Complete 2023 Guide.

How To Make An
Offer On A House.

How to Make an Offer on a House (and Negotiate the Price) in 2023

Found your dream home? Now the tricky part begins.

Knowing how to make an offer on a house and negotiate the price can be a daunting step for first time buyers in the UK.

Do you pay over the odds to secure your home? Or should you offer below the asking price and risk missing out?

If you’re unsure how to make an offer on a house, this is the perfect blog for you.

Today you’ll find out the latest tips and tricks for making an offer and negotiating the price of a house in 2023.

Let’s begin:

Contents

  • What to do before making an offer
  • How to make an offer on a house
  • How to negotiate the price
  • What to do after an offer has been accepted
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Before Making An Offer

How To Buy A House Complete Guide

How To Make An Offer On A House In Five Steps 

So, how do you make an offer on a property?

Well, after deciding what your opening bid is going to be, you can make a formal offer in five steps.

  1.     Tell the real estate agent. To initially submit your opening bid, you need to tell the estate agent who is legally required to pass on every offer they receive.
  2.     Get your offer in writing. After telling the estate agent, it’s a good idea to follow up your verbal offer with an email. This can save a lot of confusion later down the line.
  3.     Sell yourself and your position. Not every buyer is attractive to sellers, so it’s important to showcase yourself. For instance, showing you’re a first time buyer can be a good idea as it shows you’re chain-free, which will speed up the selling process (more on this in the next section).
  4.     Prepare for Negotiations. Once an offer has been made, negotiations will likely start and are held by the seller’s agent. This can put you at a disadvantage as you’ll be negotiating with a trained professional after making an offer on a house without an agent.
  5.     Get the Terms of the Sale in Writing. Once your offer is (hopefully) accepted, it’s a good idea to get a written list of all the fittings that will be included with your purchase. This will avoid any disagreements later down the line. You should also request the property be taken off the market to avoid gazumping.

Making an Offer on a House Tips 

When making an offer on a house, it’s important to showcase why you’ll be an appealing buyer.

Simply put:

Home sellers don’t want the process to drag on, and if you can speed their process up, they could be willing to accept a lower offer.

To do this, there are a few things you can mention to the seller’s agent to increase the chances of success:

  • You should say if you have a mortgage agreement in principle.
  • You have a larger deposit for a mortgage (so low LTV) to speed up the mortgage process.
  • You should mention if you’re a cash buyer, which means sellers can avoid delays over mortgages.
  • It would help if you showcased that you’re chain-free (you don’t need to wait to sell your property before buying).

Should You Offer Below the Asking Price? 

A question many first time home buyers ask is:

Should I make a lower offer than the asking price?

Many buyers usually offer 5% to 10% below the asking price.

While this will likely be rejected, there’s no harm in trying, right?

Well, offering a low offer like this can be risky if the home sees a lot of interest.

However, there are some telltale signs that a lower bid may be accepted from the seller:

  1.  If the seller is eager to sell quickly, they may be far more willing to offer below the asking price.
  2.  If you’re chain free, already have a mortgage agreement in principle, or have a conveyancer and property survey lined up. This will show your seller that you can act quickly, making them more willing to take your offer.
  3.  If you’re the only buyer interested. This means the ball is in your court, and you won’t need to be too wary of other buyers gazumping you (although things can change quickly 
  4. You agree on a closing date that works for your seller.

This could mean the seller is eager to sell and is willing to drop the asking price.

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How to Negotiate a House Price 

So, you’ve made an offer, and it’s been rejected.

How do you negotiate to make sure you get a good deal?

There are a few things you can do in the negotiation process to increase your chances of getting a home at a lower price:

  • Don’t reveal your entire budget. This is one of the worst things you can do, as your seller may try and hold out for more money if they know you can afford it.
  • Don’t show your emotions. While finding the house of your dreams is exciting, showing you’re in love with the house could tell the agent you’re willing to pay over the odds.
  • Do Your Homework. Be thorough on your property viewing and make notes of any potential problems that arise. You can then bring this up in negotiations to get a lower price. This is why making an offer on a house without seeing it is almost always a bad idea.
  • Get a Property Survey. It’s a bright idea to get the property surveyed by a professional. This way, you’ll get an idea about how much issues can cost, which will give you a strong position during the negotiation process.
  • Don’t rush. The seller will always want to conclude a deal as quickly as possible, but this shouldn’t overly influence you. Take your time and think about your budget before making a higher bid.
  • Don’t get fooled by benefits. Some sellers will try and push the price up by offering included furniture and white goods. But this will very rarely equate to the price increase they’re asking for.

The Bidding Process

While most negotiation tactics are universal, they can be influenced by the type of bidding process.

There are two types of negotiations; open and sealed bids.

Let’s discuss both below:

Open Negotiations 

The most common type of negotiation, open negotiations allow a back and forth between buyer and seller and will be the most likely way to buy a home in the UK.

With this, it’s a good idea to offer below the asking price – typically 5-10% below.

The estate agent will typically tell you of any bids that beat yours and give you a chance to reply and offer a higher bid.

Be mindful of a bidding war, though, as this could set you back thousands more than you planned.

Sealed Bids 

An unusual way of making an offer on a house in the UK, a sealed bid is when a buyer will write down their offer in a sealed envelope.

The seller will then look at the sealed bids and choose an offer based on the highest price.

This can be incredibly stressful for a buyer and will make it hard to know what offer you hope to make.

Go too low, and you could miss out. Go too high, and you could be surpassing other buyers by thousands – there’s no real way of knowing.

Sealed bids favour the seller as it is an excellent way of getting more than the asking price.

Top tip: If you choose to make a sealed bid, try and avoid round numbers. If you offer £250,050, you’ll beat out a buyer submitting a flat £250k bid.

What If Your Final Offer Is Rejected? 

If there’s a tonne of interest in a property, the agent may ask all interested buyers to submit their ‘best and final’ offer.

This will work similarly to sealed bids, and you’ll need to hope your bid is enough to get accepted.

It’s a phone call we never want to have, but you may miss out on your home if your final offer is rejected.

Unfortunately, little can be done about this, but you don’t need to give up.

Be sure to stay in touch with the estate agent as they’ll know you’re still interested if the current buyer drops out.

What to Do After Offer Has Been Accepted

Congratulations, your offer has now been accepted.

But now what?

Unfortunately, you aren’t out of the woods yet as offers are not legally binding in England and Wales.

This means your seller (and you) can still back out of the deal.

It isn’t until the exchange of contracts that a deal is considered legally binding,

This can be a tense time for buyers, as one in three homeowners have reportedly experienced a seller pulling out of a deal after receiving a higher bid – otherwise known as gazumping.

So, how can you avoid this?

Sadly, there’s no way to prevent gazumping, but you can lower the risks.

Once agreeing on an offer, you should ask the seller to take the property off the market. They don’t have to do this, mind, but they should do if they’re serious about your offer.

Can You Withdraw or Change an Offer? <h3>

Circumstances can change a lot in a few months, and you may want to withdraw or change your offer.

But can you?

Well, as mentioned early, you aren’t legally obliged to complete a deal until you exchange contracts.

This means you can back out of an offer or even lower it – known as gazundering.