How to Make an Offer on a House
Entering the housing market can be overwhelming, especially for first-time buyers and new investors. When you find the perfect property, it’s important to be ready to make an offer. Making an offer on a property is a big, often stressful step, but with the right information and preparation, you can make a strong offer that stands out.
In this guide, we’ll go through what you need to know about making an offer on a property. Whether you’re buying your first home or adding another property to your portfolio, these steps will help you make an offer on a property.
Before You Make the Offer
Do Your Research
The first step in making an offer on a house is to do your research. Become familiar with the local property market and house prices. Start by looking at recent sold prices of similar properties to what you want in the area. Websites like Rightmove and Zoopla will give you an idea of current prices and trends.
Also, arrange viewings of property to get a feel for what different types of homes can offer. Talk to estate agents for more information and to find the right property for your needs. You should also ask estate agents about the seller’s situation before you enter negotiations. For example, a seller who needs to sell fast may accept a lower price, while a seller who has time to wait may hold out for a higher price. The more informed you are the better equipped you’ll be to make a strong offer.
Talk to Your Mortgage Broker
Your mortgage broker will work with you to determine your maximum budget and gather all the details before you make your final offer. Before you can make an offer, you need to know how much you can afford. A mortgage broker will help you get pre-approved for a mortgage which shows sellers that you are a serious buyer with the means to complete the purchase.
A mortgage agreement in principle, can give you an edge in a competitive market. It shows your commitment and ability to finance the property, making your offer more attractive to sellers who want to sell to a reliable buyer.
Making the Offer on a House
When you find the right house, it’s time to make your initial offer. You can do this by contacting the seller’s estate agent, who is legally obliged to pass on your offer to the current owners. The seller and estate agent will compare your offer to any they may have received from other buyers.
Leverage Your Advantages
As a prospective home buyer, your goal is to convince the seller you’re the perfect buyer. Even if others can offer to pay more money for the property, the seller may consider several other factors that can tip the bidding process in your favour.
If you’re a first-time buyer one of your biggest advantages when you want to make a house offer is being chain-free. Unlike buyers who need to sell their current home before buying a new one, you can move fast.
This flexibility puts you in a good position and can make your offer more attractive to a seller who wants to make a quicker or more un-complicated sale. You may be able to offer below the asking price since dealing with you is more convenient. A cash buyer may enjoy the same benefits since they don’t need to go through the mortgage process.
Other advantages you may have over other offers may include having a larger deposit or being flexible with your completion date.
Include All Relevant Details
When you make your offer, include all the necessary information to make it as strong as possible. This should include:
- Buyer’s name and address
- Financial position including proof of funds or mortgage pre-approval
- Whether another property needs to be sold before you can buy
- Move-in timeframe
- Your offer amount
A detailed offer shows you’re organised and serious about buying the property. It helps the seller and estate agent know who you are and how you’ll finance the purchase.
Prepare to Negotiate
The final purchase price for a home is often not the original asking price. The negotiation process is a big part of home-buying. A respectable starting offer can be 5-10% lower than the asking amount. Don’t be discouraged if your opening offer is rejected. Instead, be prepared to open negotiations with another offer.
Discuss the amount with the estate agent and find a middle ground that works for both parties. Common points of negotiation are the offer price, closing costs and contingencies.
Set Your Offer Terms
Subject to Survey and Contract
Make sure your offer is subject to a property survey and subject to contract. This means the offer is conditional until a successful survey is completed and you exchange contracts. Your offer is not legally binding until contracts are exchanged. This protects you in case there are hidden defects in the property that could affect its value or liveability.
Prevent Gazumping
Gazumping is when the seller accepts your offer but then accepts a higher offer from someone else prior to exchange of contracts. To avoid this, ask the estate agent to take the property off the market as soon as your offer is accepted.
Request a Formal Offer Confirmation
Once you’ve made your offer ask the estate agent for a formal letter confirming the details. This letter should include the offer amount, any conditions of the offer and the timeframe for a response. It’s a written record of your offer and can prevent any misunderstandings.
How Can a Mortgage Broker Help?
Mortgage brokers are an important part of the home-buying process. Working within the industry they can help to position your offer and even negotiate with the estate agent on your behalf if required. They can then help you find the most suitable mortgage lender, mortgage rates and terms and save you money over the life of the loan. Brokers have access to many lenders and can match you with one that suits your financial situation.
Mortgage brokers can also help with the paperwork and ensure your mortgage application is complete and accurate. They can also advise on how to improve your credit score and increase your chances of approval.
Final Thoughts
Making an offer on a property is a big part of the home-buying process. By doing your homework, getting pre-approved for a mortgage, being prepared to negotiate and presenting a detailed offer you’ll increase your chances of a successful offer on your dream home. Once your offer has been accepted, you can start the full mortgage application and legal process of conveyancing.
The housing market is competitive, but with the right preparation and strategy, you can make an offer that stands out. If you need further help, contact Eden Hawk Financial Solutions. Our team of experts are here to help you through the home buying process and achieve your property goals.