housing schemes. Although these “searches” will formally be done by your conveyancer later on in the process, knowing this information early on can be a useful in negotiating your house offer.
Making your opening offer
Don’t get too bogged down in comparing house prices of neighbouring properties – no property has a fixed price tag, and it is only worth what a buyer is prepared to pay for it. When making an opening offer on a house you may want to bid as much as 10 per cent lower than the asking price. This is likely to be knocked back by the seller, but both parties can use this offer as a starting point for future bids until an agreement is reached. Seek advice from friends or parents with experience of the local area; however, don’t feel you can’t bid a lower amount – the worst that can happen is that they decline the offer.
It’s common for first time buyers to consider emotions too highly in their decision-making process. It is the estate agent’s job to get the best price possible for a property (remember they work for the seller, not for you) so they will often go to great lengths to stress the lifestyle benefits of a property. However, you need to think realistically about how your lifestyle might change in the years you’ll be in the property. Is there enough storage space? How would living there affect your commute to work? Who else might want this property and how easy would it be to sell in a few years’ time should you wish to move on?
The old adage is to always try to buy the worst house on the best street, and this can certainly hold true. Every street has a “ceiling price”, past which investment in a property in unlikely to add value when you come to sell. Consider this and ask yourself whether you are paying a premium because of your emotional attraction to a property, rather than its actual value. Buying a house is a major financial commitment, and it pays to be practical; if in doubt, take a step back and listen to your head rather than your heart.
The response to your opening bid will depend on a number of factors – how quickly the seller needs to sell, how long the property has been on the market and how many other parties have indicated an interest in the property. Do remember that you can always increase your offer, however you can’t reduce an offer without good reason (for example, a survey revealing defects or damage). Negotiation can work to your advantage, but any offer you put on the table should be made in good faith.
Ensuring a seller is receptive to your offer
In order to appeal to the emotions of the seller you may wish to try and strike up a friendship or connection between both parties. Show an interest in their future plans whilst also impressing upon them how keen you are to buy their home and the reasons why the property fits your requirements so well. Selling property is a people’s market. Would you sell your property – a home with many treasured memories – to a buyer you thought unworthy of appreciating it in the same manner?
At the same time, it is important not to appear too keen, as the seller will know you will go the extra mile (and pay the extra pounds!) to get your hands on the deeds. Don’t walk around the property exclaiming, “This is the one! We’ve got to have it!” Your negotiating power will be immediately limited. If you are in any doubt, take a trusted friend who knows you, knows how you like to live your life, and who will give you an honest appraisal from a different perspective.
Aside from your own offer, the seller is likely to be involved in acquiring their own new house. As a first time buyer you are in a strong position to allow someone to move quickly into getting their next property. Therefore it’s very important to stress your position to the seller as well as the estate agent. If you are living at home with parents, have a mortgage agreed in principle and a conveyancing solicitor already in mind, then a seller wanting a quick sale might be more willing to negotiate on price than with someone in rented accommodation with six months still on their tenancy who doesn’t know their true mortgage budget.
It is also highly recommended that you show patience and understanding if you are part of a moving chain – an act of goodwill is sure to be remembered favourably if a seller is faced with multiple offers on their property. Also remember that when you make an offer, the seller’s estate agent will ask to see your proof of identity, so make sure that you have the necessary documentation to hand to avoid any delays.
Having an offer accepted
Whether it has happened quickly or been a long, drawn-out negotiation, receiving a formal acceptance of your offer in writing makes it all worthwhile. With around one in three house purchases falling through at some stage of the process, it is important to ensure your seller is made well aware of any terms and conditions of your offer. Liaise with your conveyancer to ensure that your offer is made subject to contract and a satisfactory survey, leaving you an escape route should the survey yield reveal anything that causes you to withdraw or revise your offer.
Last reviewed May 2016