Making an offer

[Bobblybobbob]

We saw a house on Saturday and want to make an offer, We're first time buyers and have no idea how much we should offer. The house is comfortably within our price range. I'm worried about whether any offer will be too much or not enough. Can we ask the estate agent for advice or will they lie to get us to put in a higher offer? How did you decide what to offer?

[NapQueen]

I think the general consensus is to go in 10% lower to allow space for negotiation. However few things to consider
1 - are there comparable properties for sale atm? What are they priced at?
2 - how long has it been up for sale and has it been reduced prior?
3 - would you be prepared to pay over if it comes to it?

[RoganJosh]

Are houses going quickly where you are?
5% under usually looks like a serious offer but it depends on the market. You could go a bit lower.

[Hs2Issue]

Estate agents works for the house seller so shouldn't advise you as it would be a conflict of interest.

[wowfudge]

Whatever you do, don't let the EA know you can comfortably afford it or they'll know you can offer more.

[Rumtopf]

Have a look online to see what comparable houses in that street have sold for recently. Factor in any major repairs that might need doing, you can make your offer conditional of survey (I mean proper repairs such as plumbing, electrics, roofing etc not just cosmetic stuff like changing the bathroom). How quickly are houses selling locally? Is the price around a stamp duty threshold, if so I'd offer just under the threshold to save paying extra money to the government. Can you move quickly and is your mortgage agreed in principle? These things make you a more attractive prospect and as such a lower offer might be accepted because of the benefits of a shortened chain etc.
I'd always begin negotiations at around 10% less than asking, especially if the property is new to market.

[Bobblybobbob]

Thanks everyone. I'm even more terrified now! DH and I were just going to offer £5k over the asking price and hope for the best, but it all seems more complicated than that. If someone else puts in an offer do we get a chance to top it, or is it a one shot only thing?

[FormerlyFrikadela01]

I would never offer over asking for a first offer. If someone else puts in an offer you can raise yours. You're in a good position as a first time buyer because you're ready to go now so aren't in a chain.

[NiceCuppaTeaAndASitDown]

Definitely don't even give the agent a hint that you might be able to spend more, they work on commission for the seller and although they can't tell them to accept an offer or not, depending on the agent it can be a very grey area and they may well suggest to the seller that they feel this is a first offer to 'test the water' or something along those lines.

Unless it's advertised at offers over, offer under. Our house was on for 389k, we started with an offer of 330k and ended up at 350k. @NapQueen had a great post with things you will need to consider though.

However, this only goes for England/Wales. Buying in Scotland is very different and I'm not sure about other countries.

[loveka]

It totally depends on the area and house.
We had already reduced our house by 10% and had had a previous full asking price offer that fell through ( nothing to do with the house). So we didn't really want to go much below asking price. Some first time buyers offered 3% below , but a few hours later we got a full asking price offer, which we accepted.

The house we are buying our offer was about 7% below. But we thought it was overpriced which was why we went lower- it had been on the market for well over a year; it has a significant thing wrong with it. We researched similar houses sale prices, so our offer was an educated one.

Do you think the house you want is overpriced or are you just looking for 'a deal'?

[loveka]

Yes, you should get a chance to top an offer. You may end up in a bidding war though!

If you really have fallen in love with it, consider how much the extra 5k will cost on a mortgage. It's hardly anything over the mortgage term, maybe £20 a week?

[Bobblybobbob]

I suppose the problem is I don't really have a grasp of the market. The other properties we've viewed have been more expensive and nowhere near as nice. In the time we've been looking, some houses have sold very quickly and others have stayed on for ages and been reduced. How do you work these things out? This is stressing me out so much.

[loveka]

There is a element of luck about it too. My friend sold her house in a week. Mine took 6 weeks. Very similar houses, mine has bigger rooms and higher quality kitchen. But hers is very near the station. So someone came along who wanted to be 5 minutes from the station and paid an extra 20k for her house!!!

It only takes one buyer to buy a house.
It sounds like you really like the house you want?

[anotherdayanothersquabble]

It is a good idea to take a good look at the market and try to work out why houses have sold at the prices they have; decoration, outdoor space, potential for extension, proximity to schools, stations, busy roads, railway lines, proximity to shops, other good areas, not so good areas, are there are large developments planned nearby, what are the other hides in the street like?

Advertised prices might be high because the estate agent / owner is overly optimistic or low to get a quick sale.

If having looked at the market, you genuinely think the house is worth its asking price (and you are not in Scotland.. I know things are different there), then putting an offer close to asking is not such a crazy idea. Remember you are in a great position, first time buyers, nothing to sell and from what you have said, finance should be straightforward. Do you already have a mortgage offer?

In the end, if you love the house and want it more than anything else you have seen, then it is worth the asking price to you.

[Rumtopf]

Bobbly this is meant kindly but stop stressing and flapping. Be practical.
Look online at zoopla for the area, you can then find out average sales prices for that street and type of house. You can also see what the house was last purchased for and when.
Then take into account how long the house has been on the market for - a long time and there will be more room for negotiation, a few days and the price may be overinflated as they want to "test the water".
Then consider if you're in London you need to move more quickly than other parts of England, buying laws in Scotland are by sealed bid, one time only.
If you do offer and it's turned down, take some time to think about what you can afford and make a new offer. You can make the offer conditional to include items you may wish to keep - carpets, curtains, cooker, white goods etc. These are often available by separate cash offer too.
Is the property around a stamp duty threshold, this will affect your offer too.
Does the house need work? Anything other than cosmetic and you need to factor that into the calculations in what you can afford too.

The agent is working on behalf of the vendor, not you. They will get as much money out of you as possible as they will then receive more commission.

Lastly, good luck! Buying a house, especially your first is meant to be exciting!!!

[whatsthecomingoverthehill]

As far as I can make out the market is (at best) pretty much flat so you shouldn't be needing to offer over asking unless you end up in a bidding war and you really want it.

[Nodowntime]

How long has the house been on the market, has there been lots of interest? If there is no obvious competition, definitely no point offering over the asking price, just the asking price or up to 5% under should be enough...if they want more, they can always tell you

[NotDavidTennant]

There are no hard and fast rules, it depends hugely on circumstances. I certainly wouldn't offer over asking price though, unless it is advertised as 'offers over'.

As a starting point look at the 'Sold house prices' section on Rightmove and see what similar properties have gone for in the local area. Also look on the 'House price & values' section on Zopla and see if it has a previously sold price and a property history for the house you're interested as this will give you some guide to what it was worth in the past (ignore the Zopla price estimate though, as this is often not very accurate).

[GeekyWombat]

Totally agree about Zoopla! We looked up our now house (also first time buyers, I was eight months pregnant) and saw what the guy had bought it for. We knew (cause he'd told us) that he'd had some low offers. We offered him £2k over what he'd paid for it and told him it was a full and final offer because in our situation we wanted to move quickly and not get involved in protracted negotiations. He accepted it and were convinced it's because he at least felt like he'd got his money back and made a bit.

I think it all depends on your situation - do you love this house and wouldn't want another? Have you seen anything similar elsewhere?

One thing we did as first time buyers which helped was get a solicitor that charged a flat rate for handling our house - so no extra charges per email or letter. It was in their interest not to faff as they didn't get more money for it and it definitely made a difference in getting things pushed through.

Good luck!

[user1484830599]

I'm confused why your first offer would be over the asking price? Unless houses locally are all part of some ridiculous bidding war. I would never, ever pay asking price for a house - I've just bought 10% under asking purely as that is what the house was worth to us.

Look at actual sold prices for the local area and work from there. DO NOT under any circumstances ask the EA for advice, they work for the seller to get the best price so will be as useful as a chocolate teapot.

[user1484830599]

And any offer is just a starting point, you can always offer more, but you can't go down!

[Nodowntime]

Geekywombat,

In my experience all conveyancing solicitors charge a flat rate(which is tied to the value of the house) and all are "no sale, no fee'.

Also i assume your house must have been under the stamp duty threshold if your seller made 2k on selling his house on when only got 2k more than he had paid for it. He also only made 2k if he didn't spend any money on improving the house and paying mortgage interest, otherwise he probably made a loss....

[Bobblybobbob]

Thanks everyone. We offered a bit below the asking price but they accepted another offer.
I can't imagine how anyone could find this exciting. It's terrifying!

[NapQueen]

Can you offer a counter offer?

[Rumtopf]

Submit a counter offer! It's perfectly fine to do so and the EA has to inform the vendor. You've nothing to lose.

[Nodowntime]

I assume you need a mortgage, it could be that the other people are cash buyers, many vendors prefer cash buyers for obvious reasons, including the fact that they are not dependent on the valuation and survey of the bank. That's not to say you can't outbid them, but remember if you go too high your bank might not agree with you.