Buying a property can be a daunting task and making an offer on a property is one of the most critical stages of the process. It is the point at which you declare your intent to buy the property and negotiate a price with the seller. This article will guide you through the steps involved in making an offer on a property, helping you to make the process as smooth and successful as possible.
Step 1: Research the local property market.
Before making an offer, it is essential to do your research. Take the time to research the property you are interested in and compare it to similar properties in the area. This will give you a good idea of its market value and whether the asking price is reasonable. You can check the property’s history, including how long it has been on the market, any previous offers, and whether it has undergone any price reductions. Also make sure you consider the condition of the property you are interested in, as one that needs work will not attract the same price as others that are in an improved condition – and vice versa.
Step 2: Get your finances in order.
It is essential to have your finances in order before making an offer on a property. This means having a mortgage in principle from a lender or having the cash available to make the purchase. Having your finances in order will also give you the confidence to make a strong offer.
Step 3: Decide on your offer.
Once you have researched the property and the market and have your finances in order, you can decide on your offer. This will be based on the research you have done and your budget. It is essential to make a realistic offer that reflects the property’s value, but also one that is within your budget.
Step 4: Make your offer.
If you are not using the services of a buying agent, you can make your offer to the estate agent or directly to the seller if they are selling the property privately. If you are making an offer through an estate agent, they will contact the seller on your behalf. They will also advise you on how to make a formal offer, including any conditions you might want to include, such as a completion date or repairs that need to be made.
When making your offer consider:
- If the property has been on the market for a while or there are known issues that need to be fixed, you may want to consider offering a lower bid. However, be prepared for the seller to reject your offer or try to negotiate a higher price.
- In the UK we are not used to negotiating. It can feel uncomfortable or rude, you will need to set this aside for this transaction. When you make your offer, as with all negotiations, it is often prudent to offer a sum lower than your maximum amount. Usually, depending on the condition of the property, 5-10% lower than the asking price is a good place to start. If you are feeling uncomfortable about making a lower offer remember that sellers often take this into account when setting the asking price.
- Remember to not let your emotions run away with you. Yes, this is important, but getting annoyed is not going to help. Stay calm and polite at all times.
Making an offer on a sealed bid property.
In some cases, a property may be sold via sealed bids. This means that all interested parties must submit their best and final offer by a specified deadline, and the seller will choose the winning bid. In this situation, it’s important to submit a competitive offer that reflects the property’s value.
Step 5: Negotiating.
The seller may accept your offer, reject it, or make a counteroffer. If they make a counteroffer, you can negotiate until you reach an agreement. It is essential to stay within your budget and not get carried away with the negotiation process. If your offer is lower than others received the agent will let you know and will give you the opportunity to make a second or third offer. Remember do not go over your budget and if you are in a good position i.e. no chain or ready to move, then you might well be much more appealing to the seller than the other offer, who might be in a longer chain or not have their finances as well prepared as you.
If your offer is accepted, you may be asked to pay a holding deposit to secure the property. This deposit is usually refundable if the sale falls through, but you should check the terms and conditions carefully before paying.
Avoid being Gazumped.
Gazumping occurs when a seller accepts a higher offer from another buyer after accepting your offer. To avoid being gazumped, you can ask the seller to take the property off the market once your offer has been accepted, or you can agree to exchange contracts as soon as possible.
Step 6: Instruct a conveyancer.
Once you have agreed on a price, you will need to instruct a solicitor or conveyancer to handle the legal aspects of the purchase. They will carry out searches and checks on the property and handle the transfer of funds. It is essential to choose a solicitor who is experienced in property law and can handle the process efficiently. You will then proceed through to exchanging contracts and completion:
Step 7: Exchange contracts.
Once your solicitor or conveyancer has completed their checks and searches, you will need to exchange contracts with the seller. This is the point at which the purchase becomes legally binding, and you will need to pay a deposit. At this stage, you will also agree on a completion date.
Step 8: Completion.
Completion is the final stage of the process, and it is when you take ownership of the property. On the agreed completion date, your solicitor or conveyancer will transfer the funds to the seller’s solicitor, and the keys will be released to you. Congratulations, you are now a homeowner!
Making an offer on a property can be a nerve-wracking experience, but by doing your research, having your finances in order, and making a realistic offer, you can make the process as smooth and successful as possible. Remember to stay within your budget and not get carried away with the negotiation process. If you are feeling all at sea with it all, consider hiring a buying agent to act in your stead. Once you have agreed on a price, instruct a solicitor or conveyancer. By following these steps, hopefully you will soon be well on your way to owning your dream home.