How to make an offer on a house

When you're buying a property, you have to become so many different things - researcher, finance manager, architect or designer, communicator, and negotiator. Not everyone can do all these things - at least, not everything well - so it's always useful to understand what the key things are to give you a better start when it comes to putting in an offer to the vendor of your chosen property.

Making an offer on a house sounds, on the face of it, as if it ought to be straightforward and swift. To a large degree, that is certainly the case, but there are several things you can do to make sure you get the best deal and the right agreement on the price of the property.

The most successful offers, and the ones most likely to be accepted, are those that you have prepared for in detail, covering several aspects other than whether the asking price is too much or not. There is an art to the process of making an offer.

There are a few steps you can take before you get anywhere near making an offer. Such preparation means you will have all the details to hand as well as having the key activities in place that will allow you to move quickly should you find the perfect property.

Check your identification

When it comes to buying a new home, the estate agent and your conveyancing solicitor will carry out checks to verify that you are who you say you are under the anti-money laundering procedures. 

This means that you'll need officially recognised methods of identification - for example a driving licence or passport - that are valid and within date, as well as showing your photograph for full verification. 

So, check that your forms of identification are current and that you know where they are.

Ensure your affordability

It might seem an obvious point but, when you're investing in something as large as a property, you'll need to know that you can afford not only the deposit but also the payments each month if you are purchasing with a mortgage loan. 

The estate agent will likely request documented proof of funds, since lack of affordability wastes not only their time but yours, too. 

Do your research on what mortgage deals are available that are most suitable to your needs. Most lenders have a calculator online that assesses what you can afford and what the monthly repayments will be. This can then be followed up with an application to the lender, who will provide you with a Mortgage in Principle document, which is based on your earnings and how much deposit you can provide. 

You can use this as your proof of funds. 

It's also worth having a look at the recent history of mortgage rates and other financial considerations that may impact what and how much you can borrow, particularly if you are planning to borrow to the upper limit of what the lender is willing to loan - if the trend is rising prices, you'll want to move quickly before they rise too much.

Define your requirements

One of the key pieces of information in buying a property is the list of the characteristics that must be met before you'll even consider the property. For example, you might want a large garden for the family so are willing to forego a conservatory. Or perhaps you will compromise on the number bedrooms for an en suite shower room attached to the main bedroom. There are also the day-to-day uses of the home and its location that should be considered, such as access to shops and amenities, transport links, recreation facilities, and so on. 

And there are the likely maintenance costs that come with the style of property and how it's constructed, particularly if it is in a conservation area or is listed. 

Ongoing costs should be factored in, too: for example, the local councils will have information on their websites about the council tax costs per month and for the year.

Research what properties are available

At the same time as establishing how much you can borrow, you should also be looking at what you afford to buy. When you get particulars from an estate agent, they'll ask for the asking price that you're looking at - there is no need to be guarded about this because you may be limiting your choice; but the agent is likely to give you details of some homes that are simply too expensive - you can either ignore these or consider them for putting in a potentially lower offer. 

Don't forget to ask questions of the agent - why have they given you details outside your specified range? Are there any properties that might be open to lower offers simply to get a quick sale? 

There are also several property portals accessible on the internet, which are sophisticated enough to allow you to put in your requirements and for the available properties to be displayed. With your list of prioritised property points, this will help you whittle down the possibilities to a manageable handful for more detailed assessment.

Look at what similar properties have sold for recently in the area. What is the general trend for housing prices? This information can be found on some property portals, and you can interrogate the official information held by HM Land Registry, the Government body that is responsible for updating the information regarding all property and land transactions. 

Establish the purposes for the sale

Once you have narrowed your focus on the property you are considering buying, the next step is to understand why it is for sale. Why is the seller wanting to sell the property? What is the general housing market like for this style of property? And in this location? 

Has there been any interest from other buyers in purchasing the property? And how quickly are such properties agreeing a price after being put on the market?

Visit (and revisit) the property

Investing in a new property is a major financial undertaking so you'll want to be sure that it really is worth the time, trouble and money to go through to completing on it. 

Are your initial impressions of the house and garden the same on the second visit? Is it worth considering taking a friend with you who might have a different perspective on it. If at all possible, try to visit when it rains as well as in drier brighter weather because the property will probably look quite different, which might confirm your desire to go ahead - or give you cause to want to drop out of going in with an offer.

Factor in the costs of moving

Although the basic cost of the property is a huge portion of the overall cost, you shouldn't lose sight of the other costs associated with buying a home. 

If it's a new-build property, you might need to pay an up-front reservation fee. Then there will also be the Stamp Duty Land Tax (SDLT) in England and Land Transaction Tax (LTT) in Wales, as well as the other costs to consider, such as employing a mortgage broker, working with a conveyancing solicitor to look after the legal side of the transaction, assigning a chartered surveyor to check the structure of the property, a removals (and storage, if necessary) company, buildings insurance for the new home, and the list seems endless.

Armed with all of this information, once you have identified the property you want to buy, with the knowledge that it is an acceptably close fit to your requirements and that you are able to afford it, you are in a good position to move swiftly with making an offer to the vendor.

There are two ways that an offer on a house might be sought: open, which means that anyone can be privy to what has been bid at any time, and sealed, which does exactly as it says by preventing the visibility of any offers that have been made with the winner and losers of the bidding contest being informed directly after the time for sealed bids has elapsed.

There are several methods and attitudes that will help you in getting your bid accepted:

Start low but not too low

Part of the negotiation dance (often colloquially known as haggling) comes with the bidder putting in a lower offer than the stated asking price, followed by a counter-offer from the vendor bringing that asking price down a bit… and so on until the price stabilises at something that both parties are happy to accept. 

But starting too low in the often mistaken belief that you can bag a bargain will suggest that you are not a serious buyer. 

Pitch your offer at an unusual amount

It's easy to round amounts up or down to a visually pleasing amount (e.g. £xxx,000), but plumping for something unusual (e.g. £xxx,250) will mark your offer as interesting, meaning that the vendor is more likely to give this greater consideration.

Provide information to underpin your offer

If you have gone with an offer that is lower than the asking price (especially if you have decided to go with a difference substantially lower), be prepared to describe your reasoning for it. 

For example, it might be your circumstances, such as not being in a chain, being a first-time buyer, or being a cash-buyer rather than needing to involve a mortgage lender and so on, that might make it an attractive option for the vendor to consider.

Research the history of the current sale

Find out how long the property has been on the market, how much the original asking price was and whether that has changed and, if so, by how much. 

Establish why the property has not yet sold if it has been on the market for an appreciable amount of time. 

Ask the estate agent whether there has been any interest from other buyers and what their offers have looked like. 

Confirm whether a survey has been carried out on the property and if that bidder has walked away and why as a consequence.

Think about your approach

The stereotypical negotiator is the hard-bitten and aggressive person who demands and shouts until they get their way. However, it's far easier to be polite in your dealings, despite the levels of stress that come with the whole moving business. 

Be aware of what you say when looking over the property, too - making discouraging remarks about where the vendor lives (other than to point out problems that need to be fixed) will not necessarily put you at the top of the list of those prepared to make an offer.

Don't rush in

Even if you think this is your perfect property, you might be thinking that it's critical to jump straight in with agreeing to the asking price, which is particularly important if the asking price is at the top of (or even over) your budget. 

Take some time out to consider it calmly, revisit the property if possible and actively look for reasons not to make an offer. If you are still keen, then you can start the process moving. 

Equally, if the vendor comes back with a counter-offer that you feel is too good not to accept, don't appear too keen and consider the offer carefully before committing. 

Ultimately, you want to ensure you are getting the property for the price that works for you.

The “do nothing” option

Be prepared to simply walk away. 

If you think the home you are making an offer on is too expensive and the vendor is refusing to meet you in the price negotiations, then there is no point pursuing it further. And that action - or its threat - may be enough for the vendor to allow some further leeway that might be acceptable. 

But, again, if not, be resolute and walk away from the purchase to look for something else.

The first thing to remember is that your vendor accepting your offer is not legally-binding; they can decide to back out (as indeed can you).

Until you formally exchange contracts, changes may still come along, including gazumping (where the seller decides to take a higher offer from another prospective buyer than the one you put in) and issues arising from the many processes that still need to be completed. 

Gazundering may also create a problem, which is where a buyer lowers the bid at the last moment to save money - usually done in problematic properties to force a quick sale in their favour to another interested buyer. But, like gazumping, the practice, while not illegal, is also not exactly ethical or fair on those with the invested time.

Bear in mind, too, that the estate agent is legally obliged to pass on any offers that have been received on the house, regardless of whether your offer has already been accepted. It's up to the vendor to decide what they want to do with any such offers, particularly if they are at a higher value than yours. 

Once you have had your offer accepted, these are the steps you should take:

Appoint your conveyancing solicitor

When you know that the vendor is happy with your offer, the legal process can start. 

To do this, you'll need to appoint a conveyancer who is experienced and focused on your transaction, like those we have at Homeward Legal. 

They will start immediately on the initial searches and key tasks such as identification of the you as the buyer, and the seller as the rightful owner of the property for sale.

Verify the property is off the market

Once the vendor has accepted your offer, you should check with the estate agent that the property is no longer being marketed by them, which will help to limit the interest in other buyers until the point that you exchange contracts.

Note that the property will probably have the estate agent's board outside, so check that it has been updated to read something like “Sold - Subject to contract” or “Sold - STC”.

Arrange a survey

While you might consider that a survey is optional and a way of saving money, getting a comprehensive survey completed will give you the peace of mind that you need that the property is a sound investment. 

After all, this is a significant financial undertaking, which means it's critical that you know what you'd be taking on in terms of remedial work and maintenance over and above the cost of buying the home and moving in.

Apply for a mortgage

You've got your Mortgage in Principle letter, but now that you have had the offer accepted, you can contact the mortgage company to get the application for the real mortgage moving so that everything is in place when monies need to be transferred.

Renegotiate asking price/agree unexpected costs

The searches that are carried out by your conveyancing solicitor, certain information such as that detailed on the fixtures and fittings form, and the findings from the survey may all highlight a number of problems which turn out to be expensive to rectify. And you might notice something on subsequent visits that give you pause for thought.

It's not unreasonable to reopen price negotiations armed with this information to reach an agreement on sharing the costs. 

Again, if you can't afford the work or think it's unreasonable that the vendor refuses to agree to any of the costs, be prepared to walk away - it's deflating to have to do this, but you haven't lost too much other than time if you haven't exchanged contracts. And the threat to withdraw your offer may assist in coming to an acceptable agreement.

If you are looking for a focused conveyancing solicitor with the expertise and knowledge to manage your transaction effectively and in a timely manner, you'll want one who treats your transaction as a priority to avoid the potential for disappointment.

The experts at Homeward Legal will talk you through each stage of the process so that you know what is happening at any point and why and what your role is. They are well-versed in all aspects of the conveyancing process, providing a quality conveyancing service at a fee that is great value for money!

Call  to get your conveyancing quote started, or to discuss your concerns with your plans to purchase or sell your next home.